Biden to forgive 10k to everyone and leave us RPH out, we must unite

[mentos]

@KCAB are you still buying NIO? The ES7 looks nice with 578 mile range.

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[confettiflyer]

It has to be a calculated risk. You have to be prepared for that bad tenant, financially and emotionally.

I am surprised you didn’t get into that rental business with your mortgage and law background. I guess you wanted that student loan forgiveness so you had to hold on to that debt on your record?

Have two rentals also below market rent (we know the tenants, it’s long term), did not want to dip into more, mostly for diversification purposes. Stuck to more liquid investments. As for student loan, didn’t want to pay it off since I qualified for forgiveness…I’m guesstimating my final amount paid will be approximately principal, so functionally a no interest loan. I’ll post that in a future thread.

I believe I’ll also be owed a beer by certain persons on this forum when that happens. Luckily I’m a cheap date.

 

[confettiflyer]

My tax money is not enough?

I take what’s available to me, whether I truly need it or not.

 

[confettiflyer]

How much money are you going to save with PSLF vs 10 year-plan?

This is actually a fun question, I have to dig back to about 10 years ago to bring up my original balance.

Looks like my initial principal balance was $202,179...round to $200k for calculation purposes. If I was private sector and not relying on PSLF, a) I wouldn't have borrowed so much, but I'll ignore that for now and b) I would have refinanced to a private lender at a lower interest rate. Let's call it 4% (my colleagues/coworkers refinanced in the mid-2010s for something like 2.8-3.5%).

Option A: Pay everything back, private refinance, $200k @ 4% over 10 years.
Payment: $2025/mo x 120 months
Total payment (P&I): $243k

Option B: PSLF
This one is tricky because we don't know when the CARES/COVID pause actually ends (we will model it ending 12/31/2022, officially, as of right now, it ends 8/31/2022). I'll model below what I've actually paid so far, and what the remaining payments look like once we hit 1/1/2023.

Total actual payments so far: $110k

Payments remaining on 1/1/2023 = 11 (payments 110-120).
Expected payment as of today = ~$1500/mo (see discussion below, it gets weird)
Remaining total payments = 11 x $1500 = $16,500

Expected total payments upon completion of PSLF = $110k + $16.5k = $126,500

Delta = $243k - $126.5k = $116,500 saved under PSLF vs. private refinance on the outset & 10 year payment

Had there not been a COVID pause with payment credit, I would have had to make 33 additional payments out of pocket (March 2020 - December 2022) @ roughly $1300/mo, so 33 x $1300 = $42,900. So the delta would have been about $73,600 saved overall for this loan.

Discussion
That $1500/mo figure is from 2021 taxes, I don't actually have to recertify income until sometime mid-2023, so my payment will be something like $1200-$1300/mo on 1/2023, then it will rise to the $1500 figure approximately June/July (I'm just guessing). Also, it will then be based on my 2022 income, so I'm now inclined to keep income off of my personal 1040 this year and defer business income to 1/1/2023+.

Opportunity Costs & Home Loan
I'm obviously not counting investment gains here, but because my monthly payments were so low, I was able to prioritize retirement account contributions and home purchase. Oddly enough, the lender for my home had to use $3000/mo as the monthly payment to calculate BE-DTI per their underwriting guidelines, so in a weird way, if I had refinanced at the outset, I would have been able to afford an even larger house (I really really don't need a bigger one, see home improvement thread) as I would have had an even lower BE-DTI.

 

[confettiflyer]

$120 k of “saving” is nothing to sneeze at.

I had $150 k in student loans and paid it off in 3 years. No regrets tho because 1) I would have paid the same amount; 2) By getting rid of my student loan debt, I was able to buy more real estate.

So the paths we chose were optimal for what we wanted to do, and probably circumstances as well. You needed a clear DTI to make those RE investment purchases. I needed immediate cash flow to improve my time-in-market metric. I also had a year in residency, which meant I had one year of ultra-low payments (counting towards PSLF), and I got to watch my balance balloon to some ungodly amount.

Ignoring residency, if I had prioritized paying off student loans (call it, reasonably, 3 years of living at home/cheaply -- that is a $5900/mo payment, with roughly $8000/mo take home pay 10 years ago with my first job), I would have missed stock market gains from 2012-2015 (~16% YOY). It would have enabled me to buy more RE in 2015/2016, but that wasn't something I wanted to do.

Basically, for everyone else reading this, the point I'm making is that different strategies work for different people, there is a lot of luck involved, but no one method for handling finances fits everyone.

 

[CetiAlphaFive]

$50 an hour is one hell of a lot of money to 99.9% of humans on the planet. The median wage is like $18 an hour for full time workers in the US. If you can't make it off of $50 an hour, even with student loans, you either have a spending problem or very specific needs for living that others do not. If you live in extreme cost of living areas, I'd move away ASAP because it's just not worth it. You can live in a small town with good amenities and a short drive from a major city like Allentown, PA. Houses are super cheap, pay is $65/hr+. In fact, they are paying bonuses. CVS can't find enough people to work up there. 2 hours from NYC, 2 hours from Philly.

Cleaning ladies around here make like $14 an hour. Just off of a cursory search on Indeed. Where the hell are cleaning workers making $38/hr?

Not every cleaning company is corporate.
I used to do it with my mom in high school.

We'd charge some offices like $200 a week and get it done in ~1-2 hours depending on how dirty the employees had been.
We'd do a house for $100 a week and it'd take an hour tops. A fancy condo for slightly less and that place was a piece of cake, except when the old man would have a diarrhea attack

People will pay a lot for cleaning people with two kids in college for professional degrees who don't have accents

 

[DH1987]

So the paths we chose were optimal for what we wanted to do, and probably circumstances as well. You needed a clear DTI to make those RE investment purchases. I needed immediate cash flow to improve my time-in-market metric. I also had a year in residency, which meant I had one year of ultra-low payments (counting towards PSLF), and I got to watch my balance balloon to some ungodly amount.

Ignoring residency, if I had prioritized paying off student loans (call it, reasonably, 3 years of living at home/cheaply -- that is a $5900/mo payment, with roughly $8000/mo take home pay 10 years ago with my first job), I would have missed stock market gains from 2012-2015 (~16% YOY). It would have enabled me to buy more RE in 2015/2016, but that wasn't something I wanted to do.

Basically, for everyone else reading this, the point I'm making is that different strategies work for different people, there is a lot of luck involved, but no one method for handling finances fits everyone.

Overall, I agree. But I still maintain that as a pharmacist, priority #1 should be paying student loan debt ASAP, no matter what. When you are in debt, you *need* the pharmacist's salary to keep up with payments. With how uncertain the job market is, you need to minimize monthly expenses as much as possible in the event you get fired, laid off, temporarily disabled, quarter/mid life crisis (like me, lol) etc. After you reduce your expenses as much as possible...then you can think about investments.

 

[DH1987]

Financially speaking, it depends on the amount of student loan debt. You are going to have a tough time “paying it off asap” if your debt is > $250 k based on a pharmacist salary.

180k took me 3.5 years. Not saying everyone has the ability to do that, but I think it's reasonable to pay it off in less than 10 years (assuming of course, you land a job, which is a bold assumption for anyone in pharmacy school right now). And you can also renegotiate minimum payments as you go along, that's really the main point of paying it off ASAP, to minimize monthly payments to make you less dependent on a pharmacist's salary.

I suppose you could make an argument against me if there is no way to pay it off in less than 15 years. At that point, you're so financially screwed that you may as well invest in the S&P and hope that it follows the historical annual gains over 15 years - the financial equivalent of a hail mary. 😆

 

[confettiflyer]

Overall, I agree. But I still maintain that as a pharmacist, priority #1 should be paying student loan debt ASAP, no matter what. When you are in debt, you *need* the pharmacist's salary to keep up with payments. With how uncertain the job market is, you need to minimize monthly expenses as much as possible in the event you get fired, laid off, temporarily disabled, quarter/mid life crisis (like me, lol) etc. After you reduce your expenses as much as possible...then you can think about investments.

See... that's blanket advice that doesn't necessarily make sense for everyone. It's going to depend on a) other resources you have, b) your salary, c) your loan balance, d) your potential qualification for PSLF (or whatever other programs might exist out there), e) general life/financial goals.

I even take issue with the *need* for a pharmacist salary to keep up with payments. With how uncertain the job market is, paying off debt is likely not a good use of cash flow, I'd argue it's better to build an emergency fund first, alongside any 401k/403b match. When SHTF, you can always submit an IDR application for a federal loan and bring your student loan payment to zero and still have money to eat.

If you're not going the PSLF route, I think incoming cash should be dealt with in this order: 1) emergency fund until 6 months of basics, 2) 401k/403b minimum to match, 3) retirement of debt.

This dogged, religious obsession with shedding debt at all costs reminds me of that idiot Dave Ramsey.

 

[confettiflyer]

180k took me 3.5 years.

That's what I calculated above, roughly, based on my starting salary 10 years ago** & living at home. Even then, I sort of calculated I would have $2000/mo leftover to cover expenses.

**That is, $5900/mo for loan payment @ 4%, $7000/mo take home pay on $70/hr @ 40hrs/week, ~40% set aside for taxes/deductions.

 

[confettiflyer]

Financially speaking, it depends on the amount of student loan debt. You are going to have a tough time “paying it off asap” if your debt is > $250 k based on a pharmacist salary.

It's sort of do-able over a 4 year window, which isn't terrible. $250k @ 4% refinanced to private over 4yrs = $5644/mo payment.

Let's bring back that $60/hr pharmacist in So-Cal. That's what, $10,400/mo gross x 60% = $6240/mo? Live at home and spend $596/mo on food? Use a scooter to go to work?

Paying it off in 5 years is a bit more reasonable... $4604/mo in payments, so you're now up to $1636/mo on food.

I didn't want to go down that road, but I had other options available to me. Most pharmacists marry other professionals, so there's potentially some debt-free income that can come into play here.

 

[DH1987]

See... that's blanket advice that doesn't necessarily make sense for everyone. It's going to depend on a) other resources you have, b) your salary, c) your loan balance, d) your potential qualification for PSLF (or whatever other programs might exist out there), e) general life/financial goals.

I even take issue with the *need* for a pharmacist salary to keep up with payments. With how uncertain the job market is, paying off debt is likely not a good use of cash flow, I'd argue it's better to build an emergency fund first, alongside any 401k/403b match. When SHTF, you can always submit an IDR application for a federal loan and bring your student loan payment to zero and still have money to eat.

If you're not going the PSLF route, I think incoming cash should be dealt with in this order: 1) emergency fund until 6 months of basics, 2) 401k/403b minimum to match, 3) retirement of debt.

This dogged, religious obsession with shedding debt at all costs reminds me of that idiot Dave Ramsey.

I agree with your 3rd paragraph regarding the order of importance, this is what I practiced myself. I didn't take the time to verbalize it. My apologies. What I intended to say was to prioritize high interest debt over investing. After saving 6 months to 1 year of emergency expenses (with student loan payments factored in), and, arguably, taking the company match on a 401k/403b, the next highest priority is student loan debt.

I would assume that checking for PSLF eligibility would fall under the umbrella of "paying it off ASAP".

Another piece of good advice is to take everything you read with caution - including random people on the internet named DH1987.