Whats the quickest we can expect to pay back loans?

[gravitywave]

Why do you even want to pay these loans off!

Keep in mind that is is also important to start saving for retirement, buying a house and building up equity.

Spending half of your income so you can be debt free isn't always the best goal.

Currently if you do Income Based repayment for 25 years whatever is left over is just treated as taxable income and disappears (Thanks Obama)

So pay it off as slow as possible.

Also for 250K of debt your monthly payments during residency will be 350-400 dollars a month. Plus its time spent working for a non-profit.

Please consult a financial advisor. Quickly.

i don't see the problem with Disinence's remarks

the part about the debt 'disappearing' is a bit odd, since paying 33% on the taxable income that year would be a tad rough, but please enlighten us with what s/he could gain from meeting with an advisor.

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[slatermd]

Here is what a financial advisor will tell you: paying down debt that carries 7% interest is equivalent to making an investment that earns 7% interest.

Paying down your debt is, in a way, saving for your retirement. Anyone earn 7% on conventional retirement investments the past three years?

 

[gravitywave]

Here is what a financial advisor will tell you: paying down debt that carries 7% interest is equivalent to making an investment that earns 7% interest.

Paying down your debt is, in a way, saving for your retirement. Anyone earn 7% on conventional retirement investments the past three years?

it's not about the past three years, or any three year period for that matter. if i don't make better than 7% on my investments over the 25 years that i'm in repayment, then either i've invested incredibly poorly or the country has been seriously f****d for that entire length of time.

 

[MCAT guy]

Lol at the people trying to spend as little as possible on their food.

You can eat off the 99 cent menu and buy Ramen noodles or other cheap crap that is absolutely devoid of any nutritional content. Also, you will feel like crap because you are eating mac and cheese and salty cheap carbs.

Try buying good foods that aren't cheap, such as fruits, vegetables, nuts, healthy meats, etc.

Your body will thank you when you don't get cancer later. Last time I checked, Ramen noodles are pretty low in antioxidants and nutrients. And that 99 cent McDonalds burger isn't exactly the breakfast of champions.

You are saving a few hundred dollars a month to make your body feel lousy, have lower energy levels, and weaken your immune system. YEaaaaa for super-saver budgets!

 

[slatermd]

it's not about the past three years, or any three year period for that matter. if i don't make better than 7% on my investments over the 25 years that i'm in repayment, then either i've invested incredibly poorly or the country has been seriously f****d for that entire length of time.

I don't disagree with you. But considering how heinous the market has been, most people didn't average a 7% over the last 10 year period.

Great investors made a lot more than that, but not using conventional techniques. 7% was the market average leading up to this most recent collapse, so you can't expect to do much better than that using a typical "buy and hold" approach or attempting to "buy low, sell high." 7% is actually an incredible return if your efforts were that minimal.

Obviously, if you know how to trade options contracts or other derivatives, you can do much better than 7%. You can also lose your shirt, and it's a lot more complicated than sending a check to your loan servicer.

Paying down debt is the easiest, and only guaranteed way to earn 7% (or higher for credit cards). That is what a financial advisor would tell you. It is not always the best use of your money (ie should not be your only strategy for a 25 year period), but during a shorter stretch of terrible economics, when you don't have the time or knowledge to build and hedge a real portfolio, it is.

 

[MCAT guy]

Here is what a financial advisor will tell you: paying down debt that carries 7% interest is equivalent to making an investment that earns 7% interest.

Paying down your debt is, in a way, saving for your retirement. Anyone earn 7% on conventional retirement investments the past three years?

Not only this point, but also the fact that you are guaranteed to not pay 7%.

You will pay taxes on the capital gains for your investments that earn 7%, so you really have to earn more than 7% on those investments AND investment income isn't guaranteed. It's almost always better to just pay off debt. Think of it like this, if you owned a 500k home would you call a mortgage company and take a 400k 7% loan out to invest in the stock market?

Probably not. It would be dumb to put yourself in a 7% hole on the 400k, then need to outperform that 7% with the risks of the market and the taxes on your investment income.

 

[MCAT guy]

I don't disagree with you. But considering how heinous the market has been, most people didn't average a 7% over the last 10 year period.

Great investors made a lot more than that, but not using conventional techniques. 7% was the market average leading up to this most recent collapse, so you can't expect to do much better than that using a typical "buy and hold" approach or attempting to "buy low, sell high." 7% is actually an incredible return if your efforts were that minimal.

Obviously, if you know how to trade options contracts or other derivatives, you can do much better than 7%. You can also lose your shirt, and it's a lot more complicated than sending a check to your loan servicer.

Paying down debt is the easiest, and only guaranteed way to earn 7% (or higher for credit cards). That is what a financial advisor would tell you. It is not always the best use of your money (ie should not be your only strategy for a 25 year period), but during a shorter stretch of terrible economics, it is.

Exactly.

Basically, if you have the market savvy and trading ability to earn 20% + then you should just actually invest money for a living. If you are studying anatomy and biochem all day, you likely don't have a pulse on the market.

The safest choice is to pay off debt at 7%. Any intelligent financial planner would agree.

The only time I would hold off is the 10 year IBR, I would actually just pay the 15% or whatever and let the debt be forgiven.

 

[DrBowtie]

Not to mention heavily relying on the IBR/Loan repayment terms and conditions to stay the same for 25 years.

 

[90minIPA]

.

 

[gravitywave]

I don't disagree with you. But considering how heinous the market has been, most people didn't average a 7% over the last 10 year period.

Great investors made a lot more than that, but not using conventional techniques. 7% was the market average leading up to this most recent collapse, so you can't expect to do much better than that using a typical "buy and hold" approach or attempting to "buy low, sell high." 7% is actually an incredible return if your efforts were that minimal.

Obviously, if you know how to trade options contracts or other derivatives, you can do much better than 7%. You can also lose your shirt, and it's a lot more complicated than sending a check to your loan servicer.

Paying down debt is the easiest, and only guaranteed way to earn 7% (or higher for credit cards). That is what a financial advisor would tell you. It is not always the best use of your money (ie should not be your only strategy for a 25 year period), but during a shorter stretch of terrible economics, when you don't have the time or knowledge to build and hedge a real portfolio, it is.

yep, the safest, but likely not the best. that's like saying that the safest way to save for the future is buying US savings bonds. yep, safe, but you aren't going to be ready to retire when you want to.

it's not about the three years, or the seven. it's about the entire 25 year period of repayment. there has never been a 25 year period in history when the S&P 500 has failed to earn better than 7% average per annum over the entire time span. never. time is your friend when it comes to investments, and even a .25% advantage can add up to a lot over that length of time.

when you make the choice to make the smallest payments possible, you are taking advantage of that fact. the only way it doesn't work is if you aren't putting 100% of the difference into the market between what you are paying on the debt and what you would be paying if you were trying to pay it all back over ten years or less.

The safest choice is to pay off debt at 7%. Any intelligent financial planner would agree.

it's the safest, yes. but not the smartest. investments are about leveraging yourself properly. if you think about it, the entire project of going to medical school is a huge leverage experiment, financially speaking. you are going into the hole now so that you can have explosive financial advantage down the road that more than makes up for the initial investment. it's a risk, yes. we don't know what the compensation environment will look like for doctors 30 years from now. but it should pay off.

and don't get me started on real estate. that's huge leverage too, but you have to be a lot smarter about what you buy. the stock market is fire-and-forget, baby.

 

[gravitywave]

Not to mention heavily relying on the IBR/Loan repayment terms and conditions to stay the same for 25 years.

nope! the monthly difference between IBR payments and standard fixed payments once you're making attending-type figures is pretty negligible. so we're really only talking about the training years.

edit: and even when there is a difference, the NPV of pushing bigger payments out to the later years still makes increased leverage a better call under all but the most pessimistic of assumptions.

 

[slatermd]

it's not about the three years, or the seven. it's about the entire 25 year period of repayment. there has never been a 25 year period in history when the S&P 500 has failed to earn better than 7% average per annum over the entire time span. never. time is your friend when it comes to investments, and even a .25% advantage can add up to a lot over that length of time.

I was talking more about ease than safety. You can take your leverage argument one step further and say that if you know what you're doing, a 0.25% difference over 25 years isn't the smartest strategy. You can do a lot better than that if you're going to pay close enough attention. If there's a 3 or a 10 (or a whatever) year period during your repayment where an index like the S&P is performing below 7%, or whatever your interest rates are, sink more money into your debt. When the index performs higher than your loan interest rate, go back to the minimum payment and ride the market. You'll do better than a .25% difference this way. People who are paying enough attention to the market do reasonably well by selling off at the start of downturns and holding cash in a money market. Instead of the 1% you'd get from a money market, you could get 7% by paying on your debt during these periods. The trick is having the time and energy to monitor all of this.

In terms of ease and peace of mind, the "best" strategy is to pay down loans quickly.

A fiscally better, but riskier and more difficult strategy is yours: pay the minimum on loans, invest the difference, and compound 0.25% over 25 years.

The best and most difficult strategy is to leverage the **** out of your income and your debt. Hardly anybody will do this because they don't have the stomach for the middle strategy of paying the minimum and riding an index. Not to mention:

..when you make the choice to make the smallest payments possible, you are taking advantage of that fact. the only way it doesn't work is if you aren't putting 100% of the difference into the market between what you are paying on the debt and what you would be paying if you were trying to pay it all back over ten years or less.

Hardly anybody is going to put 100% of the difference into investments. So the only way that strategy doesn't work is also the most common way it plays out. The people on these boards are dying to use some of that money for boats and hoez, not for an index fund. You are right, but that theoretical rubber doesn't meet the road very often.

investments are about leveraging yourself properly. if you think about it, the entire project of going to medical school is a huge leverage experiment, financially speaking.

Agree. This makes it more fun.

and don't get me started on real estate. that's huge leverage too, but you have to be a lot smarter about what you buy. the stock market is fire-and-forget, baby.

Real estate = business more srs than the internet.

 

[MCAT guy]

yep, the safest, but likely not the best. that's like saying that the safest way to save for the future is buying US savings bonds. yep, safe, but you aren't going to be ready to retire when you want to.

it's not about the three years, or the seven. it's about the entire 25 year period of repayment. there has never been a 25 year period in history when the S&P 500 has failed to earn better than 7% average per annum over the entire time span. never. time is your friend when it comes to investments, and even a .25% advantage can add up to a lot over that length of time.

when you make the choice to make the smallest payments possible, you are taking advantage of that fact. the only way it doesn't work is if you aren't putting 100% of the difference into the market between what you are paying on the debt and what you would be paying if you were trying to pay it all back over ten years or less.



it's the safest, yes. but not the smartest. investments are about leveraging yourself properly. if you think about it, the entire project of going to medical school is a huge leverage experiment, financially speaking. you are going into the hole now so that you can have explosive financial advantage down the road that more than makes up for the initial investment. it's a risk, yes. we don't know what the compensation environment will look like for doctors 30 years from now. but it should pay off.

and don't get me started on real estate. that's huge leverage too, but you have to be a lot smarter about what you buy. the stock market is fire-and-forget, baby.

You have said it is the safest, but not the smartest. I guess it depends on your definition of smart. The savings bond analogy is far from analogous to this situation, IMO.

What are we talking here? Let's say 10-15% return, I think that is fair? Let's now factor in the fact there is a capital gains tax, let's use 20%. So right off the back we are losing 20% of the 10-15% return. That nets us about 8-12%. Ok, and we are paying 7% on the money in interest.

We are now looking at, conservatively, a 1-5% gain on what? 200k or so? Over 10 years on a 200k loan you pay a minimum of $2,300 a month. You will pay 76k in interest over this time.

Let's say you had the chance to hold off these payments and do a 20 year repayment, dropping payments to only $1500. You are now allowing yourself to invest the difference of $800 a month. Investing this money for the 10 year period will give you around 100k at 1% gain (which again, we needed to hit 10% return to receive) or 126k at 5% gain (which would be 15% return on investment). You have just gamed the system to earn 25-50k over 10 years.

Now, I know you're thinking, "that's an extra $2,500-$5,000 per year." But I would argue, for the amount of risk and stress, it isn't worth my time.

In a career where we can earn 250-500k per year, I'm not going to wheel and deal for an extra 2-5k a year. And that is assuming a 10-15% return, which is by no means guaranteed.

 

[gravitywave]

I was talking more about ease than safety. You can take your leverage argument one step further and say that if you know what you're doing, a 0.25% difference over 25 years isn't the smartest strategy. You can do a lot better than that if you're going to pay close enough attention. If there's a 3 or a 10 (or a whatever) year period during your repayment where an index like the S&P is performing below 7%, or whatever your interest rates are, sink more money into your debt. When the index performs higher than your loan interest rate, go back to the minimum payment and ride the market. You'll do better than a .25% difference this way. People who are paying enough attention to the market do reasonably well by selling off at the start of downturns and holding cash in a money market. Instead of the 1% you'd get from a money market, you could get 7% by paying on your debt during these periods. The trick is having the time and energy to monitor all of this.

you're talking about being able to "time the market," which is pretty much impossible. the big cats who run the mutual funds would like everyone to think that they and they alone can do it, but the truth is that they stink at it. this is because no one can predict the future. otherwise, hindsight is 20/20. the best, easiest, smartest strategy is get into the market and then forget about it. people who try to time the market usually miss out on the biggest rallies, a fact that has been scientifically proven time and again

In terms of ease and peace of mind, the "best" strategy is to pay down loans quickly.

A fiscally better, but riskier and more difficult strategy is yours: pay the minimum on loans, invest the difference, and compound 0.25% over 25 years.

The best and most difficult strategy is to leverage the **** out of your income and your debt. Hardly anybody will do this because they don't have the stomach for the middle strategy of paying the minimum and riding an index.

i think this is the crux of where we disagree. i maintain that the best strategy is leverage as i've described, which really doesn't require following the market that much at all. i'm not sure i understand your last paragraph here, but i think that what i'm talking about, at least at its core, is paying the minimum and riding an index. all the data we have suggests that i should win after 25 years, and that i've done it without very much effort at all.

but, as you say, it really comes down to what people are comfortable with. and if you're not going for what i'm pitching here, it's pretty unlikely that i'll be able to convince you. you seem to understand the tradeoffs pretty well.

Hardly anybody is going to put 100% of the difference into investments. So the only way that strategy doesn't work is also the most common way it plays out. The people on these boards are dying to use some of that money for boats and hoez, not for an index fund. You are right, but that theoretical rubber doesn't meet the road very often.

all it takes is a modicum of financial discipline. if someone can't do as i've described, simply using an automatic withdrawal to savings every month and treating it like any other bill, then no! - what i'm talking about isn't going to work out very well.

 

[MCAT guy]

In terms of ease and peace of mind, the "best" strategy is to pay down loans quickly.

I agree 100% with this. And I think you can use your mind in better ways to gain the small amounts of $ we are talking about.

Hardly anybody is going to put 100% of the difference into investments. So the only way that strategy doesn't work is also the most common way it plays out. The people on these boards are dying to use some of that money for boats and hoez, not for an index fund. You are right, but that theoretical rubber doesn't meet the road very often.

This is an excellent point. The same person trying to leverage their $ is typically the person who wants to also enjoy all the finer things that life has to offer.

Reality plays out much differently than they 20 year plan that a person sets up as an M4.

 

[MCAT guy]

you're talking about being able to "time the market," which is pretty much impossible. the big cats who run the mutual funds would like everyone to think that they and they alone can do it, but the truth is that they stink at it. this is because no one can predict the future. otherwise, hindsight is 20/20. the best, easiest, smartest strategy is get into the market and then forget about it. people who try to time the market usually miss out on the biggest rallies, a fact that has been scientifically proven time and again



i think this is the crux of where we disagree. i maintain that the best strategy is leverage as i've described, which really doesn't require following the market that much at all. i'm not sure i understand your last paragraph here, but i think that what i'm talking about, at least at its core, is paying the minimum and riding an index. all the data we have suggests that i should win after 25 years, and that i've done it without very much effort at all.

but, as you say, it really comes down to what people are comfortable with. and if you're not going for what i'm pitching here, it's pretty unlikely that i'll be able to convince you. you seem to understand the tradeoffs pretty well.



all it takes is a modicum of financial discipline. if someone can't do as i've described, simply using an automatic withdrawal to savings every month and treating it like any other bill, then no! - what i'm talking about isn't going to work out very well.

Basically, I don't care enough about a few extra thousand dollars a year to hold an extra student loan for 10 years.

One of the nice parts about being able to earn over 200k per year is that I don't have to try too hard. My plan, pay off loan in 10 years.

Simple, low stress, low risk. And, I would add, smart.

 

[mvenus929]

Just because something is possible doesn't mean it's realistic or enjoyable. My food bill (with fairly infrequent dining out) is usually $500/month for my wife, son and I. According to Mint, we spent $6000 in the past year: $4100 on groceries alone.

It's all about preferences, and location. I love to cook, so buying flour and eggs and milk to make my own bread and stuff is enjoyable to me. Someone who doesn't have as much time (or doesn't have it as a priority) might choose to buy food that is more easily prepared. So I eat very well on relatively little. Granted, in my budget, I have $200/month set aside for food for myself, but even with eating out once a week, I rarely hit that mark.

Someone who lives in a place with a higher cost of living than myself will probably spend more on food than I do, even if we buy the same things. But it's not impossible to have a smaller food budget and still eat well, it's just about how you do it. That's all I'm saying.

Lol at the people trying to spend as little as possible on their food.

You can eat off the 99 cent menu and buy Ramen noodles or other cheap crap that is absolutely devoid of any nutritional content. Also, you will feel like crap because you are eating mac and cheese and salty cheap carbs.

Try buying good foods that aren't cheap, such as fruits, vegetables, nuts, healthy meats, etc.

Your body will thank you when you don't get cancer later. Last time I checked, Ramen noodles are pretty low in antioxidants and nutrients. And that 99 cent McDonalds burger isn't exactly the breakfast of champions.

You are saving a few hundred dollars a month to make your body feel lousy, have lower energy levels, and weaken your immune system. YEaaaaa for super-saver budgets!

This is the attitude I'm trying to combat. Just because someone doesn't spend $500/month on food doesn't mean that they are living on ramen and the dollar menu at McDonald's (I, in fact, very rarely eat fast food, and never eat at McDonald's).

For dinner this week, I had stuffed green peppers (veggie style, with brown rice, green peppers, zucchini, and tomatoes), black bean burritos (homemade), southwest salad, and pasta.

I have the stuff to make breakfast burritos, chicken tortilla soup, chili, tacos, and a chicken and rice casserole. I have frozen burritos (homemade), pizza (homemade), and veggie burgers (homemade) in my freezer if I get bored with the other stuff. Once again, I spent about $85 this past week, including non-food items I picked up at the store (batteries, etc), and have enough food to feed myself, at least, for the rest of the month.

Bringing down your food bill does take a little effort; you have to know when something on sale is actually a good deal and when it's not, and buy in bulk. I also can't cook for a single person (I'm used to cooking for a family, and now I'm by myself, which means lots of leftovers), which certainly helps my own budget. I did a mass cooking on Sunday, where I cooked all my meat and froze it in individual packages, and made several ready-to-eat meals (including my burritos). I realize this time investment may not be for everyone, and that's fine, but saying that I'm not eating well because I don't spend huge amounts of money on groceries isn't accurate either.

 

[gravitywave]

You have said it is the safest, but not the smartest. I guess it depends on your definition of smart. The savings bond analogy is far from analogous to this situation, IMO.

What are we talking here? Let's say 10-15% return, I think that is fair? Let's now factor in the fact there is a capital gains tax, let's use 20%. So right off the back we are losing 20% of the 10-15% return. That nets us about 8-12%. Ok, and we are paying 7% on the money in interest.

We are now looking at, conservatively, a 1-5% gain on what? 200k or so? Over 10 years on a 200k loan you pay a minimum of $2,300 a month. You will pay 76k in interest over this time.

Let's say you had the chance to hold off these payments and do a 20 year repayment, dropping payments to only $1500. You are now allowing yourself to invest the difference of $800 a month. Investing this money for the 10 year period will give you around 100k at 1% gain (which again, we needed to hit 10% return to receive) or 126k at 5% gain (which would be 15% return on investment). You have just gamed the system to earn 25-50k over 10 years.

Now, I know you're thinking, "that's an extra $2,500-$5,000 per year." But I would argue, for the amount of risk and stress, it isn't worth my time.

In a career where we can earn 250-500k per year, I'm not going to wheel and deal for an extra 2-5k a year. And that is assuming a 10-15% return, which is by no means guaranteed.

multiple lousy assumptions here, but i'll keep it to the 'greatest hits':

1) capital gains is only assessed when you sell. if you buy and hold, then you get the total return from however long you've held the asset and the tax is only assessed once. so, i'm not losing 20% of my return annually, i'm only losing it when i liquidate in retirement. the difference is huge over time. further, i just went ahead and assumed that i'd be maxing out my tax-advantaged accounts first (IRA, 403b, etc), for which capital gains has limited or even no impact at all.

2) your example ignores completely the concept of net present value, which basically means that if i owe you $100, i would much rather pay you the money 25 years from now, than give it to you today. deferring interest payments into the future means i get to use my money to earn a higher rate right now, and then pay back a principal that even with compounded interest will in the future be worth a lot less than it is right now.

its worth a lot more than 2-5k a year. run the numbers yourself, or just trust me

 

[MCAT guy]

multiple lousy assumptions here, but i'll keep it to the 'greatest hits':

1) capital gains is only assessed when you sell. if you buy and hold, then you get the total return from however long you've held the asset and the tax is only assessed once. so, i'm not losing 20% of my return annually, i'm only losing it when i liquidate in retirement. the difference is huge over time. further, i just went ahead and assumed that i'd be maxing out my tax-advantaged accounts first (IRA, 403b, etc), for which capital gains has limited or even no impact at all.

2) your example ignores completely the concept of net present value, which basically means that if i owe you $100, i would much rather pay you the money 25 years from now, than give it to you today. deferring interest payments into the future means i get to use my money to earn a higher rate right now, and then pay back a principal that even with compounded interest will in the future be worth a lot less than it is right now.

its worth a lot more than 2-5k a year. run the numbers yourself, or just trust me

I'd like you to run the #'s because I still think we aren't talking about that much $ here. I'm talking about a 10 year period of time here, not 25 years. Because a person could do much better and more aggressive investing than a 10% return in the market after their 10 years of loans are paid off.

The 20% CGT is still very relevant even though it's not taxed every year. Also, IRA max is what? 5k a year? I think we will all be able to put that type of money in on an attending's salary. So I wouldn't write off the CGT.

Even if you were to come up with 100k difference in 10 years... that would not be enough in my book. I'd rather be debt free after 10 years, than owe 100k @ 7% and have made 0-10k extra a year (0 would be a 7% return, which is very possible).

There are much easier ways to earn an extra 10k a year. Again, dealing with salaries of 200-500k depending on your specialty, I would need to see some decent (great than 2-5% increase) income to do this.

Also, your scenario assumes everything in the economy is great. What happens if there is deflation and the principal you pay back is worth much more than your current $$?

The stress and risk isn't worth it in my book. The US Economy is a grand machine, but we have so much debt right now that I'd avoid statements like, "you're guaranteed 10-15% return in the stock market." Especially people spending 90% of their time on medicine.

 

[slatermd]

you're talking about being able to "time the market," which is pretty much impossible.

Actually, I'm not. I don't agree with timing the market. I do agree with liquefying assets that are over-valued and have already started to plummet.

i think this is the crux of where we disagree. i maintain that the best strategy is leverage as i've described, which really doesn't require following the market that much at all. i'm not sure i understand your last paragraph here, but i think that what i'm talking about, at least at its core, is paying the minimum and riding an index. all the data we have suggests that i should win after 25 years, and that i've done it without very much effort at all.

We don't actually disagree. Your strategy is the best middle of the road option. While it doesn't require much effort, most people would find it considerably more daunting than paying down their loans.

I like your approach, I just wouldn't recommend it to everybody. For me personally, one modification I would make depends on whether the market outperforms your loan interest over the first 10 - 12 years you're in repayment. If it does that might be a good time to pull out, obliterate the rest of your loans, and start handicapping some higher paying horses. If the market hasn't outperformed your interest over the first 10 years, you can leave your original plan in place for the remaining 15. I personally wouldn't "fire and forget" for 25 years because who knows what opportunities will present themselves half way through.

The foundation is still the same: put your money to work.

 

[45408]

I want that purple stuff.

 

[slatermd]

I'm really glad this discussion came full circle.

 

[HawaiiHereICome]

I don't understand why people think that you can't eat on $100/month for two people. Yes, it means no eating out, but I spent about $85 on food and other supplies last week and I have enough to easily feed myself, and most likely another person, well for the next month. It's a fair amount of monotony, but it's not ramen and cereal, either.

If you eat healthy food you can't! Healthy food is expensive. I never eat out. My diet consists primarily of Chicken Breast, Oatmeal, Whey Protein, Eggs, bean sprouts, cucumbers, brown rice, sweet potatoes, cottage cheese, and carrots [bodybuilders diet]. I spend between $85-100 per week while cutting!!! This means I'm eating much less than I normally do.

 

[HawaiiHereICome]

Lately, I have been thinking about debt a lot, and it has been really scary.

Say I live like a resident for 5 years after completing residency, would it be possible to pay back all of my loans by this time?

Is this reasonable, or done often?

If you finish residency by age by age 30-32, you would have to live like a resident until age 35-37!?!?!?!?! NOOOO!!!! NOOO NOOO NOOOO!


[YOUTUBE]http://www.youtube.com/watch?v=Tim5nU3DwIE[/YOUTUBE]

 

[mvenus929]

If you eat healthy food you can't! Healthy food is expensive. I never eat out. My diet consists primarily of Chicken Breast, Oatmeal, Whey Protein, Eggs, bean sprouts, cucumbers, brown rice, sweet potatoes, cottage cheese, and carrots [bodybuilders diet]. I spend between $85-100 per week while cutting!!! This means I'm eating much less than I normally do.

You can eat healthy food on a budget, as I demonstrated above. I get plenty of fruits and vegetables in my diet. But I don't buy most of them fresh; I settle for frozen or canned (and rinse most of my canned stuff to cut down on the salt). I eat whole grains. I eat lean meats. I eat a bunch of fish. It's not the cream of the crop (and certainly isn't organic or whatever), but it is healthy. Probably healthier than a lot of people who spend much more on groceries each month.

If I was more restrictive as to what I eat (as you are), I would probably spend much more as well. If I kept kosher, I'd spend an arm and a leg on meat. If I was all about being organic, I'd spend more. If I wasn't willing to cook as much, I'd spend more. Heck, if I was a resident, who simply didn't have time to cook, I'd most likely spend more. If I was feeding more people, I'd probably spend more.

But just because I have a small food budget does not mean I'm not eating healthy. That is my point. I don't rag on people because they spend 2-5 times as much as I do on food, as everyone has different circumstances and is willing to make different compromises. So I don't understand why people automatically assume that I must be living on ramen and McDonald's with my budget.

 

[argentrans37]

I don't understand why people think that you can't eat on $100/month for two people. Yes, it means no eating out, but I spent about $85 on food and other supplies last week and I have enough to easily feed myself, and most likely another person, well for the next month. It's a fair amount of monotony, but it's not ramen and cereal, either.

I love how these "ultra-frugal" people only exist on the internet. $100/month for 2 = $50/person/month. That's $1.67 a day. That means a $0.50 breakfast, $0.50 lunch, and $0.67 dinner. This also assumes that you never eat a snack, a dessert, and are never stuck away from home with the need to eat (one item off the dollar menu wrecks your whole day's budget).

And please, spare us the "I don't need to eat at nice restaurants" bit. Fact of the matter is, you have family members visit, meetings with colleagues, a schedule that doesn't allow for home-cooked meals, anniversary dinners with significant other, etc., that have all but made an occasional restaurant meal a necessity in our society.

I suppose it is possible to eat for two on $100 a month, but it is also extremely impractical. Most of you doctors/med students are working 60+ hour weeks, and spending two hours per meal trying to make beans and rice taste decent just is not realistic with that schedule.

Honestly, this whole frugality contest that always pops up in message boards does not impress anyone. Saying you can live on <$600-800 per month does nothing except prove that you are still being financially supported by a parent. Gas, car insurance (>$50), rent (>$350), utilities (>$75), food (>$100), clothes, phone/internet (>$50), and necessary various expenditures (cleaning supplies, printer paper/ink, new tires for the car, etc. etc. etc.) make living on less than $1,000/monthly all but impossible.

 

[TornadoChaser]

I love how these "ultra-frugal" people only exist on the internet. $100/month for 2 = $50/person/month. That's $1.67 a day. That means a $0.50 breakfast, $0.50 lunch, and $0.67 dinner. This also assumes that you never eat a snack, a dessert, and are never stuck away from home with the need to eat (one item off the dollar menu wrecks your whole day's budget).

And please, spare us the "I don't need to eat at nice restaurants" bit. Fact of the matter is, you have family members visit, meetings with colleagues, a schedule that doesn't allow for home-cooked meals, anniversary dinners with significant other, etc., that have all but made an occasional restaurant meal a necessity in our society.

I suppose it is possible to eat for two on $100 a month, but it is also extremely impractical. Most of you doctors/med students are working 60+ hour weeks, and spending two hours per meal trying to make beans and rice taste decent just is not realistic with that schedule.

Honestly, this whole frugality contest that always pops up in message boards does not impress anyone. Saying you can live on <$600-800 per month does nothing except prove that you are still being financially supported by a parent. Gas, car insurance (>$50), rent (>$350), utilities (>$75), food (>$100), clothes, phone/internet (>$50), and necessary various expenditures (cleaning supplies, printer paper/ink, new tires for the car, etc. etc. etc.) make living on less than $1,000/monthly all but impossible.

I think the Wal-Mart mac & cheese is 50 cents a box. Though it may have gone up with higher gas prices. And you couldn't use milk or butter, you'd just have to add water.

I think it's best not to think about the debt. The best you can hope for is crazy inflation while you're a resident. Your debt will stay the same, but your starting salary will skyrocket!

 

[SoyRicoSuave]

I could see how paying off your loans quickly is a good idea. But if you decide you want to have a life: i.e. house, car, ect. then focusing your payments on student loans doesnt make sense. My dad paid a decent amount of his loans off till he bought a house at age 32ish? then he focused on house payments due to their higher interest rates and paid off his student loans slowly

 

[DrBowtie]

I could see how paying off your loans quickly is a good idea. But if you decide you want to have a life: i.e. house, car, ect. then focusing your payments on student loans doesnt make sense. My dad paid a decent amount of his loans off till he bought a house at age 32ish? then he focused on house payments due to their higher interest rates and paid off his student loans slowly

Most mortgages are less than 6.8%

 

[link2swim06]

Where do you live for only $350/month with no utilities?

My rent is $315 including water. The apartment is nice, less than 10 years old and has alot of extras.

I do live in South Carolina, but even when I lived in Ohio my rent was only $250 per month (no utilities included though)

 

[MCAT guy]

Most mortgages are less than 6.8%

only in the last decade really. Before that, you could and likely would be paying above 6.8%.

 

[DrBowtie]

only in the last decade really. Before that, you could and likely would be paying above 6.8%.

I just assumed almost everyone refied during that time.

 

[SoyRicoSuave]

My rent is $315 including water. The apartment is nice, less than 10 years old and has alot of extras.

I do live in South Carolina, but even when I lived in Ohio my rent was only $250 per month (no utilities included though)

Wish the same could be said for SoCal... But by god do I love the beach...

 

[45408]

I love how these "ultra-frugal" people only exist on the internet. $100/month for 2 = $50/person/month. That's $1.67 a day. That means a $0.50 breakfast, $0.50 lunch, and $0.67 dinner. This also assumes that you never eat a snack, a dessert, and are never stuck away from home with the need to eat (one item off the dollar menu wrecks your whole day's budget).

And please, spare us the "I don't need to eat at nice restaurants" bit. Fact of the matter is, you have family members visit, meetings with colleagues, a schedule that doesn't allow for home-cooked meals, anniversary dinners with significant other, etc., that have all but made an occasional restaurant meal a necessity in our society.

I suppose it is possible to eat for two on $100 a month, but it is also extremely impractical. Most of you doctors/med students are working 60+ hour weeks, and spending two hours per meal trying to make beans and rice taste decent just is not realistic with that schedule.

Welcome to SDN. These threads pop up all the time, and I have to tell the parentally-dependent posters how much they're still getting, even when they don't realize it.

Honestly, this whole frugality contest that always pops up in message boards does not impress anyone. Saying you can live on <$600-800 per month does nothing except prove that you are still being financially supported by a parent. Gas, car insurance (>$50), rent (>$350), utilities (>$75), food (>$100), clothes, phone/internet (>$50), and necessary various expenditures (cleaning supplies, printer paper/ink, new tires for the car, etc. etc. etc.) make living on less than $1,000/monthly all but impossible.

Health insurance, renter's insurance, buying your first computer, the occasional social event...

Not to mention all the things like application/interview expenses, textbook purchases, or other major life events like buying your first car, an engagement ring, a wedding....

The problem is that people usually confuse what you can do and what you will do.

 

[MCAT guy]

I just assumed almost everyone refied during that time.

You'd be surprised.

 

[45408]

My rent is $315 including water. The apartment is nice, less than 10 years old and has alot of extras.

I do live in South Carolina, but even when I lived in Ohio my rent was only $250 per month (no utilities included though)

Is that a studio? In Milwaukee, the cheapest apartments were in the $500-600 range and usually included nothing more than water. No laundry, no cable/Internet, maybe some parking, and certainly no luxury amenities. The gas/electric are the expensive utilities anyways. My water+sewer for a house is just over $20/month for three people.

 

[slatermd]

I just assumed almost everyone refied during that time.

I'm at 5.5 and if I had a little more equity (and wasn't sinking cash into schooling) I would've refied to sub 5.

A lot of people who got in 5 - 10 years ago can't refi because their loan-to-value ratio got effed in the downturn; they're upside down on their mortgages even though they put 20% down and have been paying for a decade. Sucks.

 

[RFHawks]

Does anyone know if payments on interest for student loans are deductible like on a mortgage? I was just reading an article about tax brackets and how if you are in a higher tax bracket it actually hurts you somewhat to pay off your mortgage early because of the deductions you would lose.

 

[TornadoChaser]

Does anyone know if payments on interest for student loans are deductible like on a mortgage? I was just reading an article about tax brackets and how if you are in a higher tax bracket it actually hurts you somewhat to pay off your mortgage early because of the deductions you would lose.

I believe they are, but I'm not 100% sure. As for your last sentence, that would only make sense for an investment property, not your primary residence. You'd still pay more than you'd save from your deduction, not to mention all of that interest piling up over the years.

 

[slatermd]

Does anyone know if payments on interest for student loans are deductible like on a mortgage? I was just reading an article about tax brackets and how if you are in a higher tax bracket it actually hurts you somewhat to pay off your mortgage early because of the deductions you would lose.

They are...there's actually a big discussion about it on the first page of this thread where I put my foot in my mouth.

You can deduct up to $2500 in student loan interest each year, but it's phased out if your income is over $60K (single) or $120K (married filing jointly)

 

[TheUPSIDEdown]

$350 for rent?!?!? Holy cow, where do you live? I live in a sh*thole right now and am paying $800. When we move closer to the school we will be paying ~1800.

That's unfortunate. My duplex for next year is 280/br before utilities. (roughly 350)

3 person duplex 2 bathroom w/ 1 car garage.

University of Missouri - Columbia

 

[ninefivethree]

I'm about to start med school and my fiance is almost done with his 2nd year of med school. I'm looking forward to paying off debt for the rest of my life.