Loan Payment

[the prodogy]

---

Members do not see this ad.

I am currently in a DO program right now and will be in dept over 200k by the time I am done with all four years. That added with interest during residency, I figure I will be in dept around 300k due to interest.
For those who now have experience paying off loans or are in the process of paying those loans off, how did this all work out for you.
The though of having to pay off around 300k with a 175k salary sounds quite scary to be honest.

 

[PMR 4 MSK]

Yes, you literally mortgaged your future. Unfortunately, there is no real way to let it go into foreclosure, except maybe death.

You should be able to calculate (or your loan company/companies can do it for you) what your estimated payments are going to be.

$300K paid off over 30 years is about $2K/mo, 10 years about $3.5K/mo. Take home from $175k/yr = about $10K/month. That still leaves you with a lot of money - $6.5 - 8K/mo.

Don't buy an expensive car until your loans are paid off. Get a modest house, but only if you have kids or really like doing yard work. Keep a couple credit cards for emergency use only or for things that only take cc's - such as some hotels or car rentals. DO NOT GET INTO CREDIT CARD DEBT! Take it from someone who learned the hard way.

It's very doable.

 

[RUOkie]

^^^
Very sound advise. If you start off living frugally (my wife and I did), and pay off the loans, once they are paid, you will be saving hand over fist (cause you are used to living on a budget). Don't join the country club. Work hard, save, and you will be fine.

 

[SSdoc33]

talk to your school's financial counselor. 200K in debt usually means you'll be paying back a total of closer to 4 or500K unless you have some really great loans. if you are truly concerned you need to either go into a very high paying specialty/subspecialy to pay off your loans, or work something out with your state.school for some loan forgiveness for primary care work or rural medicine for a specified amount of time.

 

[kstarm]

Many residency programs have financial counslers present once or twice a year to the residents to talk about all sorts of financial matters. There are specific groups that specialize in working with physicians as well. These presentations are generally part advertisement and part sound advice (at least in my experience). Many offer a free private consultation with you, again to help gain business but also to help you set-up your financial future.

I am not in anyway an expert on this but my experience has been (from older residents/now staff, and my own consultation) that the transition from residency to attending is a important time to get your ducks in a row. Getting the correct insurance for the correct amount (life, disability, umbrella libability, etc...) is important, and that depending on the interest rate of your loans paying them off right away is not always the best move depending on what else is going on.

I know it is hard but don't get completely stuck on the loans, think of the your overall finanical picture.

 

[LTS6776]

1. Agree with living frugally. Consider working a few hours a week during your MS-2 and MS-4 years, which tend to be a bit lighter in terms of workload. I was a TA for a course my second year and made a few hundred dollars. I also transcribed some extra lectures for money. Some classmates babysat occasionally on weekends - they studied while the kids slept and made some extra cash.

2. You should look for a residency program in an area with a low cost of living (but still one that will prepare you well for your career) and really strive to start paying back your loans during residency rather than defer.
You can deduct interest you pay towards student loans the years you are in residency (but not once you start making real money). Although moonlighting is often frowned upon, there are other ways of making some money as a resident. If you are at an academic medical center, you might consider being a normal subject for minimal risk research studies, like those that just require a questionnaire and a blood sample or ultrasound (I wouldn't recommend doing anything invasive or that required you to take an experimental drug).

3. Would also put aside some money each month to pay for your PGY4 expenses (board exams, licensure, travel ~$5000) so you don't have to put it on your credit card. I recently opened a high-yield saving account at Smartypig.com that makes saving for such expenses really easy.

Good luck!

 

[PharmaTope]

Yes, you literally mortgaged your future. Unfortunately, there is no real way to let it go into foreclosure, except maybe death.

You should be able to calculate (or your loan company/companies can do it for you) what your estimated payments are going to be.

$300K paid off over 30 years is about $2K/mo, 10 years about $3.5K/mo. Take home from $175k/yr = about $10K/month. That still leaves you with a lot of money - $6.5 - 8K/mo.

Don't buy an expensive car until your loans are paid off. Get a modest house, but only if you have kids or really like doing yard work. Keep a couple credit cards for emergency use only or for things that only take cc's - such as some hotels or car rentals. DO NOT GET INTO CREDIT CARD DEBT! Take it from someone who learned the hard way.

It's very doable.

how are you taking home 10k a month

175,000 over 52 weeks is 3365 a week before taxes you can expect to take home 60% of that after taxes hit you. that leaves you with $2019 a week and $8,076 a month.

out of that money. you take the loan payment of $2,000, mortgage of $2,000 that leaves you 4,000 left assuming no savings. utilities and food and other expenses will send you to around $1,000.

you are still left with $3,000. let's hope you do not have kids in daycare though bc that is VERY EXPENSIVE. you should then dump in some more money into those loans.

 

[RUOkie]

mortgage of $2,000 .

That is a lotta house for a new grad. That was the point, buy a FRUGAL house. (FYI, my mortgage is $750/mo and I've been in practice for 15yrs)

 

[bkpa2med]

I'm sure mortgages are relative to location. I know in NYC it would be very hard to have that kind of mortgage unless you put down a major downpayment.

 

[Brachyury]

If you do IBR, your payment would be (175k-15k(poverty deduction))*.15=24k 24/12=2k a month, if you did a 10 year repayment, assuming all of the loans when averaged were about 7%, then you'd pay $3,483/month or $2696/month to pay-off in 15 years


Let's say you make 175k a year in Iowa, and you use spend 20k in pre-tax money for insurance plans and retirement savings plans, which would leave you with about 120k a year in income (I used payroll-taxes.com, and this number is assuming that you don't owe the government or state additional taxes)

If you repaid in 10 years ($41,796), you would be left with $78,204, or about 6.5k a month.

One of the best pieces of advice I was ever given was to remember that student loans won't siphon all your money, but a house you cannot afford and children will

 

[Finally M3]

That is a lotta house for a new grad. That was the point, buy a FRUGAL house. (FYI, my mortgage is $750/mo and I've been in practice for 15yrs)

Not everyone is lucky enough to live in the Midwest and it's depressed property values! 😛

Srsly, if you have a mortgage with an escrow account for property tax (in a high property tax state), that will be the payment for $240K balance with a 30 year fixed. Wouldn't say that it's outrageous.

 

[RUOkie]

Not everyone is lucky enough to live in the Midwest and it's depressed property values! 😛

Srsly, if you have a mortgage with an escrow account for property tax (in a high property tax state), that will be the payment for $240K balance with a 30 year fixed. Wouldn't say that it's outrageous.

Everybody makes their choices! 😀