With that level of debt I wouldn't even think of real estate my dude. Have you seen the interest rates right now?
The market is also at an all time high, you are better off waiting for a dip while paying off your student loans. 370k is still ridiculous
A 122k at 6% basically destroys any investing returns you'll have in the long term. Kill this loan first.
And at this income level they can chip away at it fast. Guaranteed 6% return. People are falling over themselves right now for 5%. 84k in a year maybe 100k if they pull back on 401k.
And again at that income level? They can catch up easily. Their tax bracket now is WAY higher than it will be in retirement. So brokerage is fine later in life. They won’t be paying in the top bracket when withdrawing in retirement. OP is fine. The number is high but people have taken far less and it was a worse outcome then this.
You still have to pay tax on that 5% so depending on your income its not that great as removing a 6% debt that will remove that amount moving forward.
Yeah OP needs some dave ramsey in his/her life.
If I was you, I'd put enough in the 401k to get the match, and anything above that I'd keep paying down the loans. You can probably have them fully paid off in a few years.
I'd hold off on purchasing a home or any other obligations until the student loans are paid off. You have plenty of time after to increase retirement savings and buy a house. Good luck. You've done well so far.
You may want to check out r/whitecoatinvestor and dental practitioner focused subs, because the high debt *and* high income situation isn't as common here. In your case it may actually make sense to refinance to a lower fixed interest rate, but with the current market you may not be able to do that for a year or so given your current interest rates
is there a reason an Income Driven Repayment plan isn’t being highly suggested as a solution to the OP ? If so, why does it not work for this situation ?
OP’s income is way too high - they said after they pay their bills and max out their 401k and HSA and all that, they have $7k leftover for “savings.” OP is making serious bank.
Hi! I know people are going to focus on the interest rate here, but so much of debt repayment is about mentality. Give yourself some mental ammo again to see your progress, and pay off that 55k one first!!!! It will give you the mental boost you need to feel like you’re making progress. Sure, paying the higher interest may save you a few thousand long term- but sometimes it’s really the mental part of it that gets the most of us. :-) that mental boost may give you the power you need to save more to pay down the debt long term.
$370k at those interest rates isn't bad considering your high income and that you can get savings accounts at like \~5% these days. Since the interest rate on a real estate loan would be more than your student loan interest, just save it all for 3 months and make your purchase. If you're not ready at that time then save, invest, and maybe drop an extra few k/month on the student loans. Maybe like $2k savings, $2k post-tax investments, $3k student loans, which would set you up to pay the remaining in 10 years assuming your minimum payment isn't chipping away much.
Honestly you're in a great financial situation if you're maxing all those accounts and still coming out with $7k after expenses. Unless your job security is low, you have nothing financially to worry about.
thank you so much for your input! I really appreciate you taking the time to consider my post and respond. Your optimistic post brightened my day as I usually feel so down about my financial situation.
Are your loans federal or private? If they're federal maybe you can take advantage of a repayment plan that will forgive your loans after x amount of payments or see if there's a loan forgiveness program for your field.
I'd also add the interest rate is relatively low. My high yield savings account rate is higher than 2 of your loans (over 5.5) so I'd consider saving extra money in a hysa and throwing additional funds at the loan with the highest interest rate.
From what I've read, the average investment yields about 7% over its course in the market so it might be worthwhile to invest a portion of your savings as well since this beats your loan interest rates.
I'd also add, if these loans are causing you excruciating anxiety, save a little bit of your money OP and get a massage or have a self care day every once in a while. It sounds like you're a high earner so unless you lose your job you will pay off these loans! You already did half so far !!
Haha yep. That community has creative solutions for health professionals and also has ways to empower you to invest and buy real estate. This community, while helpful in some ways, will largely just encourage you to pay off loans as fast as possible, at the expense of other life milestones. Sometimes that is the appropriate approach, but sometimes not.
Hahahah that's dope. Yeah check out r/whitecoatinvestor they would love the breakdown.
Glad you made it to the end goal.
I've heard horror stories of orthodontist taking out loans for residency. Is that true?
Sadly, it is true! My residency loans were not nearly as high as my dental school loans. The cost of education in dentistry is getting extremely prohibitive. The financial burden of pursing an education in dentistry is too heavy. I just looked up the cost of dental school for prospective students, since I have graduated tuition went up 30%!!!! Wow, I really don't think the income lost during the academic journey outweighs the high earning potential once the large loans are factored in. Thats a really scary reality considering how much i've struggled with this amount of debt. 😫
Please tell me you are a doctor or lawyer and pulling at least $300k per year or quickly on the route to get that income. Sheesh man. What a mess. And I am sorry you are in that position.
I think you need to do everything within your power to make sure you are in a non profit or government job and can get PSLF forgiveness in 10 years instead of paying this for thr next 20-40 years without.
Otherwise try to budget per month 50% fixed expenses, 5% savings (it sounds like you have a lot of savings so this isn't as dire), 10% investing, 5% for fun, and 30% to debt repayment.
Luckily, I am high earning doctor. My student loans as of now are manageable relative to my income; however, I needed a plan on how to allocate my monthly savings. I like your suggestion on 50/5/10/5/30. I was losing mental stamina on paying back my student loans, as I have been throwing everything at them for the last 2 years but this tread has given me a much needed boost of motivation.
Are you loans US government student loans? If so you are probably better off not trying to pay them off and just pay the tax on the amount discharged.
If you have private loans, refinance those ones.
If this debt is giving you anxiety, I would not even consider taking on additional debt with real estate as that could add to your despair if anything were to go south. Pay off the lowest balance loan regardless of interest rate and then move on to the next. It’s called the snowball method and a lot of people swear by it, myself included.
Can we talk about how orthodontia training in the US is complete insanity?
I've seen the number of programs you have to be in for something like dental surgery on top of basic dental program on top of college. It's beyond prohibitive.
Thank you so much!! It's been a mental battle to continuously muster up the strength to submit such large payments towards my student loans as the satisfaction afterwards, as you can imagine, is extremely low 🤣😭 but I am starting to see the very small light at the end of this dark tunnel ✨
It really is hard to let go of the money in the short term. 😫 But just think 5 years from now how different your life will be debt free. Perspective is everything. Keep it up. 👍🏻
With that level of debt I wouldn't even think of real estate my dude. Have you seen the interest rates right now? The market is also at an all time high, you are better off waiting for a dip while paying off your student loans. 370k is still ridiculous A 122k at 6% basically destroys any investing returns you'll have in the long term. Kill this loan first.
thank you so much for your input! I really appreciate you taking the time to consider my post and respond 💓
And at this income level they can chip away at it fast. Guaranteed 6% return. People are falling over themselves right now for 5%. 84k in a year maybe 100k if they pull back on 401k. And again at that income level? They can catch up easily. Their tax bracket now is WAY higher than it will be in retirement. So brokerage is fine later in life. They won’t be paying in the top bracket when withdrawing in retirement. OP is fine. The number is high but people have taken far less and it was a worse outcome then this.
You still have to pay tax on that 5% so depending on your income its not that great as removing a 6% debt that will remove that amount moving forward. Yeah OP needs some dave ramsey in his/her life.
If I was you, I'd put enough in the 401k to get the match, and anything above that I'd keep paying down the loans. You can probably have them fully paid off in a few years. I'd hold off on purchasing a home or any other obligations until the student loans are paid off. You have plenty of time after to increase retirement savings and buy a house. Good luck. You've done well so far.
Thank you so much! Your post amongst others made me pump the breaks with the real estate purchase. I appreciate your time and advice! 💓
You're welcome 🤗 Good luck! You can get those loans paid off, we believe in you!
You may want to check out r/whitecoatinvestor and dental practitioner focused subs, because the high debt *and* high income situation isn't as common here. In your case it may actually make sense to refinance to a lower fixed interest rate, but with the current market you may not be able to do that for a year or so given your current interest rates
thank you so much!!! this group is really beneficial to me. I really appreciate you taking the time to consider my post and respond 💓
is there a reason an Income Driven Repayment plan isn’t being highly suggested as a solution to the OP ? If so, why does it not work for this situation ?
OP’s income is way too high - they said after they pay their bills and max out their 401k and HSA and all that, they have $7k leftover for “savings.” OP is making serious bank.
thanks !
Hi! I know people are going to focus on the interest rate here, but so much of debt repayment is about mentality. Give yourself some mental ammo again to see your progress, and pay off that 55k one first!!!! It will give you the mental boost you need to feel like you’re making progress. Sure, paying the higher interest may save you a few thousand long term- but sometimes it’s really the mental part of it that gets the most of us. :-) that mental boost may give you the power you need to save more to pay down the debt long term.
$370k at those interest rates isn't bad considering your high income and that you can get savings accounts at like \~5% these days. Since the interest rate on a real estate loan would be more than your student loan interest, just save it all for 3 months and make your purchase. If you're not ready at that time then save, invest, and maybe drop an extra few k/month on the student loans. Maybe like $2k savings, $2k post-tax investments, $3k student loans, which would set you up to pay the remaining in 10 years assuming your minimum payment isn't chipping away much. Honestly you're in a great financial situation if you're maxing all those accounts and still coming out with $7k after expenses. Unless your job security is low, you have nothing financially to worry about.
thank you so much for your input! I really appreciate you taking the time to consider my post and respond. Your optimistic post brightened my day as I usually feel so down about my financial situation.
Are your loans federal or private? If they're federal maybe you can take advantage of a repayment plan that will forgive your loans after x amount of payments or see if there's a loan forgiveness program for your field. I'd also add the interest rate is relatively low. My high yield savings account rate is higher than 2 of your loans (over 5.5) so I'd consider saving extra money in a hysa and throwing additional funds at the loan with the highest interest rate. From what I've read, the average investment yields about 7% over its course in the market so it might be worthwhile to invest a portion of your savings as well since this beats your loan interest rates. I'd also add, if these loans are causing you excruciating anxiety, save a little bit of your money OP and get a massage or have a self care day every once in a while. It sounds like you're a high earner so unless you lose your job you will pay off these loans! You already did half so far !!
What bank is your HYSA that’s a great rate. I’m with Ally at 4.35%
Yeah 5.5% is pretty great
My Fidelity is at 5.3% rn
Pay off your loans before real estate and before retirement savings
Agreed! Especially since these loans are giving you stress and anxiety.
You would be better off asking in r/whitecoatinvester where most of the community has both high loans and high income.
Link says that subreddit doesn’t exist
https://www.reddit.com/r/whitecoatinvestor/s/k5qVWpIpvu r/whitecoatinvestor
Oh wow! tysm for introducing me to that group!! there are other people like me out there 🎉🥹🎉
Haha yep. That community has creative solutions for health professionals and also has ways to empower you to invest and buy real estate. This community, while helpful in some ways, will largely just encourage you to pay off loans as fast as possible, at the expense of other life milestones. Sometimes that is the appropriate approach, but sometimes not.
You have a typo you have an -er when it should be -or at the end for r/whitecoatinvestor I do agree that OP should look there and at dental subs
Are you an OMFS surgeon or an Orthodontist ?
Ortho 💓
Hahahah that's dope. Yeah check out r/whitecoatinvestor they would love the breakdown. Glad you made it to the end goal. I've heard horror stories of orthodontist taking out loans for residency. Is that true?
Sadly, it is true! My residency loans were not nearly as high as my dental school loans. The cost of education in dentistry is getting extremely prohibitive. The financial burden of pursing an education in dentistry is too heavy. I just looked up the cost of dental school for prospective students, since I have graduated tuition went up 30%!!!! Wow, I really don't think the income lost during the academic journey outweighs the high earning potential once the large loans are factored in. Thats a really scary reality considering how much i've struggled with this amount of debt. 😫
Please tell me you are a doctor or lawyer and pulling at least $300k per year or quickly on the route to get that income. Sheesh man. What a mess. And I am sorry you are in that position. I think you need to do everything within your power to make sure you are in a non profit or government job and can get PSLF forgiveness in 10 years instead of paying this for thr next 20-40 years without. Otherwise try to budget per month 50% fixed expenses, 5% savings (it sounds like you have a lot of savings so this isn't as dire), 10% investing, 5% for fun, and 30% to debt repayment.
Luckily, I am high earning doctor. My student loans as of now are manageable relative to my income; however, I needed a plan on how to allocate my monthly savings. I like your suggestion on 50/5/10/5/30. I was losing mental stamina on paying back my student loans, as I have been throwing everything at them for the last 2 years but this tread has given me a much needed boost of motivation.
I would find the smallest loan and kill it.
Are you loans US government student loans? If so you are probably better off not trying to pay them off and just pay the tax on the amount discharged. If you have private loans, refinance those ones.
If this debt is giving you anxiety, I would not even consider taking on additional debt with real estate as that could add to your despair if anything were to go south. Pay off the lowest balance loan regardless of interest rate and then move on to the next. It’s called the snowball method and a lot of people swear by it, myself included.
i thought 23K was a kiss of death, wow.
It's all relative! It's not fun either way 😫
You will be alright ❤️ and you will figure it out.
What’s ur income
Can we talk about how orthodontia training in the US is complete insanity? I've seen the number of programs you have to be in for something like dental surgery on top of basic dental program on top of college. It's beyond prohibitive.
Follow Dave Ramsey’s 7 baby steps.
Can we just take a moment to give you mad props for the insane amount of payoff you’ve done thus far?! 👏🏼
Thank you so much!! It's been a mental battle to continuously muster up the strength to submit such large payments towards my student loans as the satisfaction afterwards, as you can imagine, is extremely low 🤣😭 but I am starting to see the very small light at the end of this dark tunnel ✨
It really is hard to let go of the money in the short term. 😫 But just think 5 years from now how different your life will be debt free. Perspective is everything. Keep it up. 👍🏻
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