Life as a pharmacist with heavy student loan debt

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All4MyDaughter said:
You are an unethical, lying criminal who can't manage your money! You will never own a home, no one will ever lend you money and you will be a debt slave 4 life! :p
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Woe is me.


Speaking of taxes, I haven't actually researched this one...but can you theoretically max out your IRA/SEP contributions ($17k/yr... $34k/yr w/ a spouse) to reduce your AGI for 10 years and then do a Roth conversion in year 11 and pair it with a planned business income loss in that year?

Granted, we should be maxing out contributions anyway, and these new surtaxes are like moving targets, but it's just a thought.
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All4MyDaughter said:
It cost me less than $500 to start my MTM business... and I can write off things that I would be paying for anyway if I didn't have a business
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confettiflyer said:
Well the key is to open a business for less investment ($5k will do it, unless you're opening a physical store front or doing something intensive), and shoveling over expenses you might normally buy into business use that is generally "unauditable."[/i]
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All of this talk....just for a measly amount of money? Just max out your 401 k. That's already $17,000.
 
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All4MyDaughter said:
You will never own a home, no one will ever lend you money and you will be a debt slave 4 life! :p
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Well yeah, that's what happen when you are in $250,000 in debt. Your borrowing capacity is limited.

And yes, you will be in debt for 25 years. That's a life time. Some of you may even be eligible for social security when you are finally done with paying off your student loans. That's just a fact.
 
BMBiology said:
Well yeah, that's what happen when you are in $250,000 in debt. Your borrowing capacity is limited.

And yes, you will be in debt for 25 years. That's a life time. Some of you may even be eligible for social security when you are finally done with paying off your student loans. That's just a fact.
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...who are you talking to....
 
I have not been following this thread, so I will chime in with my 2 cents.

There are many to blame for this massive student loan debt crisis. But us (pharmacists) are fortunate that our salary can support 6 figure student loans. I can't even imagine someone who goes to a private school for undergraduate where all their education is financed through student loans.

I wish when I was in school (undergrad + pharmacy school) someone would sit down down with me and talk about basic finances. It astonishes me how clueless current students are about debt and student loan obligations.

How much of you know what amortization schedule is?

We can argue to the death who is responsible for teaching individual students about basic personal finances. But we can all agree that such education is necessary.
 
Confetti--

I of course defer to you in your knowledge of IRB/IRS scams; but even you know you must eventually show a profit in your business or the IRS will disallow all expenses.

It's not like I can "start an MTM consulting business" and just write off dinners downtown with my RPh friends forever and ever.

http://www.irs.gov/uac/Business-or-Hobby?-Answer-Has-Implications-for-Deductions

The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year.

If an activity is not for profit, losses from that activity may not be used to offset other income. An activity produces a loss when related expenses exceed income. The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. It does not apply to corporations other than S corporations.
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Now obviously All4MyDaughter is making some mad cash so yeah, she can do those "dinner/car/cell" deductions. All small business owners do that. No big deal. But in the end, you eventually must show a profit.
 
awval999 said:
Now obviously All4MyDaughter is making some mad cash so yeah, she can do those "dinner/car/cell" deductions. All small business owners do that. No big deal. But in the end, you eventually must show a profit.
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If she's indeed making a profit, then her argument about reducing her AGI so she can pay less IBR is really a moot point.
 
awval999 said:
Confetti--

I of course defer to you in your knowledge of IRB/IRS scams; but even you know you must eventually show a profit in your business or the IRS will disallow all expenses.
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Oh of course, I've made strategic decisions to become profitable at certain points in time. But two points:

1) When you decide to go for a loss (like you're gonna make a bunch of capital expenses), you better go balls out.

2) My main concern with business expenses is not to generate a loss to reduce AGI as discussed here for loan purposes, it's moving expenses over that would ordinarily be made anyway for personal use (ie for MTM - write off Pharmacist's Letter, Lexi-Comp subscriptions, etc...), but can be substantiated on paper as a business expense.

So this little nut of a business is just *barely* profitable for 3 years for IRS purposes and becomes wildly not profitable for the other 2.

If you time everything right, you can do well, I already have a 10 year plan pencilled out.

Now, if your business just takes off and becomes wildly profitable and outpaces your expenses...like I said, it ceases to become a deduction vehicle and then becomes a legit income stream. Be happy and enjoy. Opening a business this way becomes almost a win-win situation if played right, regardless of the revenue you're bringing in.
 
kwakster928 said:
We can argue to the death who is responsible for teaching individual students about basic personal finances. But we can all agree that such education is necessary.
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Agreed. I'm blessed to be surrounded by maniacal accountants with a penchant for drinking and having worked in finance. It gives me a level of comfort (or insanity) with money and the systems that govern it that most people don't have.

I'm probably borderline cavalier about it, but oh well.
 
confettiflyer said:
Oh of course, I've made strategic decisions to become profitable at certain points in time. But two points:

1) When you decide to go for a loss (like you're gonna make a bunch of capital expenses), you better go balls out.

2) My main concern with business expenses is not to generate a loss to reduce AGI as discussed here for loan purposes, it's moving expenses over that would ordinarily be made anyway for personal use (ie for MTM - write off Pharmacist's Letter, Lexi-Comp subscriptions, etc...), but can be substantiated on paper as a business expense.

So this little nut of a business is just *barely* profitable for 3 years for IRS purposes and becomes wildly not profitable for the other 2.

If you time everything right, you can do well, I already have a 10 year plan pencilled out.

Now, if your business just takes off and becomes wildly profitable and outpaces your expenses...like I said, it ceases to become a deduction vehicle and then becomes a legit income stream. Be happy and enjoy. Opening a business this way becomes almost a win-win situation if played right, regardless of the revenue you're bringing in.
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I hear this is a good book to learn this sort of stuff.
 
confettiflyer said:
it's not measly if you do it right.
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What was being characterized as measly anyway? I didn't understand that comment.

confettiflyer said:
...who are you talking to....
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Another mystery comment. I know it wasn't directed at me because, 1) I don't owe 250K in loans (nowhere close to that), 2) I already own a home, and 3) I will definitely pay off my loans before I'm eligible for Social Security! :laugh:
 
awval999 said:
Now obviously All4MyDaughter is making some mad cash so yeah, she can do those "dinner/car/cell" deductions. All small business owners do that. No big deal. But in the end, you eventually must show a profit.
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Yes, I'll definitely show a profit. I set this business up and got the MTM contract so I could work from home after residency, for health and family reasons. It has been profitable beyond my wildest expectations. Right place/right time kind of thing. I don't expect it to be as good in subsequent years, but I do expect that it will continue to provide a nice income stream to supplement whatever else I'm doing.

confettiflyer said:
2) My main concern with business expenses is not to generate a loss to reduce AGI as discussed here for loan purposes, it's moving expenses over that would ordinarily be made anyway for personal use (ie for MTM - write off Pharmacist's Letter, Lexi-Comp subscriptions, etc...), but can be substantiated on paper as a business expense.
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I also never intended my business to generate a loss to reduce my AGI. I have other ways to reduce AGI (all legal, of course). The sole purpose of my business was to provide pharmacist-level income for me while allowing me to work from home. And it has. :thumbup:

Now, if your business just takes off and becomes wildly profitable and outpaces your expenses...like I said, it ceases to become a deduction vehicle and then becomes a legit income stream. Be happy and enjoy. Opening a business this way becomes almost a win-win situation if played right, regardless of the revenue you're bringing in.
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Agree. Husband and I are very happy with the way this has all turned out.
 
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A4M are you S Corp or LLC? Had lunch w/ my attorney today, had a discussion about suspending dividend payments to recapitalize an S Corp and the grey area of what minimum salary you'd need to take. You could do something like set up some high capitalization threshold like $100,000 before paying out a dividend in your operating agreement.

For some reason I thought of postponing dividend payments to reduce AGI, haha. If you keep that up for 10 years you can keep income hidden for IBR, then have your annual meeting in year 11 and reduce the amount.

But don't know if it's worth the extra hoops to incorporate.
 
confettiflyer said:
A4M are you S Corp or LLC? Had lunch w/ my attorney today, had a discussion about suspending dividend payments to recapitalize an S Corp and the grey area of what minimum salary you'd need to take. You could do something like set up some high capitalization threshold like $100,000 before paying out a dividend in your operating agreement.

For some reason I thought of postponing dividend payments to reduce AGI, haha. If you keep that up for 10 years you can keep income hidden for IBR, then have your annual meeting in year 11 and reduce the amount.

But don't know if it's worth the extra hoops to incorporate.
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LLC - although I might switch to S-corp depending on the accountant's recommendation. Over a certain revenue threshold (which I cannot recall), he thought it would be more favorable to incorporate. I need to make an appointment...
 
All4MyDaughter said:
LLC - although I might switch to S-corp depending on the accountant's recommendation. Over a certain revenue threshold (which I cannot recall), he thought it would be more favorable to incorporate. I need to make an appointment...
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Ok ignore my previous post about overcapitalizing an S Corp...cuz you can't. Haha...ok next stop is accountant.
 
Bier9999 said:
Seems like more debt in store for you :(

http://abcnews.go.com/Business/ready-student-loan-rates-double-monday/story?id=19524843#.UdZANzs3u1V


Before pharmacy school: 'Encumbered forever by desire and ambition'
After pharmacy school: 'Along the long road to a life consumed by slow decay'.
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at 6.8%, government is making out like a bandit. \

lean-mean money making machine

Well, I guess I can see how this all fits into a fiscal plan. Call me a cynic, but student loans is another way to transfer wealth from the young to pay for the old. And there is the added benefit of being a voluntary one, "we didn't tell you to take out all those loans". :)
 
I think the biggest problem is the increase of tuition cost. Since I graduated (about 10 years ago) tuition has more then doubled (I was paying about $400 per credit and now its close to $1000). If you can't pay off your student loans in 10 years, something is terribly wrong. Now there is news that the PharmD programs will add a 7th year...so future graduates will have a 300k+ debt!
Here in NY the average rent for a 1 bedroom in Manhattan is slightly over $3000. In Brooklyn NY the average rent for a 1 bedroom is $2500. Buying is not even an option to new grads.
The best thing to do is seek the advice of a knowledgable CPA who will review your finances and assist you in paying off the loan as soon as possible.
 
xiphoid2010 said:
at 6.8%, government is making out like a bandit. \

lean-mean money making machine

Well, I guess I can see how this all fits into a fiscal plan. Call me a cynic, but student loans is another way to transfer wealth from the young to pay for the old. And there is the added benefit of being a voluntary one, "we didn't tell you to take out all those loans". :)
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the gov is making a killing if everyone will repay their loans.
 
humate said:
the gov is making a killing if everyone will repay their loans.
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I'm just having difficulty dealing with paying 6.8% on student loans and 3.8% on my mortgage...:scared:
 
Here's a review of World War Z as a metaphor for the **** sandwich being handed to the post baby boomer generations.

https://www.youtube.com/watch?v=a0oRoRWbpTk&feature=player_detailpage

Keep this video in mind the next time a boomer throws a hissy fit in the waiting room full of young mothers waiting for antibiotics b/c the boner pill refill he touched toned out in the parking lot for asap isn't ready.
 
Last edited:
Arrested development courtesy of student debt: How student debt is putting the lives of many young Americans on hold.

http://www.mybudget360.com/student-debt-young-american-spending-habiits-loans-life-on-hold-education/

Some of you who have procured employment as pharmacists are paying down your student loans asap. This might not be the wisest move for the following:

1. The Fed is hellbent on devaluing the dollar alleviating all debt loads.

2. "If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem." J. Paul Getty

Collectively young adults owe a trillion dollars in student loans. It's not their problem, it's the lenders. Just watch what will happen with Obamacare and how young people will blow off the mandate. The same will happen with student loans. If you payoff these loans you'll regret it down the road for being a chump.
 
grumps said:
Arrested development courtesy of student debt: How student debt is putting the lives of many young Americans on hold.

http://www.mybudget360.com/student-...pending-habiits-loans-life-on-hold-education/

Some of you who have procured employment as pharmacists are paying down your student loans asap. This might not be the wisest move for the following:

1. The Fed is hellbent on devaluing the dollar alleviating all debt loads.

2. "If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem." J. Paul Getty

Collectively young adults owe a trillion dollars in student loans. It's not their problem, it's the lenders. Just watch what will happen with Obamacare and how young people will blow off the mandate. The same will happen with student loans. If you payoff these loans you'll regret it down the road for being a chump.
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Pretty much agree. Although not sure exactly what kind of evidence supports #2 ... but they can't take away your education even if you owe $600k after compounded interest .. ibr, folks!

Thus it really becomes the govts problem. But nobody in the coming decades would be electable based on hosing student debtors... by then everyone in the country will basically be bearing the burden in the form of loan payments to uncle sam for education.
 
grumps said:
If you payoff these loans you'll regret it down the road for being a chump.
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This has to be the dumbest advise ever. Right next to buying gold when it's already $1,500.
 
pharmd718 said:
I think the biggest problem is the increase of tuition cost. Since I graduated (about 10 years ago) tuition has more then doubled (I was paying about $400 per credit and now its close to $1000). If you can't pay off your student loans in 10 years, something is terribly wrong. Now there is news that the PharmD programs will add a 7th year...so future graduates will have a 300k+ debt!
Here in NY the average rent for a 1 bedroom in Manhattan is slightly over $3000. In Brooklyn NY the average rent for a 1 bedroom is $2500. Buying is not even an option to new grads.
The best thing to do is seek the advice of a knowledgable CPA who will review your finances and assist you in paying off the loan as soon as possible.
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Tell me how the hoodrats in Brooklyn can afford rent if 1 bedroom was really 2500. unless you're talking about a studio with 1 bedroom and even in that case, those reasonably go for about 1700. if you trying to just get 1 bedroom, you can easily find one for 750. check craigslist. if you really want to slum it. you could probably get a room for 500 in queens.
 
boriqua said:
Tell me how the hoodrats in Brooklyn can afford rent if 1 bedroom was really 2500. unless you're talking about a studio with 1 bedroom and even in that case, those reasonably go for about 1700. if you trying to just get 1 bedroom, you can easily find one for 750. check craigslist. if you really want to slum it. you could probably get a room for 500 in queens.
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meh, move to jersey city, take the PATH train in. bam.
 
lol no offense to anybody from NJ

but i'd rather pay the extra money than move to that hellhole
 
NJ is nice, grew up there and all and they have one of the best school systems. Most areas felt safe and not many other places are better for raising a family, but the cost of living is no longer worth the benefits. It is a great place if you already make good money and/or your work essentially limits you to the NYC metro area.
 
jachen84 said:
NJ is nice, grew up there and all and they have one of the best school systems. Most areas felt safe and not many other places are better for raising a family, but the cost of living is no longer worth the benefits. It is a great place if you already make good money and/or your work essentially limits you to the NYC metro area.
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HEY! Long time no see buddy, how's Tejaaasssss?
 
Hey man! It's been a while! Congrats on making it through! So I'm assuming you're back out west?

Things are good here. Just trying to survive another summer (should last until the end of September) and enjoy the 7 months of godly weather
 
Government Cutting Benefits For "Generation Screwed"

"And rather than follow the conventional path of indebting yourself for 13-years so that you can attend university for four, and then fork over the bulk of your pay to the government, instead focus on learning tangible, valuable skills overseas.

Moving to a thriving place like China or Myanmar costs a tiny fraction of a single semester at university."

http://www.sovereignman.com/trends/government-cutting-benefits-for-generation-screwed-12777/
 
"A generation already swindled by the college loan racket must be chafing at the bureaucratic nightmare that ObamaCare instantly turned into at its roll-out, with a website that wouldn't let anyone log in. Isn't technology wonderful? I wonder when the "magic moment" will come when all those unemployed millennials join a Twitter injunction to just stop paying back their loans."--Kunstler

http://kunstler.com/cluster****-nation/creepily-close/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+cluster****nation+%28Cluster****+Nation%29
 
"A generation already swindled by the college loan racket must be chafing at the bureaucratic nightmare that ObamaCare instantly turned into at its roll-out, with a website that wouldn’t let anyone log in. Isn’t technology wonderful? I wonder when the “magic moment” will come when all those unemployed millennials join a Twitter injunction to just stop paying back their loans."--Kunstler

http://kunstler.com/cluster****-nation/creepily-close/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+cluster****nation+%28Cluster****+Nation%29
 
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