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Best way to pay off student loans

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  • Best way to pay off student loans

    Hello,

    I would like some advice on paying off student loans.
    Here is a snapshot of my financial situation.

    I am 30 years old and currently working as a pharmacist making $125,000 annually. I have 25k in savings. After taxes and 401k contribution (which I recently changed to 10%) I make about $3,100/ per paycheck ($6200/ month). I currently have $297,000 in student loans which I have been paying off at $858/month but have recently decided to get much more aggressive with payments. I am planning on refinancing them and thinking about paying about 3-4000/month.

    I currently pay $1400/ month for rent, $395/month for my car, which I have ~20K balance remaining. and $858 in student loans. My lease is ending soon and I am thinking about buying a house (200K) or continuing to rent at a much lower cost or possibly buying rental property and living in one of the units. I have no children and than that my only expenses are gas(~$20/week) food(~400/month), entertainment, gym (~$100/month)

    Thoughts? Advice? Critique?

  • #2
    Wow... lots of loans there.
    I would not buy a home until this is more manageable. $4k/month is $48K/Year, which will take you over 6 years to pay it off.
    Can you work extra shifts? I'd try to get this done in 3-5 years, if possible, so decreasing the rent would be really beneficial.
    Good luck, you got this!

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    • #3
      What rate are your loans? Can you get a better one?
      that is a crummy ratio and it is going to suck to pay it back. You got the right idea though. Live as cheaply as you can and throw every extra dollar at the loans.
      Opportunity for extra work? My area has a surplus of pharmacists and you are lucky to just get a job but I realize it may be regional.
      Good luck.

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      • #4
        Don’t buy a house. Get a cheaper apartment you aren’t throwing money away at this stage. That’s just realtor tactics

        pick up any shifts you can and keep attacking

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        • #5
          Increase income and minimize expenses. You're not really in a position to purchase real estate at this point. However, I promise you'll thank yourself the faster you pay those loans off. You can do it!

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          • #6
            Also keep in mind your net worth and not just your income when looking at your life situation and when making decisions based on it...keep renting, minimize expenses, and live like you're more broke than when you started pharmacy school (because you are). You could even sell that car and get a cheaper one, though this won't change your situation drastically. Regarding real estate, keep in mind it's not just being able to afford the mortgage, but it's the weekly trips to the home improvement store, paying people for intermittent repairs, property taxes, insurance, etc. It's much easier to fix your expenses when you rent so that you can follow a student loan payoff plan. Good luck, remember the sacrifices you make now will pay off exponentially in the future!

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            • #7
              I would form some sort of plan and budget to tackle all those loans, especially the student debt.

              I'm not the biggest fan of Dave Ramsey, but if you search Youtube for Dave Ramsey student debt, he has many callers with 2,3,4-hundred thousand debt, and gives good advice when it comes to debt paydown. It can be motivating to some. I use it for entertainment value and to keep me going on my path towards aggressive debt paydown.

              Work extra shifts, moonlight, side gig, etc, to increase your income and plow it all in the debt.

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              • #8
                Another vote for simplify your life as much as possible to get you on track to pay off the student loans. BIG NO to rental property! I agree that the Dave Ramsey 'scorched earth' method is a bit aggressive, but you should do what you can today to get a good handle on the student loans before they get out of hand. $858 per month really isn't getting you anywhere, and in fact I'd say your balance is only increasing each month.
                But you have a good income and are only 30 so you have the tools to wipe out the debt before too long.

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