Yes!!! I am officially worthless!!!

[worthless]

Today is a great day. I accomplished a big goal that I set out for myself almost 10 years ago.

That's right: I became worthless. That is, my net assets are finally greater than my debt.

Some background:
1. Graduated from a state undergrad with no debt in 2006
2. Graduated from M.D. school with $160,000 debt in 2010 and started 5-yr residency
3. Married spouse (non-medical) with $90,000 debt in 2011

In residency, I've made between $50-$70k. My wife's pay has been between $30-$45k. We have maxed our ROTH IRAs, enrolled in IBR, and made additional loan payments on top of that. Our total loan balance at this point is around $140k with nothing above 5%.

I am posting to make the point that tackling this debt is very doable even on a limited budget. We are cognizant of every dollar we spend. We don't eat out, we drive cheap cars, and we have cheap hobbies (crafts and working out). We even have a pretty good-sized emergency fund.

Truthfully, I don't really feel like we've sacrificed a whole lot and I would be happy living this way for many more years. Our plan is to continue to live at our current standard for 2-3 after residency before we make any major financial moves (house, etc).

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[Catalystik]

Today is a great day. I accomplished a big goal that I set out for myself almost 10 years ago.

That's right: I became worthless. That is, my net assets are finally greater than my debt.

Some background:
1. Graduated from a state undergrad with no debt in 2006
2. Graduated from M.D. school with $160,000 debt in 2010 and started 5-yr residency
3. Married spouse (non-medical) with $90,000 debt in 2011

In residency, I've made between $50-$70k. My wife's pay has been between $30-$45k. We have maxed our ROTH IRAs, enrolled in IBR, and made additional loan payments on top of that. Our total loan balance at this point is around $140k with nothing above 5%.

I am posting to make the point that tackling this debt is very doable even on a limited budget. We are cognizant of every dollar we spend. We don't eat out, we drive cheap cars, and we have cheap hobbies (crafts and working out). We even have a pretty good-sized emergency fund.

Truthfully, I don't really feel like we've sacrificed a whole lot and I would be happy living this way for many more years. Our plan is to continue to live at our current standard for 2-3 after residency before we make any major financial moves (house, etc).

Congratulations!

 

[Xenoblade]

I dream of graduating with 160k of debt.

For me, tuition alone breaks 225k

 

[Gauss44]

Today is a great day. I accomplished a big goal that I set out for myself almost 10 years ago.

That's right: I became worthless. That is, my net assets are finally greater than my debt.

Some background:
1. Graduated from a state undergrad with no debt in 2006
2. Graduated from M.D. school with $160,000 debt in 2010 and started 5-yr residency
3. Married spouse (non-medical) with $90,000 debt in 2011

In residency, I've made between $50-$70k. My wife's pay has been between $30-$45k. We have maxed our ROTH IRAs, enrolled in IBR, and made additional loan payments on top of that. Our total loan balance at this point is around $140k with nothing above 5%.

I am posting to make the point that tackling this debt is very doable even on a limited budget. We are cognizant of every dollar we spend. We don't eat out, we drive cheap cars, and we have cheap hobbies (crafts and working out). We even have a pretty good-sized emergency fund.

Truthfully, I don't really feel like we've sacrificed a whole lot and I would be happy living this way for many more years. Our plan is to continue to live at our current standard for 2-3 after residency before we make any major financial moves (house, etc).

What areas of the USA offer residents $70k, with a cost of living that would allow one to pay down loans like you did? I know I cannot ask where you live, but I think this is a key factor in this discussion. (Instead, asking which areas allow for this, seems to me like an okay question.) As a resident, I assume that you were able to defer some loans as well, which would enable you to make larger payments?

 

[gyngyn]

Worthless, but full of value!

 

[Pacna]

I dream of graduating with 160k of debt.

For me, tuition alone breaks 225k

No joke. Undergrad alone is over $120k for me.

 

[Psai]

I'm wondering which state you are in since taxes vary widely. I'm also suspicious about the join date.

 

[worthless]

I dream of graduating with 160k of debt.

For me, tuition alone breaks 225k

Ahhh, but I married into $90k more without much additional earning potential

No regrets

 

[worthless]

What areas of the USA offer residents $70k, with a cost of living that would allow one to pay down loans like you did? I know I cannot ask where you live, but I think this is a key factor in this discussion. (Instead, asking which areas allow for this, seems to me like an okay question.) As a resident, I assume that you were able to defer some loans as well, which would enable you to make larger payments?

No, you can't but I'll tell you anyway: DC Metro. It's expensive.

The $70k includes additional non-clinical earnings (not moonlighting because we can't) such as buying and selling on eBay

We didn't defer any loans - just put them all into IBR and made additional payments on top of that

 

[worthless]

I'm wondering which state you are in since taxes vary widely. I'm also suspicious about the join date.

I'm a very well-known poster, but made a new account for the purposes of posting this. I don't want everyone else knowing my financial business. I have an online rep to protect

The taxes in my region are not enviable, but I've been able to get my AGI down using various means (retirement accounts, etc)

 

[Gauss44]

No, you can't but I'll tell you anyway: DC Metro. It's expensive.

The $70k includes additional non-clinical earnings (not moonlighting because we can't) such as buying and selling on eBay

We didn't defer any loans - just put them all into IBR and made additional payments on top of that

Thanks for responding. This is very helpful information.

Some people might still run into trouble though. Last time I checked, (federal student loan Income Based Repayment or IBR) IBR doesn't take private student loan payments into consideration. So, for example, if you have to pay $1000 a month to your private student loans, IBR will ignore that and make your IBR payment higher than what you can afford.

 

[worthless]

Thanks for responding. This is very helpful information.

Some people might still run into trouble though. Last time I checked, (federal student loan Income Based Repayment or IBR) IBR doesn't take private student loan payments into consideration. So, for example, if you have to pay $1000 a month to your private student loans, IBR will ignore that and make your IBR payment higher than what you can afford.

I only had one small private loan, which I whacked first.

There are numerous scenarios where this can't be done, but I approached this with a "can-do" attitude and things are going pretty well. I never dreamed I'd be at net-zero with a year of residency to go.

 

[orthos]

Congratulations! It only gets better from there

 

[Xenoblade]

I only had one small private loan, which I whacked first.

There are numerous scenarios where this can't be done, but I approached this with a "can-do" attitude and things are going pretty well. I never dreamed I'd be at net-zero with a year of residency to go.

This is inspiring. Thanks and congrats.

 

[TheWeeIceMan]

I'm jealous of those interest rates.

 

[sky1025]

Wow, Congratulations!

 

[worthless]

I'm jealous of those interest rates.

I attended during the worst rate period: when the majority of Stafford loans were at 6.8%. I paid all those higher interest rate loans off first (before I even built up much of an emergency fund). The interest savings (just in the last 4 years) from paying them off early is the equivalent of a year of my rent.

 

[DermViser]

Today is a great day. I accomplished a big goal that I set out for myself almost 10 years ago.

That's right: I became worthless. That is, my net assets are finally greater than my debt.

Some background:
1. Graduated from a state undergrad with no debt in 2006
2. Graduated from M.D. school with $160,000 debt in 2010 and started 5-yr residency
3. Married spouse (non-medical) with $90,000 debt in 2011

In residency, I've made between $50-$70k. My wife's pay has been between $30-$45k. We have maxed our ROTH IRAs, enrolled in IBR, and made additional loan payments on top of that. Our total loan balance at this point is around $140k with nothing above 5%.

I am posting to make the point that tackling this debt is very doable even on a limited budget. We are cognizant of every dollar we spend. We don't eat out, we drive cheap cars, and we have cheap hobbies (crafts and working out). We even have a pretty good-sized emergency fund.

Truthfully, I don't really feel like we've sacrificed a whole lot and I would be happy living this way for many more years. Our plan is to continue to live at our current standard for 2-3 after residency before we make any major financial moves (house, etc).

Wow only $160,000 in medical school debt? Must be nice.

 

[wanderer]

Congrats! Good job on eliminating the debt, but don't you think you could have splurged a little bit more on say a couple of vacations and taken only a couple of more years to eliminate your debt?
Also why do you think your number 1 priority was eliminating debt? Is it a personality thing to avoid excessive purchases, was the anxiety of debt killing you, or was this just a goal you set?
And as DermViser said, 160k in debt isn't too bad. Having less than 200k these days is tough for most people unless they go to a cheap in state school or are fortunate enough to get scholarship money.

 

[worthless]

Congrats! Good job on eliminating the debt, but don't you think you could have splurged a little bit more on say a couple of vacations and taken only a couple of more years to eliminate your debt?

We HAVE taken vacations! Just not to expensive/exotic locales which was simply because we didn't want to. We have tons of frequent flyer miles and could do so fairly cheaply if we chose. However, we generally just take a weekend off here and there and I've traveled for conferences about twice a year so we get our fix. We aren't expecially travel-minded in general.

I know that was just an example, but I want to point out that we are both very happy with our quality of life. I honestly couldn't think of a thing I wanted for Christmas last year.

Also why do you think your number 1 priority was eliminating debt? Is it a personality thing to avoid excessive purchases, was the anxiety of debt killing you, or was this just a goal you set?

Just to clarify: my goal was to reach net-zero, not necessarily to pay off my debt. Part of the reason I made it to zero was because of $10k from investments because of the recent bull market. I prioritized the 6.8% loans first (after 401k and ROTH), but I'll likely hang on to the 2.4%ers for quite a while.

This was a goal and personal challenge to myself. I wanted to learn to live lean and save money. Also, I REALLY, REALLY, REALLY hate Sallie Mae and wanted them off my back.

And as DermViser said, 160k in debt isn't too bad. Having less than 200k these days is tough for most people unless they go to a cheap in state school or are fortunate enough to get scholarship money.

Again, I think it's important to realize that I inherited another $90k through marriage and my spouse isn't making a ton and will likely make even less in the future.

 

[cookiemonsters]

So you paid off 160K (more after interest?) in four years? So why are people on SDN all doom and gloom about debt? Do people on this website exaggerate the burden of debt?

edit: So you made like 40-50K/year post taxes, correct? And you graduated almost 4 years ago. How did you pay off 160K+ after four years when you have other expenses on the side (retirement accounts, rent, groceries, etc)? Did you and your spouse do a courthouse marriage to save money? Are you getting income or financial assistance that you're not mentioning?

 

[Pacna]

So you paid off 160K (more after interest?) in four years? So why are people on SDN all doom and gloom about debt? Do people on this website exaggerate the burden of debt?

This person was financially responsible. Most med students don't have a clue about ROTH IRAs, etc.

 

[worthless]

edit: So you made like 40-50K/year post taxes, correct? And you graduated almost 4 years ago. How did you pay off 160K+ after four years when you have other expenses on the side (retirement accounts, rent, groceries, etc)? Did you and your spouse do a courthouse marriage to save money? Are you getting income or financial assistance that you're not mentioning?

No. Please read again (both the OP and the replies). I never said I paid off $160k. I also explained that I reduced taxes. My spouse has income as well.

Parents paid for the wedding.

 

[TheWeeIceMan]

I attended during the worst rate period: when the majority of Stafford loans were at 6.8%. I paid all those higher interest rate loans off first (before I even built up much of an emergency fund). The interest savings (just in the last 4 years) from paying them off early is the equivalent of a year of my rent.

Oh, gotcha.

Congrats on hitting that milestone.

 

[Xenoblade]

This person was financially responsible. Most med students don't have a clue about ROTH IRAs, etc.

So........you're saying I shouldn't buy a Porsche in med school?

What if I lease it?

 

[NorthernMav]

Today is a great day. I accomplished a big goal that I set out for myself almost 10 years ago.

That's right: I became worthless. That is, my net assets are finally greater than my debt.

Some background:
1. Graduated from a state undergrad with no debt in 2006
2. Graduated from M.D. school with $160,000 debt in 2010 and started 5-yr residency
3. Married spouse (non-medical) with $90,000 debt in 2011

In residency, I've made between $50-$70k. My wife's pay has been between $30-$45k. We have maxed our ROTH IRAs, enrolled in IBR, and made additional loan payments on top of that. Our total loan balance at this point is around $140k with nothing above 5%.

I am posting to make the point that tackling this debt is very doable even on a limited budget. We are cognizant of every dollar we spend. We don't eat out, we drive cheap cars, and we have cheap hobbies (crafts and working out). We even have a pretty good-sized emergency fund.

Truthfully, I don't really feel like we've sacrificed a whole lot and I would be happy living this way for many more years. Our plan is to continue to live at our current standard for 2-3 after residency before we make any major financial moves (house, etc).

Bro, I will have 400k (pre-interest) when I graduate medical school. haha. Your life sounds dreamy!

 

[worthless]

Bro, I will have 400k (pre-interest) when I graduate medical school. haha. Your life sounds dreamy!

Right, bro. And you can just throw up your hands and call it impossible like most do or you can start making financial plans and learning to live lean right now.

I'm willing to bet, for instance, that you could cut that $400k at least a bit with some smart planning (I've found the cost estimates on school websites to be grossly over-stated).

There are numerous situations where you won't be able to reach net-zero this fast, and this wasn't a one-size fits all because there are literally innumerable scenarios that students can find themselves in. However, you need to work with what you have. In comparison to those in med school 5-10 years before me, I have a nightmare scenario as well.

 

[NorthernMav]

Right, bro. And you can just throw up your hands and call it impossible like most do or you can start making financial plans and learning to live lean right now.

I'm willing to bet, for instance, that you could cut that $400k at least a bit with some smart planning (I've found the cost estimates on school websites to be grossly over-stated).

There are numerous situations where you won't be able to reach net-zero this fast, and this wasn't a one-size fits all because there are literally innumerable scenarios that students can find themselves in. However, you need to work with what you have. In comparison to those in med school 5-10 years before me, I have a nightmare scenario as well.

I agree, I do need to cut out major things in my budget. I mean, every time I buy a sandwich I look at it as if it is a $40 lunch haha. And I was just messing around with the "bro" comment; I am not that bad...

 

[Fabio Lanzoni]

We HAVE taken vacations! Just not to expensive/exotic locales which was simply because we didn't want to. We have tons of frequent flyer miles and could do so fairly cheaply if we chose. However, we generally just take a weekend off here and there and I've traveled for conferences about twice a year so we get our fix. We aren't expecially travel-minded in general.

I know that was just an example, but I want to point out that we are both very happy with our quality of life. I honestly couldn't think of a thing I wanted for Christmas last year.



Just to clarify: my goal was to reach net-zero, not necessarily to pay off my debt. Part of the reason I made it to zero was because of $10k from investments because of the recent bull market. I prioritized the 6.8% loans first (after 401k and ROTH), but I'll likely hang on to the 2.4%ers for quite a while.

This was a goal and personal challenge to myself. I wanted to learn to live lean and save money. Also, I REALLY, REALLY, REALLY hate Sallie Mae and wanted them off my back.



Again, I think it's important to realize that I inherited another $90k through marriage and my spouse isn't making a ton and will likely make even less in the future.

Awesome! Very exemplary for the rest of us going into the profession

 

[worthless]

This thread was so well-received that I thought I'd add a little update

We are now at +25k with about $128k total in loans remaining. I'm happy to report that I just signed a contract with a very generous salary in a low COL area so I should be able to kill the rest of these in 1-2 years, although I may string them out a bit longer since most of them are under 3% at this point.

Just to make you guys aware, some of the jobs that I interviewed for offered loan repayments of up to $200k. I didn't end up taking one of those, but they are out there.

 

[Lysinee]

I agree, I do need to cut out major things in my budget. I mean, every time I buy a sandwich I look at it as if it is a $40 lunch haha. And I was just messing around with the "bro" comment; I am not that bad...

I heard Subway is offering select 6 inch subs for $2.

$40 / $2.14 = about 18 lunches.
Assume 7% tax.

You can thank me later.

 

[jb94mg]

Just to make you guys aware, some of the jobs that I interviewed for offered loan repayments of up to $200k. I didn't end up taking one of those, but they are out there.

Outside of primary care?

 

[Lysinee]

Outside of primary care?

There was a thread in the EM forum where someone paid off his loans in 2 years and the job offered around 100k in loan repayment. I believe it was a rural job. Usually you have to sign a 2-3 year contract to get the money up front.

 

[pyrrion89]

Shameless plug of this book on how to max your financial future as a physician: http://www.amazon.com/The-White-Coat-Investor-Investing/dp/0991433106

Unsurprising spoiler: They suggest what the OP did!

 

[ftp902]

Just have a few questions.
Since what year did you start maxing out your Roth IRAs? and when did you start putting money into 401k? was that after your first resident year? Also what percent of your 160K loan had an interest of 6%+? why couldn't you get all your loans in less than 5% interest? Lastly I know, some of your interest is tax deductible.. is that true? I heard something like 50% of your interest from education loan is tax deductible or something haha.

I'm sure getting married helped a lot to cut taxes too. Great job!

 

[worthless]

Outside of primary care?

Yes, sir. I am not in primary care and had several offer me that.

 

[worthless]

Shameless plug of this book on how to max your financial future as a physician: http://www.amazon.com/The-White-Coat-Investor-Investing/dp/0991433106

Unsurprising spoiler: They suggest what the OP did!

Yep. I read it - and I followed his blog long before his book came out.

 

[worthless]

Since what year did you start maxing out your Roth IRAs?

I started at age 20

and when did you start putting money into 401k?

During internship

Also what percent of your 160K loan had an interest of 6%+?

About 1/3 initially

why couldn't you get all your loans in less than 5% interest?

I only took government-issued FFELP loans, so I was a slave to their rates.

Lastly I know, some of your interest is tax deductible.. is that true? I heard something like 50% of your interest from education loan is tax deductible or something haha.

Yes, interest on student loans in taxable to an extent, but this benefit is phased out pretty quickly once you make over $70k or so. Plus the cap is only around $2500 so not a huge benefit.

I'm sure getting married helped a lot to cut taxes too. Great job!

Yes, almost made up for the $90k in loans she brought in

Good questions!

 

[ftp902]

Thank you for answering all those questions!
Wow did you have a source of income to max out IRAs since you were 20 though? I know max is around $5500 a year! Not sure if a lot of people can afford to max out IRAs while they are in college and med school.. how did that work out for you?

 

[worthless]

I had a job as a TA and Summer internships, so I put a portion towards that. It was only $4k max back then.

 

[ftp902]

I see! Can I ask what was your rationale behind your decision to max out IRAs instead of using that money to take less loans? assuming 5000 a year for four years of med school, that's 20k which will bring down your loans to 140k. You said 1/3 of it was at >6% interest rate, so wouldn't it make more sense to use that money to take less of >6% loan, assuming the money you make from your roth IRAs is <6%, which I am sure it was during the housing crisis...

 

[worthless]

I see! Can I ask what was your rationale behind your decision to max out IRAs instead of using that money to take less loans? assuming 5000 a year for four years of med school, that's 20k which will bring down your loans to 140k. You said 1/3 of it was at >6% interest rate, so wouldn't it make more sense to use that money to take less of >6% loan, assuming the money you make from your roth IRAs is <6%, which I am sure it was during the housing crisis...

Hind-site is 20/20. I grew up hearing that early and consistent investment in the market would yield double-digit returns throughout my lifetime and make me a million by 40. Obviously that was bologna.

In the end, the ROTH ended p being an emergency fund since I could always pull out what I put in there without penalty. Once the downturn hit, I couldn't bear to pull it out to put toward loans. I also knew there was a chance I'd get some kind of loan repayment through an employer down the line.

At this point, I could pull some out and pay off loans, but I just don't think that makes a ton of sense since it has the potential to grow tax free for the rest of my life. I'll have these loans whacked soon enough without it.

 

[deleted390966]

We have maxed our ROTH IRAs, enrolled in IBR, and made additional loan payments on top of that.

Usually, wouldn't IBR alone allow you to pay less in the end, though? And the remaining amount would be forgiven after 20 years of repayment?

 

[worthless]

Usually, wouldn't IBR alone allow you to pay less in the end, though? And the remaining amount would be forgiven after 20 years of repayment?

Not in my case, for several reasons. The following among them:
1. The 20-year loan forgiveness is taxable, so I would be hit with a huge tax bill by the time it was forgiven (if I only paid the minimum), essentially putting me back at square one
2. Under IBR, I will be forced into the 10-year plan in a few months anyway, so it's a pay-me-now or pay-me-later type scenario
3. There's no reason to believe that the loan forgiveness options will be around by the time I would benefit from them

 

[Holmwood]

Today is a great day. I accomplished a big goal that I set out for myself almost 10 years ago.

That's right: I became worthless. That is, my net assets are finally greater than my debt.

Some background:
1. Graduated from a state undergrad with no debt in 2006
2. Graduated from M.D. school with $160,000 debt in 2010 and started 5-yr residency
3. Married spouse (non-medical) with $90,000 debt in 2011

In residency, I've made between $50-$70k. My wife's pay has been between $30-$45k. We have maxed our ROTH IRAs, enrolled in IBR, and made additional loan payments on top of that. Our total loan balance at this point is around $140k with nothing above 5%.

I am posting to make the point that tackling this debt is very doable even on a limited budget. We are cognizant of every dollar we spend. We don't eat out, we drive cheap cars, and we have cheap hobbies (crafts and working out). We even have a pretty good-sized emergency fund.

Truthfully, I don't really feel like we've sacrificed a whole lot and I would be happy living this way for many more years. Our plan is to continue to live at our current standard for 2-3 after residency before we make any major financial moves (house, etc).

Honestly the title was misleading.
But perhaps in a good way, because you've attracted all the sadistic peeps into your realm of positivity.

 

[worthless]

Honestly the title was misleading.
But perhaps in a good way, because you've attracted all the sadistic peeps into your realm of positivity.

You clicked on it, didn't you?

 

[Holmwood]

You clicked on it, didn't you?

Yup...

 

[barsoum.michael]

I'm currently in 12th grade and am seriously debating JHU and other cheaper schools in NY. Any opinions?

 

[TheLionheart]

I'm currently in 12th grade and am seriously debating JHU and other cheaper schools in NY. Any opinions?

Yeah, worry about college first. Do well and explore medicine to see if it's for you. You're a minimum of several years away from being able to even apply, much less consider the financial differences from school to school.

 

[NP545]

This person was financially responsible. Most med students don't have a clue about ROTH IRAs, etc.

Someone please provide good links/ explain ROTH, IRA, IBR, etc.
I want to have a head start on this. Googling it won't provide me with the necessary info as SDN would. (to the point info)