physician 2.5 years out of training

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inbox788
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Re: physician 2.5 years out of training

Post by inbox788 »

mwille wrote:Brief update,

I looked further into loan forgiveness. I work at an institution that qualifies, and I looked further into my federal loans. It turns out that all of them are candidates for loan forgiveness. So clearly it makes sense to let those ride at minimum payment until I have 10 years service, at which point I can apply for discharge. Silver lining to the debt cloud.

Mark
I don't think that's going to be relevant. I think your income is way too high for IBR, though debt level might play a part early. If there is a benefit, please do let us know the program and how it's supposed to work out.

http://studentaid.ed.gov/repay-loans/un ... calculator


Add: I may have spoken too soon. Is this the program?

https://www.aamc.org/services/first/fir ... eness.html
http://studentaid.ed.gov/repay-loans/fo ... ic-service

And even if you qualify, chances are the income forgiveness may be treated as income so you'd be liable for taxes on the amount, which is likely roughtly 50%. Still better than nothing if it works out.
Last edited by inbox788 on Thu Dec 12, 2013 6:52 pm, edited 2 times in total.
robertalpert
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Re: physician 2.5 years out of training

Post by robertalpert »

mwille wrote:Brief update,

I looked further into loan forgiveness. I work at an institution that qualifies, and I looked further into my federal loans. It turns out that all of them are candidates for loan forgiveness. So clearly it makes sense to let those ride at minimum payment until I have 10 years service, at which point I can apply for discharge. Silver lining to the debt cloud.

Mark

That's great news. Perhaps get them to certify that your specific loans are on-track for the forgiveness program.
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avenger
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Re: physician 2.5 years out of training

Post by avenger »

Yes, it is the PSLF program. I have Direct Consolidation loans.
cheers ... -Mark | "Our life is frittered away with detail. Simplify. Simplify." -Henry David Thoreau | [VTI, VXUS, VWITX, SV fund]
inbox788
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Re: physician 2.5 years out of training

Post by inbox788 »

mwille wrote:Yes, it is the PSLF program. I have Direct Consolidation loans.
How long is the repayment term? I thought they started with 10 year repayment. I don't immediately see anything about consolidation or extending the payment duration impacting the forgiveness option. I guess with the size of your loan, it might be more than 10 years.

http://loanconsolidation.ed.gov/help/faq.html#option
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avenger
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Re: physician 2.5 years out of training

Post by avenger »

inbox788 wrote:
mwille wrote:Yes, it is the PSLF program. I have Direct Consolidation loans.
How long is the repayment term? I thought they started with 10 year repayment. I don't immediately see anything about consolidation or extending the payment duration impacting the forgiveness option. I guess with the size of your loan, it might be more than 10 years.

http://loanconsolidation.ed.gov/help/faq.html#option
I have a 30 year repayment, maturity in 2041
cheers ... -Mark | "Our life is frittered away with detail. Simplify. Simplify." -Henry David Thoreau | [VTI, VXUS, VWITX, SV fund]
inbox788
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Re: physician 2.5 years out of training

Post by inbox788 »

mwille wrote:
inbox788 wrote:
mwille wrote:Yes, it is the PSLF program. I have Direct Consolidation loans.
How long is the repayment term? I thought they started with 10 year repayment. I don't immediately see anything about consolidation or extending the payment duration impacting the forgiveness option. I guess with the size of your loan, it might be more than 10 years.

http://loanconsolidation.ed.gov/help/faq.html#option
I have a 30 year repayment, maturity in 2041
Before you get too excited about this, be sure you actually do qualify. There are lots of hoops to jump over, and you don't want to be surprised at the end. Or have stuck out at a job you may not have and wind up empty handed.

http://studentaid.ed.gov/repay-loans/fo ... qualifying
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avenger
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Re: physician 2.5 years out of training

Post by avenger »

inbox788 wrote:
mwille wrote:
inbox788 wrote:
mwille wrote:Yes, it is the PSLF program. I have Direct Consolidation loans.
How long is the repayment term? I thought they started with 10 year repayment. I don't immediately see anything about consolidation or extending the payment duration impacting the forgiveness option. I guess with the size of your loan, it might be more than 10 years.

http://loanconsolidation.ed.gov/help/faq.html#option
I have a 30 year repayment, maturity in 2041
Before you get too excited about this, be sure you actually do qualify. There are lots of hoops to jump over, and you don't want to be surprised at the end. Or have stuck out at a job you may not have and wind up empty handed.

http://studentaid.ed.gov/repay-loans/fo ... qualifying
I agree. Furthermore, if I have to pay approximately half of the current balance in income taxes as a result of the forgiveness, that might not pay off in a way that makes sense in the long run (to pay an 80k tax bill up front in 10 years as opposed to putting that into my taxable portfolio, for example).

I plan on sending in the form to see if I fully qualify, however.

Thanks
Last edited by avenger on Thu Feb 27, 2014 7:49 pm, edited 1 time in total.
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LowER
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Re: physician 2.5 years out of training

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.....
Last edited by LowER on Sat Nov 01, 2014 11:28 am, edited 1 time in total.
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goodenyou
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Re: physician 2.5 years out of training

Post by goodenyou »

Thanks goodenyou. The school of financial hard knocks has many wise and crafty professors, but none of the ones who talk about it work at medical schools.
You got that right! It explains why doctors are ill-prepared for the world of "Financial Hard Knocks". I really got a kick out of your response to the OP.
Osme02
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Re: physician 2.5 years out of training

Post by Osme02 »

OP, we graduated the same year with the same salary. I would like to be financial independent at 55. I dont spend a lot of money but if I want to go a bar or restaurant I dont even think twice. If I want to go to Vegas for a guys trip I just go. You can walk the middle road. Being a doc is a great job. Who gets paid like this to help people! Anyways heres my info so you have something to compare.


Debt:
Credit Card Debt: None
School Loans: $200,000 Federal Debt, 3.25% fixed (pay $1500/month, 15 yrs left!)
Car Loans: none, I own my 07 civic
Rent: $1850/month

Insurance:
Life: none (no dependents)
Disability: 8k/month group, 5k/month individual

Tax Filing Status: Single
Tax Rate: 33% Federal, 10% State
Income: ~$300k also in a very stable job. +5-20k bonus
Age: 33
vanguard asset class: 60% large caps, 20% mid caps, 10% small caps, 5% REITs, 5% bonds
Taxable account: 125k
Retirement: 85k
Cash: 85k (saving for a condo/house and or a car, 370Z?)


New annual Contributions
$17,500 401k (plus 5% corp contribution, goes up to 10% in another year)
$5,500 Roth IRA
I save 5k/month for the taxable retirement account plus any bonus


Hopefully this gives you a different perspective.


EDIT: my min payment would be $800 to pay my student loan off in 25ish years. I decided I would rather accumulate cash/stock than aggressively pay down a 3% loan. With the market doing well recently, so far I've made the right decision.
Last edited by Osme02 on Sun Dec 15, 2013 8:42 pm, edited 4 times in total.
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avenger
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Re: physician 2.5 years out of training

Post by avenger »

Osme02 wrote:OP, we graduated the same year with the same salary. I would like to be financial independent at 55. I dont spend a lot of money but if I want to go a bar or restaurant I dont even think twice. If I want to go to Vegas for a guys trip I just go. You can walk the middle road. Being a doc is a great job. Who gets paid like this to help people! Anyways heres my info so you have something to compare.


Debt:
Credit Card Debt: None
School Loans: $200,000 Federal Debt, 3.25% fixed (pay $1500/month, 15 yrs left!)
Car Loans: none, I own my 07 civic
Rent: $1850/month


Tax Filing Status: Single
Tax Rate: 33% Federal, 10% State
Income: ~$300k also in a very stable job. +5-20k bonus
Age: 33
vanguard asset class: 60% large caps, 20% mid caps, 10% small caps, 5% REITs, 5% bonds
Taxable account: 125k
Retirement: 85k
Cash: 85k (saving for a condo/house and or a car, 370Z?)


New annual Contributions
$17,500 401k (plus 5% corp contribution, goes up to 10% in another year)
$5,500 Roth IRA
I save 5k/month for the taxable retirement account plus any bonus


Hopefully this gives you a different perspective.
Osme02,

Definitely gives a different perspective.

So I take it you're paying your federal loans at the minimum every month? I'm going to focus on paying down the real estate and private loans, and probably leave the federal debt (matures in 2041!!) as it's borrowed at a rate ~inflation (2.62%). Congrats on saving so much, good job.

My first two years out I didn't really live on a budget, even though I was maxing out tax-advantaged accounts, paid off $30k in credit card debt, saved a $65k emergency fund and put away $40k in a taxable account. - always lived far below my income. Of course I "splurged" on a couple of items - one being the new car, the other being a piece of land which will ultimately build a dream home to hopefully retire in one day in a picturesque midwest resort town. Three months ago I really started to gain some perspective and I feel like I got it out of my system. Now definitely budgeting a bit more and cutting back on things like eating out. Have about $6k/month over and above my monthly payments to save and pay down debt.

I don't agree at all that you should live your life in paper like some of the folks in this forum. It is clear that some are obsessed with their financial accounts in a dysfunctional way (probably some DSM 5 diagnoses).

Thanks
Last edited by avenger on Thu Feb 27, 2014 7:50 pm, edited 1 time in total.
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LowER
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Re: physician 2.5 years out of training

Post by LowER »

mwille wrote: I don't agree at all that you should live your life in paper like some of the folks in this forum. It is clear that some are obsessed with their financial accounts in a dysfunctional way (probably some DSM 5 diagnoses).

Mark
Wow….
inbox788
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Re: physician 2.5 years out of training

Post by inbox788 »

LowER wrote:
mwille wrote: I don't agree at all that you should live your life in paper like some of the folks in this forum. It is clear that some are obsessed with their financial accounts in a dysfunctional way (probably some DSM 5 diagnoses).

Mark
Wow….
I thought it was funny. If everyone were screened , 90% of the population would fall under some DSM criteria. I'm somewhat OCD about things, and I see many here have it much worse.

My house is full of clutter, and watching those hoarder shows, I'm wondering when I would be labeled a hoarder. So far food and decay haven't been a problem, but recently I saw an article about a book that was very interesting. http://www.amazon.com/Life-Home-Twenty- ... 1931745617
I took a look at the pictures, and it is fascinating how others live. It's inspired me to declutter a bit.

http://www.huffingtonpost.com/2012/07/0 ... 59172.html
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CMartel2
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Re: physician 2.5 years out of training

Post by CMartel2 »

mwille wrote:
inbox788 wrote:
mwille wrote:Yes, it is the PSLF program. I have Direct Consolidation loans.
How long is the repayment term? I thought they started with 10 year repayment. I don't immediately see anything about consolidation or extending the payment duration impacting the forgiveness option. I guess with the size of your loan, it might be more than 10 years.

http://loanconsolidation.ed.gov/help/faq.html#option
I have a 30 year repayment, maturity in 2041
I would look into this. If you have a 30-year repayment plan, you're not in the IBR (Income-based repaymet) plan and thus not eligible for PSLF--or at least none of your current payments are qualifying.

http://studentaid.ed.gov/sites/default/ ... stions.pdf

IBR defaults to a 10-year repayment plan when you no longer qualify for reduced payments. You were making payments during residency? You don't have to make all of your payments consecutively over 10-years, but you do have to have 120 on-time payments into the IBR system. Some of these could be a payment of $0 if that's what the IBR calculated as your payment. I should note that any loan repayment made via PSLF is tax-free.

I'm not really fully expecting PSLF to come through, as I strongly suspect it's going to be cut by Congress given our nation's massive deficit problems, but who knows? My plan is to save in parallel with the program, and if my loans are repaid in 5-years, it's a bonus. If the federal government doesn't come through, I pay off my student loans from a stash of ibonds and CDs I'll be building in parallel instead of using that money for extra payments on my student loans.
inbox788
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Re: physician 2.5 years out of training

Post by inbox788 »

CMartel2 wrote: I should note that any loan repayment made via PSLF is tax-free.

I'm not really fully expecting PSLF to come through, as I strongly suspect it's going to be cut by Congress given our nation's massive deficit problems, but who knows? My plan is to save in parallel with the program, and if my loans are repaid in 5-years, it's a bonus. If the federal government doesn't come through, I pay off my student loans from a stash of ibonds and CDs I'll be building in parallel instead of using that money for extra payments on my student loans.
Did not know this. Different programs have different treatment, and everyting is subject to change.

http://www.finaid.org/loans/forgivenesstaxability.phtml

Great way to pay down student loan to another account, so if there is a benefit, you don't lose it, but effectively, the loan is paid off.
namaste
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Re: physician 2.5 years out of training

Post by namaste »

I am also a physician and I did take a job where loan repayment did pay off a chunk over 2 years. I could have applied for more loan repayment through service but chose to just throw everything I could at those debts rather than keep them around and I'm so glad I did. I was paying several thousand a year in interest on those loans even though they were low interest loans.

I've now decided to work part time to spend time with my twin babies, something I never could have done with all those debts. As others have said, you have more choices when you don't have debt hanging over you.

Now, 5 years out of residency we have a net worth of nearly 400K. It's still not nearly where I'd like to be, but it's nice to have choices to throw money into retirement savings and our little ones' 529's.
drmoob
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Re: physician 2.5 years out of training

Post by drmoob »

Osme02 wrote: (saving for a condo/house and or a car, 370Z?)
Irrelevant but +1 on the 370Z - my friend has one and it's awesome! Enjoy your single life, my friend ;)
IndexMD
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Re: physician 2.5 years out of training

Post by IndexMD »

My first two years out I didn't really live on a budget, even though I was maxing out tax-advantaged accounts, paid off $30k in credit card debt, saved a $65k emergency fund and put away $40k in a taxable account. - always lived far below my income. Of course I "splurged" on a couple of items - one being the new car, the other being a piece of land which will ultimately build a dream home to hopefully retire in one day in a picturesque midwest resort town. Three months ago I really started to gain some perspective and I feel like I got it out of my system. Now definitely budgeting a bit more and cutting back on things like eating out. Have about $6k/month over and above my monthly payments to save and pay down debt.

I don't agree at all that you should live your life in paper like some of the folks in this forum. It is clear that some are obsessed with their financial accounts in a dysfunctional way (probably some DSM 5 diagnoses).

Mark
Oh dear God. See the bolded sections above. Is delusional disorder still a DSM 5 diagnosis? 30K in credit card debt is not compatible with "always lived far below my income". I get nervous when I carry a balance, period, on my card.

From one MD to another, these people are trying to help you get out of a big hole. I wouldn't take potshots at them.
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avenger
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Re: physician 2.5 years out of training

Post by avenger »

IndexMD wrote:
My first two years out I didn't really live on a budget, even though I was maxing out tax-advantaged accounts, paid off $30k in credit card debt, saved a $65k emergency fund and put away $40k in a taxable account. - always lived far below my income. Of course I "splurged" on a couple of items - one being the new car, the other being a piece of land which will ultimately build a dream home to hopefully retire in one day in a picturesque midwest resort town. Three months ago I really started to gain some perspective and I feel like I got it out of my system. Now definitely budgeting a bit more and cutting back on things like eating out. Have about $6k/month over and above my monthly payments to save and pay down debt.

I don't agree at all that you should live your life in paper like some of the folks in this forum. It is clear that some are obsessed with their financial accounts in a dysfunctional way (probably some DSM 5 diagnoses).

Mark
Oh dear God. See the bolded sections above. Is delusional disorder still a DSM 5 diagnosis? 30K in credit card debt is not compatible with "always lived far below my income". I get nervous when I carry a balance, period, on my card.

From one MD to another, these people are trying to help you get out of a big hole. I wouldn't take potshots at them.
Credit card debt was accumulated in residency. Was paid off in 4 months once I got my job. Also have now accumulated 100k in taxable savings, 75k in 457, 25k in Roth and decided to go with $30k emergency fund in cash. Saving 25% of gross income for retirement and 25% gross for debt reduction. So yes, I am currently living below my means. Certainly wasn't during training.

I'm grateful for all I've learned on the forum.

Thanks.
cheers ... -Mark | "Our life is frittered away with detail. Simplify. Simplify." -Henry David Thoreau | [VTI, VXUS, VWITX, SV fund]
DFWinvestor
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Re: physician 2.5 years out of training

Post by DFWinvestor »

I think I've seen this thread before. People tend to pile on the OP a little bit IMO in most of these threads. There is a thin line between offering useful suggestions and shaming someone for their debt burden---in this case most of which was for education. I don't see the condo as a huge burden given your situation and the car may have been a bit of a premature splurge but it's very affordable at your income level.

It may not be a popular opinion on here but I am still a fan of the Dave Ramsey approach in your situation, OP---and I'd do this for the two smaller loan balances and slowly chip away at the others without being super aggressive---after the smaller loans are gone. How much would your fixed monthly expenses drop if you paid off your car loan and your second mortgage on the condo? I would guess somewhere in the neighborhood of $1,200 to $1,500/month.

There is something immensely rewarding in having a monthly obligation go away and I think it matters more in some instances than attacking another loan with a larger balance and interest rates marginally higher. I'd pay off a couple of smaller loan balances, and when your fixed monthly expenses drop (balance paid off completely) split that money between paying the larger loan balances and investing in a taxable account.

For reference I'm 6.5 years out of residency making about what you do, net worth 750K. Had a net worth of -195K when I graduated including my wife's student loans and my student loans.

Bottom line for me is there are a lot of avenues to make your situation significantly better in a 2-3 year time frame, you have plenty of income to do it. I think looking at things from a fixed monthly expense standpoint matters as much or more than balances and interest.
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avenger
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Re: physician 2.5 years out of training

Post by avenger »

DFWinvestor wrote:I think I've seen this thread before. People tend to pile on the OP a little bit IMO in most of these threads. There is a thin line between offering useful suggestions and shaming someone for their debt burden---in this case most of which was for education. I don't see the condo as a huge burden given your situation and the car may have been a bit of a premature splurge but it's very affordable at your income level.

It may not be a popular opinion on here but I am still a fan of the Dave Ramsey approach in your situation, OP---and I'd do this for the two smaller loan balances and slowly chip away at the others without being super aggressive---after the smaller loans are gone. How much would your fixed monthly expenses drop if you paid off your car loan and your second mortgage on the condo? I would guess somewhere in the neighborhood of $1,200 to $1,500/month.

There is something immensely rewarding in having a monthly obligation go away and I think it matters more in some instances than attacking another loan with a larger balance and interest rates marginally higher. I'd pay off a couple of smaller loan balances, and when your fixed monthly expenses drop (balance paid off completely) split that money between paying the larger loan balances and investing in a taxable account.

For reference I'm 6.5 years out of residency making about what you do, net worth 750K. Had a net worth of -195K when I graduated including my wife's student loans and my student loans.

Bottom line for me is there are a lot of avenues to make your situation significantly better in a 2-3 year time frame, you have plenty of income to do it. I think looking at things from a fixed monthly expense standpoint matters as much or more than balances and interest.
DFW,

Thanks for the helpful remarks. The last three months on this forum have been so incredibly helpful. Honestly my perspective has changed so significantly since I started reading in December. I respect the minds on the forum and the evidence- and reason-based approach.

I understand the Dave Ramsey method. I don't have a cash flow issue, so I am paying off the highest tax-adjusted rate loan first, which I did calculate (not in original post). It turns out it is the 3.42% student loan which I have decreased by 20k since original post. By my calculations will be paid off by end of 2015. I'll just keep working down the line. While others have suggested not doing any taxable investing, I have decided to continue it and focus on both sides of the balance sheet.

I'm looking forward to the day of being debt free. Just going to keep chugging along and not generate any new debt.

Thanks.
cheers ... -Mark | "Our life is frittered away with detail. Simplify. Simplify." -Henry David Thoreau | [VTI, VXUS, VWITX, SV fund]
DFWinvestor
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Re: physician 2.5 years out of training

Post by DFWinvestor »

mwille wrote:
DFWinvestor wrote:
I understand the Dave Ramsey method. I don't have a cash flow issue, so I am paying off the highest tax-adjusted rate loan first, which I did calculate (not in original post). It turns out it is the 3.42% student loan which I have decreased by 20k since original post.
That's one reason I thought some comments were a bit harsh. If I understood your posts correctly you have an extra $6K/month to use for taxable investments and/or debt reduction. You have plenty of wiggle room to make big improvements in your situation in short time.

If you had put that 20K towards the vehicle loan, your balance would be small enough now to eliminate that fixed expense probably by August of this year. Then when the car loan is gone throw that money into another one of your smaller balances and you could probably eliminate two of them---and improve your monthly cash flow even further---within 12-14 months time. I'm sure you get the concept of snowballing and I know it's not popular here but for me it has worked well. People may flog me for saying it but for me watching fixed monthly expenses evaporate motivated me to stay the course.
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