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Incoming EM Intern married to lawyer, is my strategy appropriate?

Home Student Loan Management Incoming EM Intern married to lawyer, is my strategy appropriate?

  • Avatar osteoson56 
    Participant
    Status: Student
    Posts: 21
    Joined: 12/04/2018

    First thank you so much to everyone on WCI who has helped us in the past year. Due to your suggestions we were able to pay off a $40K private loan and have a continued mindset of loan attacking and frugality. I still consider myself financially inept but I visit the forum frequently and am learning every day.

    In short:

    • I have $358K in federal loans and $35K in private loans, my wife has zero debt
    • My intern salary will be $56k, she has a gross income of $64k as lawyer working for the city, we have no children
    • We want to pay off all of the loans as soon as possible, we have about $40k in savings
    • We are renting during residency and the rent + bills + living expenses + other is around $1,700/month

    From the knowledge I have accumulated via WCI and other sources, does this plan sound like our best option?:

    • Refinance my $35k in private loans (we’re also considering using our savings to pay one or both off now, like today)
    • Enroll in RePAYE (I’m still not very confident in my understanding of these IDR programs and which one is the best fit for us but most of you suggest RePAYE for a married couple, one of whom is in residency)
    • File taxes MFJ as a resident
    • Contribute to deferred retirement account
    • Refinance when I sign my attending contract, live like a resident for the following 2-5 years and pay off aggressively

    Is it ok to keep it this simple in my head right now? Would you suggest hiring a student loan advice consultant listen on WCI? Do I consolidate the federal loans first before I enroll into RePAYE or does is all occur at once? I apologize for my inexperience but there is just so much information out there it is hard to keep all of the suggestions in order. Thank you to anyone who can help us.

    – Matt

     

    #211130 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2844
    Joined: 01/03/2017

    What’s the interest rate on your private loans? Depending on that, I would consider knocking a chunk or possibly even all of them out. Don’t forget about a Roth IRA. Will you get a match from your institution for your 403b or 401k? There’s really no wrong answer with saving for retirement and paying off debt but some answers are more right than others.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #211138 Reply
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4434
    Joined: 01/08/2016
    she has a gross income of $64k as lawyer working for the city

    Click to expand…

    sorry, completely not what you asked, but…..what????

    #211139 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2844
    Joined: 01/03/2017
    Earnest refinancing bonus

    sorry, completely not what you asked, but…..what????

    Click to expand…

    You probably haven’t seen the average salaries for law students entering the workforce. It’s bi-modal and if you aren’t doing big law, you are likely going to be around $40k-60k. Law school may now be the worst deal out of all professional schools.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #211140 Reply
    SerrateAndDominate SerrateAndDominate 
    Participant
    Status: Physician
    Posts: 487
    Joined: 02/01/2018

    If you do REPAYE, your spouse income is calculated in your payments regardless of tax filing status. higher payments means less subsidy. Perhaps you mean PAYE?

    Earn everything.

    #211142 Reply
    Avatar osteoson56 
    Participant
    Status: Student
    Posts: 21
    Joined: 12/04/2018

    If you do REPAYE, your spouse income is calculated in your payments regardless of tax filing status. higher payments means less subsidy. Perhaps you mean PAYE?

    Click to expand…

    Well, that is this mixed message I am trying to work through. I am unsure/leaning toward NOT doing public service loan forgiveness so I am unsure as to if PAYE or RePAYE would be the best option?

     

    What’s the interest rate on your private loans? Depending on that, I would consider knocking a chunk or possibly even all of them out. Don’t forget about a Roth IRA. Will you get a match from your institution for your 403b or 401k? There’s really no wrong answer with saving for retirement and paying off debt but some answers are more right than others.

    Click to expand…

    The private loans are $16k at 8% variable and a $19k at 7.88% fixed. And as for my residency, they offer a 401K retirement plan and benefits are deferring federal and state income taxes and saving for retirement. I am not sure if they match but I assume so.

     

    #211149 Reply
    Craigy Craigy 
    Participant
    Status: Spouse
    Posts: 2058
    Joined: 09/16/2016

    You could look into the prospects of PSLF and see if that’s for you.

    Yeah don’t forget the Roth IRA.

    Be open to and prepared for your attorney wife quitting when you a) become an attending or b) have kids.

    I’d hold onto your savings– cash will be tight for the next few years and you might need it.

    LEVEL 1 WCI FORUM MEMBER.

    #211150 Reply
    Liked by adventure
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2844
    Joined: 01/03/2017
    The private loans are $16k at 8% variable and a $19k at 7.88% fixed.

    Click to expand…

    I’d probably put about $30k out of your $40k in savings towards those loans. That’s a pretty good guaranteed return.

    I am not sure if they match but I assume so.

    Click to expand…

    I would double check this because this would likely be the exception to the rule in residency. In my experience, few programs do matching.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #211152 Reply
    Liked by EM->CCM MD
    Craigy Craigy 
    Participant
    Status: Spouse
    Posts: 2058
    Joined: 09/16/2016
    she has a gross income of $64k as lawyer working for the city 

    Click to expand…

    sorry, completely not what you asked, but…..what????

    Click to expand…

    Yeah bruh attorneys are the poors.  Particularly ones with state jobs, though they tend to have vastly better benefits.

    The biglaw kids making big money are like the neurosurgeons of the field.  Minuscule population.  For every six-figure JD grad, there are a few JD bartenders and baristas.

    LEVEL 1 WCI FORUM MEMBER.

    #211153 Reply
    Liked by Tim, snowcanyon
    SerrateAndDominate SerrateAndDominate 
    Participant
    Status: Physician
    Posts: 487
    Joined: 02/01/2018

    If you do REPAYE, your spouse income is calculated in your payments regardless of tax filing status. higher payments means less subsidy. Perhaps you mean PAYE?

    Click to expand…

    Well, that is this mixed message I am trying to work through. I am unsure/leaning toward NOT doing public service loan forgiveness so I am unsure as to if PAYE or RePAYE would be the best option?

    Click to expand…

     

    I believe this is the WCI blog that addresses this: https://www.whitecoatinvestor.com/student-loan-management-when-both-spouses-work/

     

    I think doing REPAYE requires consolidation so it’s worth assessing how that would affect your rate. Your subsidy goes down when you end up paying more, which sorta ruins the advantage of doing REPAYE as a trainee. Many single trainees stick to REPAYE to keep their interest rate down since they won’t be able to make much of a dent. Going into EM, you can do some moonlighting and start attacking these sooner than most.

    Earn everything.

    #211154 Reply
    Avatar snowcanyon 
    Participant
    Status: Physician
    Posts: 527
    Joined: 10/22/2018

    Yup. Education often does not pay; many nurses make more than 64k. I know more than one lawyer who now works as a nurse FWIW.

    Few places match 401k; if they do, I would contribute until you get the match. Same with spouse. If they don’t, I’d do a Roth IRA for each of you, and then throw the rest at loans depending on interest rate.

    Do you have a prenup?

    #211155 Reply
    Avatar osteoson56 
    Participant
    Status: Student
    Posts: 21
    Joined: 12/04/2018
    The private loans are $16k at 8% variable and a $19k at 7.88% fixed. 

    Click to expand…

    I’d probably put about $30k out of your $40k in savings towards those loans. That’s a pretty good guaranteed return.

    I am not sure if they match but I assume so. 

    Click to expand…

    I would double check this because this would likely be the exception to the rule in residency. In my experience, few programs do matching.

    Click to expand…

    I just called and my residency does match up to 5% for my 401k. Knowing this, does it change anyones suggestion on whether I should go PAYE or RePAYE?

    Yup. Education often does not pay; many nurses make more than 64k. I know more than one lawyer who now works as a nurse FWIW.

    Few places match 401k; if they do, I would contribute until you get the match. Same with spouse. If they don’t, I’d do a Roth IRA for each of you, and then throw the rest at loans depending on interest rate.

    Do you have a prenup?

    Click to expand…

    They do match, should I still do a Roth IRA? We do not have a prenup. We are very traditional, both sets of parents have been married for over 30 years each etc.

    #211161 Reply
    Liked by CM
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3059
    Joined: 09/18/2018

    @peds,
    8 Assistant City Attorney’s in San Antonio.

    7 average $60k
    1 at $72k (since 2005)
    That is it!

    There is a misconception what attorneys make.
    Yes, large firms start at $190k for the chosen few.

    https://www.chron.com/business/article/More-Texas-law-firms-boosting-pay-for-attorneys-13083088.php

    #211162 Reply
    Liked by Craigy
    Avatar osteoson56 
    Participant
    Status: Student
    Posts: 21
    Joined: 12/04/2018

    If you do REPAYE, your spouse income is calculated in your payments regardless of tax filing status. higher payments means less subsidy. Perhaps you mean PAYE?

    Click to expand…

    Well, that is this mixed message I am trying to work through. I am unsure/leaning toward NOT doing public service loan forgiveness so I am unsure as to if PAYE or RePAYE would be the best option?

    Click to expand…

     

    I believe this is the WCI blog that addresses this: https://www.whitecoatinvestor.com/student-loan-management-when-both-spouses-work/

     

    I think doing REPAYE requires consolidation so it’s worth assessing how that would affect your rate. Your subsidy goes down when you end up paying more, which sorta ruins the advantage of doing REPAYE as a trainee. Many single trainees stick to REPAYE to keep their interest rate down since they won’t be able to make much of a dent. Going into EM, you can do some moonlighting and start attacking these sooner than most.

    Click to expand…

    Yes I did view this post and it seems like we fall under the “Doctor Married to an Engineer, Not Going for PSLF” in which the author suggests doing RePAYE or eve possible just refinancing your federal loans along with your private loans.

     

    #211163 Reply
    Avatar snowcanyon 
    Participant
    Status: Physician
    Posts: 527
    Joined: 10/22/2018
    The private loans are $16k at 8% variable and a $19k at 7.88% fixed. 

    Click to expand…

    I’d probably put about $30k out of your $40k in savings towards those loans. That’s a pretty good guaranteed return.

    I am not sure if they match but I assume so. 

    Click to expand…

    I would double check this because this would likely be the exception to the rule in residency. In my experience, few programs do matching.

    Click to expand…

    I just called and my residency does match up to 5% for my 401k. Knowing this, does it change anyones suggestion on whether I should go PAYE or RePAYE?

    Yup. Education often does not pay; many nurses make more than 64k. I know more than one lawyer who now works as a nurse FWIW.

    Few places match 401k; if they do, I would contribute until you get the match. Same with spouse. If they don’t, I’d do a Roth IRA for each of you, and then throw the rest at loans depending on interest rate.

    Do you have a prenup?

    Click to expand…

    They do match, should I still do a Roth IRA? We do not have a prenup. We are very traditional, both sets of parents have been married for over 30 years each etc.

    Others can comment better on PAYE vs rePAYE.  Honestly, as long as you plan on paying off the loans within 3-5 years, it’s not that big a deal. The big deal is paying them off fast. I realize that huge a number is daunting and it’s easy to get caught in the minutiae of repayment plan. Just pick the lowest interest rate IMHO.

    Things that are equally, perhaps more, important than the particular repayment plan:

    “Traditional” folks are no less likely to divorce. Consider a post-nup with the disparity in salaries. Really. Do. Please.

    401k until match, maybe a Roth, rest to loans depending on interest rate.

    Make sure you both have adequate disability insurance with that chunk of debt.

     

    #211166 Reply

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