My plan to payoff $117K student loans in 3 years.

[PharmacistFl12]

I'm on an accelerated plan to payoff my student loans. This plan consists of auto payment of $813 monthly and extra payment of $500 weekly. I plan to make $500 extra payment every Saturday morning while having my cup of coffee. I feel more in control under this plan and will keep me motivated by developing a routine and following it religiously. What are your opinion of this strategy?

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[owlegrad]

That's very aggressive but if you can swing it you will knock out those loans in no time!

 

[mfdoom]

So ~$2800/month? Dang, that's admirable. I try to do the same method of autopay + extra, but I'm finding that it's hard to keep up with the extra part. There's always some moneysuck event that comes up -- just in the past few months, I've had to replace tires, buy an emergency plane ticket, pay for car registration, etc. Not to mention COL in CA sucks. Gives me more peace of mind to back off the extra loan payments so I can have more of a rainy day fund available.

 

[PharmacistFl12]

So ~$2800/month? Dang, that's admirable. I try to do the same method of autopay + extra, but I'm finding that it's hard to keep up with the extra part. There's always some moneysuck event that comes up -- just in the past few months, I've had to replace tires, buy an emergency plane ticket, pay for car registration, etc. Not to mention COL in CA sucks. Gives me more peace of mind to back off the extra loan payments so I can have more of a rainy day fund available.

I'm following Dave Ramsey's strategy and attack student loans with full force. He actually does not advocate having a large emergency fund because having that "fear" is a actually a motivator to get rid of your debts ASAP. It's not that hard if you follow a strict budget. I was able to pay down from $180k to $117k in 2 years. Slacked off for 3 years because I bought a house. But no i'm focused again.

 

[wagrxm2000]

I'm following Dave Ramsey's strategy and attack student loans with full force. He actually does not advocate having a large emergency fund because having that "fear" is a actually a motivator to get rid of your debts ASAP. It's not that hard if you follow a strict budget. I was able to pay down from $180k to $117k in 2 years. Slacked off for 3 years because I bought a house. But no i'm focused again.

100% agree that an emergency fund is pointless.

 

[PharmacistFl12]

That's very aggressive but if you can swing it you will knock out those loans in no time!

Budget will be very tight. Cutting down on the food is going to be hard but the sacrifice will be worth it in 3 years.

 

[PharmacistFl12]

So ~$2800/month? Dang, that's admirable. I try to do the same method of autopay + extra, but I'm finding that it's hard to keep up with the extra part. There's always some moneysuck event that comes up -- just in the past few months, I've had to replace tires, buy an emergency plane ticket, pay for car registration, etc. Not to mention COL in CA sucks. Gives me more peace of mind to back off the extra loan payments so I can have more of a rainy day fund available.

I fell into that trap of wanting "peace of mind" after I bought my house because I'm still paying a mortgage. But i'm beginning to realize that the fear of unknown emergencies can really mess with your mind and cause you to do illogical things such as hoarding cash instead of paying off borrowed money ASAP.

 

[Sine Cura]

Is Fidelity referring to a taxable account? I would rather put that money toward maxing 401k if you have one especially with a match but your priorities may vary.

 

[PharmacistFl12]

Is Fidelity referring to a taxable account? I would rather put that money toward maxing 401k if you have one especially with a match but your priorities may vary.

I do stock trading. So Fidelity is my short term taxable investment account. I'm already contributing up to company match in 401k.

 

[pezdispenser]

Budget will be very tight. Cutting down on the food is going to be hard but the sacrifice will be worth it in 3 years.

It's an ambitious goal but I think you can do it if you stay focused and motivated.

I would stop investing and saving and put that $1k towards your loans. That should get you paid off 8 months sooner! I think it's best to focus on one thing at a time and right now, that's your loans. Once your loans are paid off in just a couple of years, you'll free up that $4k/mo in cash flow which you can then plow into investments, or use it to pay off your mortgage.

If you want to go hardcore, you can slash your bills.
Electricity: A/C off when you're away. Program it to turn back on 1-2 hours before you get home, or get a wi-fi thermostat that you can turn on remotely. It should be able to cool 2-3F per hour.
AT&T: Cut the cable, get a cheap cell phone plan. Xfinity Mobile is unlimited talk/txt and $12/GB data (need to be an Xfinity internet customer). Cricket, Boost and Virgin have cheap plans around $30/mo.
Water: $110?? Are you watering your lawn with tap water? Don't. Get a non-potable water line for irrigation.

 

[PharmacistFl12]

It's an ambitious goal but I think you can do it if you stay focused and motivated.

I would stop investing and saving and put that $1k towards your loans. That should get you paid off 8 months sooner! I think it's best to focus on one thing at a time and right now, that's your loans. Once your loans are paid off in just a couple of years, you'll free up that $4k/mo in cash flow which you can then plow into investments, or use it to pay off your mortgage.

If you want to go hardcore, you can slash your bills.
Electricity: A/C off when you're away. Program it to turn back on 1-2 hours before you get home, or get a wi-fi thermostat that you can turn on remotely. It should be able to cool 2-3F per hour.
AT&T: Cut the cable, get a cheap cell phone plan. Xfinity Mobile is unlimited talk/txt and $12/GB data (need to be an Xfinity internet customer). Cricket, Boost and Virgin have cheap plans around $30/mo.
Water: $110?? Are you watering your lawn with tap water? Don't. Get a non-potable water line for irrigation.

I really want to cut down on cable charges but I'm a big football fan. I need NFL ticket to watch my favorite team live. I use a lot of water for my lawn but have no choice. I live in a city that requires green lawn or we get fined. Electricity is easiest to save. I live in Florida so for next 4-5 months, won't need to spend much on AC bills.

 

[Joleybear]

I'd do it. I've lived low income my entire life. If I make $5000-8000 per month like a lot of pharmacists do I could easily shell out a grand (or more if I made above $5000) and still feel very well off. lol. We barely get about $3000 now for 5 people, 2 with special needs which cost us thousands per year, so it would still be an extra $1000 per month. We could have a huge apartment or a house. Lol. I'm cool with that! I mean 6440 - 3000 = 3440 and thats still more than we get now for 5 lol

 

[kidsaremypassion]

I'm on an accelerated plan to payoff my student loans. This plan consists of auto payment of $813 monthly and extra payment of $500 weekly. I plan to make $500 extra payment every Saturday morning while having my cup of coffee. I feel more in control under this plan and will keep me motivated by developing a routine and following it religiously. What are your opinion of this strategy?

Sound's great to me!
Doing something very similar, but simply throwing $3k towards my loans at the end of every month. I owe a tad more than you do though, at $157k, and planning to be done in 4 years.
Best of luck to you!

 

[Momus]

I really want to cut down on cable charges but I'm a big football fan. I need NFL ticket to watch my favorite team live. I use a lot of water for my lawn but have no choice. I live in a city that requires green lawn or we get fined. Electricity is easiest to save. I live in Florida so for next 4-5 months, won't need to spend much on AC bills.

Artificial turf or change your grass to less demanding one.

Better yet, change it to a desert landscape if your hoa allows it.

 

[Swishers]

That's a very doable strategy. I've paid down $84,000 since December 2015. I still have plenty left for my invesments, vacations, hobbies, and emergency fund. Keep in mind that I'm single with no kids and live in a low COL area.

 

[radio frequency]

I averaged $3.6k/month for 18 months when I first finished school. I think this would easily be doable...especially for a single person. You might even be able to pay more.

 

[mfdoom]

I'm following Dave Ramsey's strategy and attack student loans with full force. He actually does not advocate having a large emergency fund because having that "fear" is a actually a motivator to get rid of your debts ASAP. It's not that hard if you follow a strict budget. I was able to pay down from $180k to $117k in 2 years. Slacked off for 3 years because I bought a house. But no i'm focused again.

Yeah, I tend to have an anxious type of personality that wants me to hoard cash but my rainy day fund ranges from 3-5k, which doesn't seem like too much. I don't work in retail, so I'm making less and living in one of the most expensive states. I estimate that loans will be paid off in ~2 years; the bigger issue to me is that I have to decide if I'm okay with staying here and not owning property until I'm like 50. I don't know if it's just me, but as a new(ish) grad, it's difficult to think long term financially.

 

[Momus]

Yeah, I tend to have an anxious type of personality that wants me to hoard cash but my rainy day fund ranges from 3-5k, which doesn't seem like too much. I don't work in retail, so I'm making less and living in one of the most expensive states. I estimate that loans will be paid off in ~2 years; the bigger issue to me is that I have to decide if I'm okay with staying here and not owning property until I'm like 50. I don't know if it's just me, but as a new(ish) grad, it's difficult to think long term financially.

You only need 20% downpayment to buy a house.

600k house = 120k DP (20%), or even less if you don't mind paying PMI (I don't recommend).

I'd say it will take 3 yrs of frugal living after your loans paid off to save up $120k, definitely NOT 30 yrs. If you hustle, you can save $120k in 2 yrs or less.

 

[mentos]

My wife and I paid down ~100k each in about 3 years each. It's very possible. If you make extra payments, I suggest doing it on an early weekday. If you make a payment on a Saturday, it will sit there doing nothing until Monday and won't be processed until Tuesday or Wednesday. Interest will accumulate over all of those days.

 

[Danbo1957]

Good plan. I have advised many new professionals to do the same. Stick to that budget; the absolute joy of being 35 years-old and debt free... As far as an emergency fund, work on getting good credit and have a credit card, or charge card (American Express), with a $5000 borrowing limit.

 

[6GodPharm]

Good plan, pay them off. I send anywhere from 5k-9k a month to loans. Started around 178k in jan 2016. After Oct i'll be at around 75k. Going forward i've made a commitment to send a flat rate of 8k no matter what. Hoping to get this done in about 10 months.

 

[rph3664]

As long as you can pull it off, do it!

 

[Mao Mao]

Saving is easier when you have yet developed expensive tastes for things like eating out and traveling. I graduated in 04/2014 with slightly over 70K (state school tuition). Between my residency and two per diem jobs, I was able to pay it off completely in 16 months. All of my bills except for rent went on my two credit cards. On pay day, I would pay off my credit cards ' balance/ rent and then send whatever left straight to the student loans. I always felt broke but my loans went down really fast.

 

[PharmacistFl12]

Update: I received approval from SoFi to refinance my student loans. $117,000 from 6.8% down to 4.85%. Will be making $2,222 monthly for next 5 years. I will be making extra payments to SoFi monthly. My goal is to payoff completely by next Presidential Election

 

[Swishers]

Update: I received approval from SoFi to refinance my student loans. $117,000 from 6.8% down to 4.85%. Will be making $2,222 monthly for next 5 years. I will be making extra payments to SoFi monthly. My goal is to payoff completely by next Presidential Election

A reduction of 1.15% isn't worth the risk or hassle from refinancing. A rate of 6.8% is already relatively low. What if you lose your job or can't make as much money for whatever reason during the next 5 years? With Sofi you don't have the option of income based repayment or loan forgiveness. I would only recommend Sofi for people with a high interest rate and remaining balance of 300k+.

 

[6GodPharm]

A reduction of 1.15% isn't worth the risk or hassle from refinancing. A rate of 6.8% is already relatively low. What if you lose your job or can't make as much money for whatever reason during the next 5 years? With Sofi you don't have the option of income based repayment or loan forgiveness. I would only recommend Sofi for people with a high interest rate and remaining balance of 300k+.

I started with 180k in jan 2016 and refinanced with sofi when I was at about 150k in Aug of 2016. Best decision I made. Lowering it even 2% makes a huge difference. I'm now at 83k left. If your goal is to pay loans right away, going with sofi is a great decision.

 

[PharmacistFl12]

A reduction of 1.15% isn't worth the risk or hassle from refinancing. A rate of 6.8% is already relatively low. What if you lose your job or can't make as much money for whatever reason during the next 5 years? With Sofi you don't have the option of income based repayment or loan forgiveness. I would only recommend Sofi for people with a high interest rate and remaining balance of 300k+.

IBR has never crossed my mind. I want to payoff my student loans ASAP. After graduating in 2012, I promised myself to not pay longer than 10 years. Refinancing with SoFi is one of the greatest financial decision I've made. It will save me $85,000 for the lifetime of the loans if I decide to not payoff early. Loan forgiveness is very unlikely for anyone working as a Pharmacist. The only loan forgiveness option we have is death lol.

 

[radio frequency]

A reduction of 1.15% isn't worth the risk or hassle from refinancing. A rate of 6.8% is already relatively low. What if you lose your job or can't make as much money for whatever reason during the next 5 years? With Sofi you don't have the option of income based repayment or loan forgiveness. I would only recommend Sofi for people with a high interest rate and remaining balance of 300k+.

Disagree completely. 6.8% is not a low rate at all. And SoFi has protections built in to help if you lose your job. Refinancing was a great option for me and saved me thousands. All paid off now, of course. IBR and regular loan forgiveness isn’t a good deal anyway. The only forgiveness program worth pursuing is PSLF, and most pharmacists won’t be eligible for that.

 

[owlegrad]

I am surprised that SoFi is only giving you 4.5%. Maybe you wanted the flexibility of a longer repayment term? I don't mean to be a naysayer but I suspect you could have gotten a much better deal if you shopped around, depending on your credit and terms you wanted.

At any rate I am 100% on the refinancing bandwagon, I literally cannot comprehend why anyone would leave that much money on the table. Maybe if you had a family and you were the sole bread winner and you wanted the comfort of PAYE or something, but even then you are giving up so much money for that possible benefit. Probably would be cheaper just to pay the fees involved of missing a few payments if you are laid off.

 

[GrapePropel]

I'm on an accelerated plan to payoff my student loans. This plan consists of auto payment of $813 monthly and extra payment of $500 weekly. I plan to make $500 extra payment every Saturday morning while having my cup of coffee. I feel more in control under this plan and will keep me motivated by developing a routine and following it religiously. What are your opinion of this strategy?

great strategy! don't forget you can save a ton of money just eating ramen, rice and beans. Also if you really want to save money you can live in a car/van and use a gym for shower and storing your clothes (however this might seem extreme and unorthodox to some). You will have to eat out a lot though. Glad to hear people being financially responsible! I try to save money when i can. I use most of my money on trying to meet my future wife.

 

[ldiot]

When I graduate in less than 2 years, I will be doing the same thing. I will be starting out with close to 200k in loans. But... my car is paid off and I may consider staying with my parents for the first year or two. So my expenses will be virtually 0. After I pay a good chunk off in the first year or two, I may rent a descent apartment and upgrade the car while still paying aggressively.

I had a financial emergency which landed my in 15k of credit card debt as well. Even taking the max student loans, I am barely able to make the minimum payments + rent while in school. It is very stressful.

 

[PharmacistFl12]

When I graduate in less than 2 years, I will be doing the same thing. I will be starting out with close to 200k in loans. But... my car is paid off and I may consider staying with my parents for the first year or two. So my expenses will be virtually 0. After I pay a good chunk off in the first year or two, I may rent a descent apartment and upgrade the car while still paying aggressively.

I had a financial emergency which landed my in 15k of credit card debt as well. Even taking the max student loans, I am barely able to make the minimum payments + rent while in school. It is very stressful.

My advice is refinance and payoff ASAP. Put everything into student loans and suffer for 3-5 years. You'll be glad you did. I made the mistake of buying a brand new gas-guzzler truck my first year. Then buying a house my second year. Looking back now, I wish I had attacked my student loans with every single penny. The best way to defeat corporate greed, take off the handcuffs and not be a slave is to be debt free!

 

[ldiot]

My advice is refinance and payoff ASAP. Put everything into student loans and suffer for 3-5 years. You'll be glad you did. I made the mistake of buying a brand new gas-guzzler truck my first year. Then buying a house my second year. Looking back now, I wish I had attacked my student loans with every single penny. The best way to defeat corporate greed, take off the handcuffs and not be a slave is to be debt free!

I also watch Dave Ramsey, on YouTube. Most of what he says I already knew, but the one thing that I did learn from him is that the behavioral aspect of managing money is as important, or more important, than knowledge.

 

[pezdispenser]

I followed Dave Ramsey too and he changed my whole life. He's great for getting you motivated and focused on a simple plan to pay off all your debts. You have to ignore all your broke friend's advice, sorry I mean excuses, and your own urges to spend more than you have and go deeper into debt. Once you're debt free, these good habits continue as well. For example, I used the motivation, focus and confidence that I gained to go out and get per diem jobs, and now they just keep calling me asking me to work. I'll make around $40k from per diem jobs this year. Also, once all your debts are paid off, the interest and earnings on your investments will be compounding in your favor. I paid off my mortgage 2 years ago and now I'm already on the verge of becoming a millionaire. Seriously, Dave Ramsey's advice works!

 

[CrewThanh]

I followed Dave Ramsey too and he changed my whole life. He's great for getting you motivated and focused on a simple plan to pay off all your debts. You have to ignore all your broke friend's advice, sorry I mean excuses, and your own urges to spend more than you have and go deeper into debt. Once you're debt free, these good habits continue as well. For example, I used the motivation, focus and confidence that I gained to go out and get per diem jobs, and now they just keep calling me asking me to work. I'll make around $40k from per diem jobs this year. Also, once all your debts are paid off, the interest and earnings on your investments will be compounding in your favor. I paid off my mortgage 2 years ago and now I'm already on the verge of becoming a millionaire. Seriously, Dave Ramsey's advice works!

Agreed, Dave Ramsey changed my life too ! I was looking for some motivation and glad I found him on Youtube. Every single "debt-free" video gave me a boost of motivation to work towards my dream of one day being free from the lenders. The only deviation would be that I am doing the "avalanche" instead of the "snowball" because I really want to save the most out of all this.