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Any general advice on Loans/Budget?

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  • Any general advice on Loans/Budget?

    Hi there,

    I am married, 2 Doc no Children (as of yet) family, with tons of combined student loans (about 1.2 Loan:Income ratio). I'm looking for advice regarding budget allocation when planning the first 5 years out as an attending. As of now as fellows about 40% of our income is going towards loan debt. Keeping this average we will have student debt/loans paid off within 5 years. Is it smarter to stretch out that 5 years to afford a greater amount toward retirement? I assume it is worthwhile to weigh student loan interest rate (4.5% after refinancing with SoFi as a fellow) versus return of retirement investment in the future.

    Also, wondering about overall Net pay allocation for someone wanting to take after POF to an extent and what % would be good to shoot for as far as Loan/Debt payments and wealth building (Real-Estate, 401k, Roth...etc)? I know these are broad questions, but feel it would be helpful to hear what others are doing with their allocation of earnings.

    Thanks!

  • #2
    1:2 loan to income once you are attendings? Student loan only? Can you give us numbers? Why would it take you 5 years as a two doc couple? Unless you are both very low-pay specialties in HCOL. Can you not live off less than one income?

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    • #3
      Are you paying so much that you cannot afford to contribute to your 401k's and backdoor Roth's?
      Financial planning, investment management and CPA services for medical professionals | 270-247-6087

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      • #4
        Originally posted by childay View Post
        1:2 loan to income once you are attendings? Student loan only? Can you give us numbers? Why would it take you 5 years as a two doc couple? Unless you are both very low-pay specialties in HCOL. Can you not live off less than one income?
        My understanding was 1.2 to 1, not 1 to 2. Guess we need some clarification.
        Financial planning, investment management and CPA services for medical professionals | 270-247-6087

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        • #5
          Sorry for the confusion. Yes, 1.2:1 loan to expected income. It will likely be a bit higher, but want to undershoot depending on how much we are offered. We are still in training, Fellowship currently. Only debt is student loan debt. we can most definitely live off of less than once income.

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          • #6
            1.2:1 DTI ratio means approx 500k debt if making 400k salary (made up numbers).

            I would max out all tax-advantaged accounts first, including backdoor roth, then put everything else in loans. You can be done in ~3 years most likely, depending on tax rate and HCOL/LCOL area. Would not buy a house personally before paying down the loans.

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