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380k debt , EM applicant, guidance

Home Student Loan Management 380k debt , EM applicant, guidance

  • Avatar Panscan 
    Participant
    Status: Resident
    Posts: 902
    Joined: 03/18/2017

    You don’t need an emergency fund of 50k that is crazy. Pay private loan off and you still have 20 which is plenty for new family.

    #172061 Reply
    Avatar LiquidAlchemy 
    Participant
    Status: Physician
    Posts: 8
    Joined: 05/28/2016

    I’ve got to agree with totally paying off the 30k 11% loan. That thing is cancer. I personally think heading into residency I’d like to just pay it off and use the 20k to float travel expenses for interviewing and moving and as an emergency fund.  Agree with setting good habits on Roth and maxing out any match offered to you. Please don’t buy a house. I was in your shoes a few years ago – DO grad (guessing you are as well with name and placing ACGME in there) with roughly 320k applying to MD Emergency Medicine residencies – my wife and I had a child in my M3 year and 2 more during residency, so she didn’t work outside of the home. We bought a home for 175k in the southeast, became unintentional landlords upon completion of training because we were about 5k underwater if paying realtor fees. I got a call from my tenant last week with about 10k in water damage from a cracked shower stall that they didn’t notice for quite some time…. Best case scenario, you’ll come out 10-25k ahead, worst case scenario you deal with way more stress than working 10 more shifts when you finish your training, lose money, and don’t have the ability to pull out quickly if the neighborhood changes, your family size changes, or you just want a new/different place.

    Good luck with your decisions. Don’t know where you are hoping to practice when you finish, but you’ll find plenty of jobs when you do.  Is the 2 year fellowship in CC? Other than pain there isn’t much out there in the world of EM fellowships that will improve your income, especially when thinking of it as an hourly rate.

    #172084 Reply
    Avatar osteoson56 
    Participant
    Status: Student
    Posts: 21
    Joined: 12/04/2018

    WE JUST PAYED OFF THE 30K LOAN AT 11% d/t all of your suggestions to!!! Such a big relief to wipe out that undergrad loan I’ve been starring at for 10 years. One step closer! Thank you to all.

    MPMD MPMD 
    Participant
    Status: Physician
    Posts: 2281
    Joined: 05/01/2017

    WE JUST PAYED OFF THE 30K LOAN AT 11% d/t all of your suggestions to!!! Such a big relief to wipe out that undergrad loan I’ve been starring at for 10 years. One step closer! Thank you to all.

    Click to expand…

    strong work dude.

    wait until they are all gone and imagine how you’ll feel!!!

    #175005 Reply
    Liked by adventure, Benji, Peds
    Avatar Benji 
    Participant
    Status: Physician
    Posts: 14
    Joined: 01/20/2019

    A 30k loan at 11%, while 50k is just sitting in an account “not really earning anything”? Just get rid of that 30k and suddenly that 50k is making you 3300 a year in interest you don’t have to pay.

    #190215 Reply
    Avatar osteoson56 
    Participant
    Status: Student
    Posts: 21
    Joined: 12/04/2018

    Thank you to all for your guidance and suggestions. Another question has come up. We just got our tax returns back and they were about $10,000. I have about $320k in loans between undergraduate and medical school all with interest rates between 4.5 and 7%. I then have two other loans, one through Navient at $16k (8% interest) and one through PNC for $11k at 7.89% interest. My question is, would it benefit my wife and I to use our tax returns + extra savings to totally pay off the Navient loan right now in order to get our total interest rate lowered when we consolidate here in the next few months before residency? Or will that 8% on the loan not make that much of a difference when we are offered rates once we consolidate? Thank you so much for anyone with input.

    #196586 Reply
    Liked by adventure
    Avatar adventure 
    Participant
    Status: Spouse
    Posts: 1154
    Joined: 10/24/2016

    Thank you to all for your guidance and suggestions. Another question has come up. We just got our tax returns back and they were about $10,000. I have about $320k in loans between undergraduate and medical school all with interest rates between 4.5 and 7%. I then have two other loans, one through Navient at $16k (8% interest) and one through PNC for $11k at 7.89% interest. My question is, would it benefit my wife and I to use our tax returns + extra savings to totally pay off the Navient loan right now in order to get our total interest rate lowered when we consolidate here in the next few months before residency? Or will that 8% on the loan not make that much of a difference when we are offered rates once we consolidate? Thank you so much for anyone with input.

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    The rate you are offered has nothing to do with the current rate you are paying.

    The rate you’ll be offered DOES have to do with you credit score, your income, and your debt to income ratio.

    To answer your question, I’d say yes, you should take the 10k back from uncle same and remove Navinet, simply because it needs to go, and you have the cash. Once you refi everything into a single 320k loan at (say) 4%, the dollar don’t really matter which was paid off vs which wasn’t. However, I’d suggest you kill the 16k or the 11k asap, so it doesn’t get refinanace, and you’ll stop paying interest on those today. Every day counts! It’s also slightly less paperwork to refi, which is not a bad thing. It’ll slightly change your Debt to Income (DTI) ratio too, by havng overall less debt which won’t hurt. … this is a little of the snowball mindset, where you pick a loan you can pay off and start there first (regardless of interest rate, because it’ll help you feel like you make progress – mathematical sense aside).

    Will it actaully help get you a better overall interest rate when you refinance? Can’t really know. It won’t hurt, and can only help.

    #196588 Reply
    Liked by osteoson56
    Molar Mechanic Molar Mechanic 
    Participant
    Status: Dentist, Small Business Owner
    Posts: 373
    Joined: 10/29/2017

    You’ll come across two mindsets regarding what to pay off first.  The snowball and the avalanche.

     

    The snowball is promoted by Dave Ramsey and others.  It says to pay off your lowest balance first regardless of interest rate.  This is going for the psychological win of killing a debt.  You will technically pay more in interest with this route, but the argument is that debt is a psychological problem and winning the psychology is more important than math.

    The avalanche is promoted by those who are better with calculators than their touchy feely side.  It says attack the highest rate first to pay the least interest.  This is great so long as you stay motivated to kill the debt.

    Your highest rate (nearly) is also your smallest balance.  Put  the $10k into the debt and find another $1,000 to make it go away entirely.

    The factors that go into determining your consolidation rate are the cost of money to the bank, the probability of you repaying the loan in the banks eyes, and the competitive market.  They don’t care what rate you are paying now.  Probability of repayment is affected by credit score, so killing that one loan entirely presumably has the best effect on your credit score.  Good luck.

    #196687 Reply
    Liked by osteoson56
    Avatar osteoson56 
    Participant
    Status: Student
    Posts: 21
    Joined: 12/04/2018

    My wife and I are discussing now whether we should throw all of my money I earn during my 3 year EM residency at my loans (around 350k), or just make the interest payments until I become an attending? Is there a general consensus on this?

    #204859 Reply
    White.Beard.Doc White.Beard.Doc 
    Participant
    Status: Physician
    Posts: 843
    Joined: 02/06/2016
    Splash Refinancing Bonus

    My wife and I are discussing now whether we should throw all of my money I earn during my 3 year EM residency at my loans (around 350k), or just make the interest payments until I become an attending? Is there a general consensus on this?

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    The answer of how much to spend while a resident and how much to put towards loans is a good one.

    I would recommend you limit spending on rent and other living expenses, but not to the extreme.  I would seek to live in a relatively safe neighborhood relatively close to the hospital.  Have an occasional date night, but at a modest cost.  Splurge a bit on occasion, perhaps on your birthday or on an anniversary.  Take a nice vacation, you will need a break, but at modest cost while a resident.  Otherwise, the extra money should be going towards your loans, even in residency.

    Finding your financial balance is a question of developing good lifelong habits.  Financial balance is also life balance.  You want to live a good life, but things don’t have to be fancy, luxurious, or expensive to have a good life.  Overspending comes with extra stress and can reduce your quality of life.  To me, having extra money in the bank when a car dies or an illness strikes is a life enhancing and valuable luxury.

    #204865 Reply

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