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Watch out!
- Thread starter NatCh
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This was a sobering article but honestly, this woman brought this financial misfortune on herself. She even states she wasn't careful with her finances...who does that?
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I heard from somewhere that for every $1 we take out in student loans, it will cost us $3 down the road. I try to think about this as I apply for financial aid and student loans...
The article is interesting but I don't think it tells the whole truth. Dr. Bisutti is a fellowship trained Internist...and she had trouble paying $1500/month in student loans? Missed some payments? It sounds like she didn't take her student loans very seriously.
The article is interesting but I don't think it tells the whole truth. Dr. Bisutti is a fellowship trained Internist...and she had trouble paying $1500/month in student loans? Missed some payments? It sounds like she didn't take her student loans very seriously.
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This is what I thought too, something doesn't quite add up.
Even if she is making only 200k a year, she should be able to clean her student loan mess up by moving into an apartment, living on rice and beans and just throwing every single extra dollar at her loans for say 7-10 years or so.
200k gross - call it 120k after taxes, live on 50k and throw 70k year at your loans until they are gone.
That really took about 7 seconds to figure out. I'd be interested to hear why she doesn't see this as a legitimate path out of her mess.
Paying on those loans when you are 70? No thanks.
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Its not directed towards you. Iam just speaking in general. Its very easy to say "its her fault!" , "who does that". When time actually comes and you are in that situation then you realize it.
Back in 2006 my friend moved to Chi town for her Physical therapy school. Their school is 3yrs. I told her not to buy a house because of the expected housing slump. I was afraid she woudnt be able to sell the house
Her husband told me that i was naive and need more time to stay in USA to realize what does EQUITY profit means and other bullcrap he blabbered. she said to me "who does that, we are not like those people. we have everything planned out". Now we buy a house, keep it for 3 years and then sell it for higher price and keep the profit.
Ha ha 2009 came and she graduated with dreams of moving to LA. and here she is stuck in her house. They cant sell it. Let alone cheap price. no one is even making a decent offer.
Now she is doing a SHORT SALE foreclosure. Their credit took a beating. All interest rates are higher from car to cards,etc.
When i met her few days back, she said you were right. we shoudnt have invested in this housing market.
There are thousands of stories like these were people think they are smart-Assses! and think they are invulnerable. but this economic storm has touched people beyond their beliefs. We can happily blame the individual for a foreclosure or bankruptcy or deliquency. But by doing that we are in self denial. If one or two are doing that then its fine. But when masses are doing that then its not exactly the fault of individual alone. There is collective failure on the part of lender as well as the borrower. Infact its a failure of the whole system!
I have personal experiences where the person said "Haaa! that happened bcoz its their own fault! Nothing can happen to us."
We do things that we never thought of when the situation comes. It just happens. Its not something you want but bad time makes you take bad decisions.
Whenever i read such news. I symphathise with them and get on my knees and thank GOD almighty that iam not in their situation and pray to god to prevent me from getting into one.
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cool_vkb,
I can see the point you are trying to make with the story about your friends being unsuccessful in selling their house but, I have to ask, why would they purchase a house in the first place if they knew living in Chicago was only a temporary situation? What's wrong with renting an apartment and signing a year to year lease? This would allow them to have no strings attached once they decided to leave.
I can see the point you are trying to make with the story about your friends being unsuccessful in selling their house but, I have to ask, why would they purchase a house in the first place if they knew living in Chicago was only a temporary situation? What's wrong with renting an apartment and signing a year to year lease? This would allow them to have no strings attached once they decided to leave.
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Yeah bro thats was my question also.
But thats what iam trying to explain. People think they are smart *****es. That they are invulnerable to any thing.
In this case, the husband and wife were from california. So they had the taste of high profits from selling houses after few years in their mind. Remember the housing boom of 2000s?
They thought they would buy a house for $220K and probably sell it for $240-250K in 3years when she graduates. Lol the actual price that the assesor gave them now is $150K. 70K loss!
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Even at 100k/year she would be able to make the minimum of $1500/month.
$1500 x 12 = $18k
$100k -> $65k net
$65k - $18k = $47k
rent: $2000/month
car: $500/month
gas, water, elec., insurance, etc.: $1000/month
food: $500/month
total: $4000/month or $48k/year
She's got a posh apartment, BMW 3 series, and still breaks even.
Lets hope we all get residencies or else we will be next on the news
QFT
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I agree with everyone else that there is something fishy here. It is her fault. I owed about the same as she did $220k and graduated in 2004. I kept up with my paperwork and got deferred payment through residency and fellowship. I now pay nearly $1000 per month which I can afford and will be paid off in 27 more years. She graduated near the same time I did when interest rates on student loans were at a historic low. She could have consolidated at that point. If you ignore the paperwork for deferment and miss payments, it will compound quickly and that would be her fault.
So it sounds like she is not financially savvy, but that's okay, she should have hired an advisor. The debt load after medical school is EXCESSIVE and made worse by greedy private schools, but it is manageable.
Also something else fishy, perhaps the article author was mistake, but she stated is a "fellowship-trained internist" which means a subspecialist like a cardiologist/neurologist/endocrinologist - but she is working as a family practitioner????
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[Cliffs Notes version at the bottom for you ADD types]
The Dr. in this article most definitely did not manage her finances well, but I think the message that the readers of this forum should take home is that things can easily get out of hand if one does not pay close attention to one's debts. With a high principal and compounding interest, even low interest, one's debt will rapidly increase. It's about the last thing you'll want to think about when you first get out of residency and start your career. You'll suddenly be making more money than you ever have before in your life (hopefully). You'll be tempted by the nice house, the European cars, fancy restaurants, big vacations, etc. Thinking about your student loan debt is completely painful in a time of excitement.
When I finished residency in 2000 I had a principal balance of approximately $150,000. Rather than taking a job as a Associate I became a sole proprietor and went into business for myself using a practice management company. It was really slow at first, and there was about a six month lag time before I got my first payment from insurance companies for work that I did. My monthly payment on a ten year note was approximately $1800, but since I was really not making any money I did not think I could make ends meet. I therefore refinanced to a thirty year note, which lowered my monthly payment down to approximately $1200. At the time I did not feel that I could pay the additional $600 per month. I would not say that I lived extravagantly either.
What I did not understand at the time was that a person has one chance to refinance a federal student loan. Once you refinance your federal loan you may not refinance it again. Back in those days interest rates had dropped to the 8% range and everybody said that they would never be lower than that, and that I should refinance immediately. Unfortunately I listened to everybody and my federal loans became locked in at 8 1/4%. Ideally I would have waited until interest rates had dropped down to 4% or less, refinanced to a thirty year note, and made double or triple the minimum payment every month. But you know what they say about hindsight...
Also, I elected to take the six-month forbearance. During forbearance one does not have to pay back the loan, however interest does still accrue on the principal balance. That six-month forbearance increased my principal from $150,000 to $180,000. In six lousy months my principal went up $30,000! I had an understanding that the principal would increase, but that was before amortization tables were readily available on the Internet and I did not understand exactly how much the principal would increase. Fortunately I am able to afford more than the minimum monthly payment at this point and I expect my entire student loan to be gone within the next three years. That will have been thirteen years until full repayment on a thirty year loan, even factoring in marriage, two children, a house, three different practices, a few cars, and the rest of life's expenses.
Some posters have proposed hypothetical repayment schedules. Congratulations if you can stick to an aggressive repayment schedule, but the further along you get in life the more complicated life seems to get. Sometimes things come up. For example, perhaps your first job does not work out and suddenly you're left looking to start over. Perhaps the practice for which you work wants you to buy in. Perhaps the practice that you already own suddenly needs a new x-ray machine. Perhaps you get married. Perhaps you and your spouse have a child or two or three. Perhaps your child or children start playing sports or an instrument and need lessons. Perhaps one of your children becomes sick. Perhaps you get divorced. Perhaps your aging mother-in-law needs to move in with you. These are all events that one probably does not think about when one is in undergrad or in podiatry school, but I'm sure you have heard of these events happening to people around you pretty regularly...and they are all expensive. That fat check of yours suddenly has become much skinnier.
I think the article mentioned how toxic student loan debt can be. Obviously it is a good idea to pay down your student loan as quickly as feasible. Even making one extra payment per year makes a huge difference over time. Using an online amortization table you can see exactly how much less your debt would be or how much more quickly you could pay it off by entering in your numbers. Here's one that I use. It's titled as a mortgage calculator, but really you can enter in your student loan debt, auto debt, credit card debt, or any debt:
http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx
Cliffs Notes version:
The Dr. in this article most definitely did not manage her finances well, but I think the message that the readers of this forum should take home is that things can easily get out of hand if one does not pay close attention to one's debts. With a high principal and compounding interest, even low interest, one's debt will rapidly increase. It's about the last thing you'll want to think about when you first get out of residency and start your career. You'll suddenly be making more money than you ever have before in your life (hopefully). You'll be tempted by the nice house, the European cars, fancy restaurants, big vacations, etc. Thinking about your student loan debt is completely painful in a time of excitement.
When I finished residency in 2000 I had a principal balance of approximately $150,000. Rather than taking a job as a Associate I became a sole proprietor and went into business for myself using a practice management company. It was really slow at first, and there was about a six month lag time before I got my first payment from insurance companies for work that I did. My monthly payment on a ten year note was approximately $1800, but since I was really not making any money I did not think I could make ends meet. I therefore refinanced to a thirty year note, which lowered my monthly payment down to approximately $1200. At the time I did not feel that I could pay the additional $600 per month. I would not say that I lived extravagantly either.
What I did not understand at the time was that a person has one chance to refinance a federal student loan. Once you refinance your federal loan you may not refinance it again. Back in those days interest rates had dropped to the 8% range and everybody said that they would never be lower than that, and that I should refinance immediately. Unfortunately I listened to everybody and my federal loans became locked in at 8 1/4%. Ideally I would have waited until interest rates had dropped down to 4% or less, refinanced to a thirty year note, and made double or triple the minimum payment every month. But you know what they say about hindsight...
Also, I elected to take the six-month forbearance. During forbearance one does not have to pay back the loan, however interest does still accrue on the principal balance. That six-month forbearance increased my principal from $150,000 to $180,000. In six lousy months my principal went up $30,000! I had an understanding that the principal would increase, but that was before amortization tables were readily available on the Internet and I did not understand exactly how much the principal would increase. Fortunately I am able to afford more than the minimum monthly payment at this point and I expect my entire student loan to be gone within the next three years. That will have been thirteen years until full repayment on a thirty year loan, even factoring in marriage, two children, a house, three different practices, a few cars, and the rest of life's expenses.
Some posters have proposed hypothetical repayment schedules. Congratulations if you can stick to an aggressive repayment schedule, but the further along you get in life the more complicated life seems to get. Sometimes things come up. For example, perhaps your first job does not work out and suddenly you're left looking to start over. Perhaps the practice for which you work wants you to buy in. Perhaps the practice that you already own suddenly needs a new x-ray machine. Perhaps you get married. Perhaps you and your spouse have a child or two or three. Perhaps your child or children start playing sports or an instrument and need lessons. Perhaps one of your children becomes sick. Perhaps you get divorced. Perhaps your aging mother-in-law needs to move in with you. These are all events that one probably does not think about when one is in undergrad or in podiatry school, but I'm sure you have heard of these events happening to people around you pretty regularly...and they are all expensive. That fat check of yours suddenly has become much skinnier.
I think the article mentioned how toxic student loan debt can be. Obviously it is a good idea to pay down your student loan as quickly as feasible. Even making one extra payment per year makes a huge difference over time. Using an online amortization table you can see exactly how much less your debt would be or how much more quickly you could pay it off by entering in your numbers. Here's one that I use. It's titled as a mortgage calculator, but really you can enter in your student loan debt, auto debt, credit card debt, or any debt:
http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx
Cliffs Notes version:
- Don't enter forbearance if you can at all avoid it
- Pay more than the minimum amount, even one extra payment per year
- After a certain income level student loan interest is not tax-deductible whereas mortgage interest is, therefore I would rather have mortgage debt than student loan debt. If given the choice between making extra payments towards mortgage or towards student loans, pay the student loans first. If you have equity in a house, consider refinancing the house and taking a cash out payment to pay down your student loans
- Sometimes life throws you a curve ball and you encounter unexpected expenses. A thirty year note paid back at double the monthly payment comes out to about the same total debt overall as a ten year note at minimum payment but gives you flexibility in case you get a curve ball
- When considering a big ticket purchase, try playing with an online amortization table to see what would happen if you put that money towards paying down debt rather than buying something new and shiny
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Two of my friends graduated from reputed engineering schools in USA with Undergrad and Masters degree in Environmental Engineering and the other in Mechanical Engineering.Each has an approx loan of 40-60K. Now its almost a year and half they graduated and still didnt got a job.How are they suppose to pay? As far as i know they are gonna default. With country's unemployment rate around 9.7% (basically 1 out of 10 americans is jobless). The defaulters will be on rise.
And if we ever get public healthcare (now my understanding may be wrong regarding its effect on our salaries) but from the people i spoke they told me that if we get public healthcare then our salaries will be severely compromised. Say if we earn 20-30% less than what we earn now. how are we suppose to pay our debts. That never shows up in any debate. what abt the huge student loans we carry? how should we manage?
And if we ever get public healthcare (now my understanding may be wrong regarding its effect on our salaries) but from the people i spoke they told me that if we get public healthcare then our salaries will be severely compromised. Say if we earn 20-30% less than what we earn now. how are we suppose to pay our debts. That never shows up in any debate. what abt the huge student loans we carry? how should we manage?
If we get true healthcare reform (doubt it) your income may drop but so will overhead. It will be a wash. In addition the increased people (35 million) with insurance will be up for grabs. I believe student loans are a bubble ready to pop. Truck driver schools, medical assisting, air conditioning repair etc. charge huge tuitions rarely place students and are loan approved. Salaries are at an all time high for our residency graduates. This is the result of 30 years of work to mainstream the profession and acceptance.
Having said that here is a funny story: This week, I performed 4 major reconstructions after doing my own H&Ps. An orthopod who referred one observed and complimented me in front of the staff. Another orthopod who was performing his first MPJ arthrodesis sought out my advice and had a resident assist. As vice chair of the department of surgery, I had to review a case and then spank a general surgeon for substandard care. 25 years ago I couldn't have parked in the doctors lot. So I am feeling pretty cocky and go to lunch where another orthopod tells me about a ankle fusion patient he is sending me. Just as I take a bite a Physiatrist sits down and asks me why our residents do not carry Dremel tools since it is basic equipment for Podiatrists. I explain to him that although DPMs do provide nail care that my practice has only a handful of these type of patients. He then said oh so you probably make most of your income from shoes. I smiled ego in check and said yes.
Love Podiatry it always makes me smile
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Podfather,
I find your post ironic. In my area, I can not break through the orthopedic "problem". There are a plethora of orthopedic foot & ankle surgeons, and that's where all the general orthopods send the foot & ankle cases. Sending anything other than wounds or palliative care to a DPM is highly unusual.
On the other hand, my second largest referral source is the head of physical medicine/rehabilitation at a major university teaching hospital. As a physiatrist, he sends me some very unique pathology and often sends me family members of staff physicians. I just treated a cardiologist's wife who had been misdiagnosed by some well known docs. The problem is/was they all listened to the patient's symptoms, but none ever actually placed their hands on the patient to palpate, etc. So they all missed the true pathology.
But it's ironic that I can't get orthopedic referrals, but get significant referrrals for major pathology from a physiatrist, and your experience has basically been the opposite.
As far as the original topic in this thread, the internist really should have been able to make payments prior to getting that deep in the hole, but as NatCH pointed out, sometimes there are extenuating circumstances.
You don't always have to be irresponsible to run into financial problems. Unplanned events can and do occur, and some people simply don't plan ahead well financially, and simply aren't prepared.
Even when you think you're prepared, there are events that take place such as stock market crashes, poor investments, home repairs, new equipment needs (such as NatCh mentioned), etc.
Time creeps up on you quickly. You pay your school loans, purchase a nice home, cars, some purchase a vacation home, and before you know it your kids are ready for college. I'm presently shelling out about $50,000 a year for each of my kids, less some $$ that my son received for soccer. But any money he got for Div I soccer is basically tossed aside for the expenses incurred to send him to study abroad.
There are certainly advantages to making a decent income, but then you don't qualify for financial aid for college for your kids.
So I recommend that all the young grads that are starting out with great salaries please don't run out and purchase BMW's, etc. Be smart, get a good accountant and don't try to impress your friends. Be financially responsible for yourself and your future family. You don't have to be frugal, just be smart and responsible, it's a lot better than trying to play "catch up" later on.
I find your post ironic. In my area, I can not break through the orthopedic "problem". There are a plethora of orthopedic foot & ankle surgeons, and that's where all the general orthopods send the foot & ankle cases. Sending anything other than wounds or palliative care to a DPM is highly unusual.
On the other hand, my second largest referral source is the head of physical medicine/rehabilitation at a major university teaching hospital. As a physiatrist, he sends me some very unique pathology and often sends me family members of staff physicians. I just treated a cardiologist's wife who had been misdiagnosed by some well known docs. The problem is/was they all listened to the patient's symptoms, but none ever actually placed their hands on the patient to palpate, etc. So they all missed the true pathology.
But it's ironic that I can't get orthopedic referrals, but get significant referrrals for major pathology from a physiatrist, and your experience has basically been the opposite.
As far as the original topic in this thread, the internist really should have been able to make payments prior to getting that deep in the hole, but as NatCH pointed out, sometimes there are extenuating circumstances.
You don't always have to be irresponsible to run into financial problems. Unplanned events can and do occur, and some people simply don't plan ahead well financially, and simply aren't prepared.
Even when you think you're prepared, there are events that take place such as stock market crashes, poor investments, home repairs, new equipment needs (such as NatCh mentioned), etc.
Time creeps up on you quickly. You pay your school loans, purchase a nice home, cars, some purchase a vacation home, and before you know it your kids are ready for college. I'm presently shelling out about $50,000 a year for each of my kids, less some $$ that my son received for soccer. But any money he got for Div I soccer is basically tossed aside for the expenses incurred to send him to study abroad.
There are certainly advantages to making a decent income, but then you don't qualify for financial aid for college for your kids.
So I recommend that all the young grads that are starting out with great salaries please don't run out and purchase BMW's, etc. Be smart, get a good accountant and don't try to impress your friends. Be financially responsible for yourself and your future family. You don't have to be frugal, just be smart and responsible, it's a lot better than trying to play "catch up" later on.
W
whiskers
It's easy for 20 year old kids, who have never had a job in their lives, to blame the woman in the article for her misfortune.
But once they get out in residency and start working those long hours many times over the limit.... while making a paultry $40k a year.... incurring interest and fees constantly from the student loans and credit cards and car loans....
They will see how quickly they miss their payments and screw up. their own lives.
We will then see how well these hot shots do compared to her!
LMAO esp if they are making 70k for their 1st job and have a $1500-2000 dollar a month student loan payment... with only 500-700 bucks going towards the original loans and the rest towards interest!
Now that is funny stuff. good luck kids!
This woman is NOT alone and will have good company with some of you more than likely esp when you kids are not getting residency spots and no one can tell who those people will be!
But once they get out in residency and start working those long hours many times over the limit.... while making a paultry $40k a year.... incurring interest and fees constantly from the student loans and credit cards and car loans....
They will see how quickly they miss their payments and screw up. their own lives.
We will then see how well these hot shots do compared to her!
LMAO esp if they are making 70k for their 1st job and have a $1500-2000 dollar a month student loan payment... with only 500-700 bucks going towards the original loans and the rest towards interest!
Now that is funny stuff. good luck kids!
This woman is NOT alone and will have good company with some of you more than likely esp when you kids are not getting residency spots and no one can tell who those people will be!
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Just about any info you read about defaulters in most medical health professions (including allopathic and osteopathic medicine, dentistry, veterinary medicine, optometry, podiatry, pharmacy, chiropractic medicine, health administration, public health, allied health, and clinical psychology), paints the exact opposite picture from what this article and whiskers claim. Is it going to be a pain to repay up to $200k of student loans? Absolutely. But do 99% of health professionals repay their student loans without defaulting? Yes they do. The gal in the article is in a very extreme minority.
ie the Health Education Assistance loan saw over 157,000 borrowers (people with open accounts) in 2008 and only 1,065 defaulters...thats around a .006% default rate.
All in all I'm not worried too much about getting a residency (after seeing the competition during interviews and reading some of the posts on these forums), let alone being scared of student loans. They are not something to be taken lightly, but in the same respect a responsible individual entering podiatry shouldn't have any problems repaying them. And don't make claims about the effect the residency shortage will have on graduates UNTIL there is a year where there are ZERO unfilled programs (has yet to happen).
ie the Health Education Assistance loan saw over 157,000 borrowers (people with open accounts) in 2008 and only 1,065 defaulters...thats around a .006% default rate.
All in all I'm not worried too much about getting a residency (after seeing the competition during interviews and reading some of the posts on these forums), let alone being scared of student loans. They are not something to be taken lightly, but in the same respect a responsible individual entering podiatry shouldn't have any problems repaying them. And don't make claims about the effect the residency shortage will have on graduates UNTIL there is a year where there are ZERO unfilled programs (has yet to happen).
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You can say what you want about dtrack but his post is true. If we take the loans seriously we will be able to pay them off. Defaulters are definately the minority.
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His comments are un-becoming of a future health professional...plain and simple. It's a little premature to be claiming who is landing a residency spot and who isn't. We haven't even started school yet!
Do well in school, publish some research, get involved in your community and do YOUR PART of promoting this profession. Once you accomplish all of that then come back here talk about how wonderful you are.
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My post only spoke of my confidence in my ability to succeed in pod school and land a residency. If you don't feel the same way about your own education then why are you going into $200,000 of debt??
There is some part of you that knows you're going to be fine or you wouldn't have signed your life away. I chose to speak openly about that feeling, you did not. To each his own.
I was going to make a joke about whiskers' and my private therapy sessions and how insightful his psychoanalysis was...however, looking at the other thread he started I'm afraid you believe everything you read. You really thought he was just pre-psych and posted about podiatry since early 2006 for S&G's?
[Edit] I interviewed with some very solid candidates (Shireiqiang was one) who did well in undergrad and know exactly why they chose podiatry. My post did seem to bash on them a little reading it back this morning. My bad guys and gals
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When I initially read it didn't sound like you were putting in that kind of light.
Nah I was actually being sarcastic with whiskers. I know he is a troll and take nothing he says to heart.
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whiskers
studywithfury, you really make me laugh. now you are calling out dtrack for being unprofessional!
Funny stuff.
You will change the world and be most famous!
I am honored to be in the company of such undergrad nobility!
Funny stuff.
You will change the world and be most famous!
I am honored to be in the company of such undergrad nobility!
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I actually got a MS in Biological Science.
Thanks for the compliments though (I'm being sarcastic just in case anyone gets confused here)
Thanks for the compliments though (I'm being sarcastic just in case anyone gets confused here)
