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How Long To Pay Off Debt

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Hello all,

I'm decided between price points for school and have 0 debt coming out of undergrad. With the projected  PA starting salary of 90K, it makes a loan of 100-150K seem manageable to be paid off in under 5 years. Is this a realistic estimate? If not, what other things are there to consider. I imagined that if 90K is a starting salary, assuming employed right out of college, than half of that would be more than manageable for living expenses per year....but I never took out loans before so I may be rather naïve.

Any information is helpful.

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It is realistic, but not easy. I am on track to pay off 190K in 5 years, but this is at the cost of only contributing 5% of salary to retirement accounts. I pay 3,800 monthly towards loans (recently increased, the first 1.5 years wasn't paying quite so much). 

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These loans aren't subsidized so they begin accruing interest from the minute you take them out.  This means that if you estimate COA at 90k - you will end up with a higher loan burden than that as interest accumulates.  

 

Also keep in mind that a 90k salary is likely BEFORE taxes, health insurance, 401k,etc.  A 90k salary is, conservatively, a take home of 60k (I always just estimate 30% going to taxes, SS, everything else - but this can vary based on where you live (state taxes) and your marital status, etc).  This means you've got 60k to live on, pay off loans, etc.  If you have 100k in loans and want to pay it off in 5 years, you're looking at 20k per year (or more considering interest is still accumulating) - leaving you with 40k to live on.  Doable?  Probably, maybe depending on where you're living and what other expenses you may have.

 

There are a lot of variables to consider.

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I'm in the same boat, just refinanced my loans about to start paying them back. My best advice would be to look for a per diem job. I'm about to pick up one at a local urgent care $75 an hour 2-3 shifts a month. That will cover my loan payment plus a little extra left over hopefully.Good luck!

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Yes, it's doable, and you could knock it down to 3.5-4 years if you work 2 jobs like t2091 suggests.

 

Regarding retirement, 3 strategies to choose from:

 

1: Don't invest in retirement until debt is paid off. That will make you FEEL the fear of not saving for retirement, which can make you angry at your debt so you hit it hard. You'll only lose 3-4 years of investing which you could quickly make up starting in 3-4 years when your making great money and have ZERO debt.

 

2. Do the basic retirement investing, limiting it to ROTH and 401k but ONLY up to the match. You are limited in how much you can put into your ROTH ($5500/yr), and it grows tax free, so the more years (and the earliest years) you do that the better. (An HSA works even better). Also, investing in 401k up to match is getting free money. But don't invest ANY more than that, instead throw everything at debt.

 

3. Fully invest (15%) in your retirement at the cost of paying off your debt. This may stretch your debt to 5-6 years, even living modestly.

 

My suggestion is #2 for most people, but ya gotta keep the intensity/hatred for the debt and hit it in its face!

 

Alternatively, you could kept Fannin Mae around for 10-15 years paying the minimum payments, maybe get loan forgiveness somewhere (in exchange for being tied down somewhere), buy new cars every other year. Vacation a few times a year, and put it all on credit card....living the American Dream by being flashy, young....and broke!

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Yes, it's doable, and you could knock it down to 3.5-4 years if you work 2 jobs like t2091 suggests.

 

Regarding retirement, 3 strategies to choose from:

 

1: Don't invest in retirement until debt is paid off. That will make you FEEL the fear of not saving for retirement, which can make you angry at your debt so you hit it hard. You'll only lose 3-4 years of investing which you could quickly make up starting in 3-4 years when your making great money and have ZERO debt.

 

2. Do the basic retirement investing, limiting it to ROTH and 401k but ONLY up to the match. You are limited in how much you can put into your ROTH ($5500/yr), and it grows tax free, so the more years (and the earliest years) you do that the better. (An HSA works even better). Also, investing in 401k up to match is getting free money. But don't invest ANY more than that, instead throw everything at debt.

 

3. Fully invest (15%) in your retirement at the cost of paying off your debt. This may stretch your debt to 5-6 years, even living modestly.

 

My suggestion is #2 for most people, but ya gotta keep the intensity/hatred for the debt and hit it in its face!

 

Alternatively, you could kept Fannin Mae around for 10-15 years paying the minimum payments, maybe get loan forgiveness somewhere (in exchange for being tied down somewhere), buy new cars every other year. Vacation a few times a year, and put it all on credit card....living the American Dream by being flashy, young....and broke!

Option 4:  Find a job with a non-profit, pay IBR for 10 years, have balance forgiven at 120th payment....  Definitely get loan forgiveness while being tied to non-profit employers and max out your retirement every year.

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Option four leaves you trapped in working for that nonprofit for TEN YEARS.

 

8 years in, when your DREAM JOB comes open at the private practice....you will have to pass on it.

 

Debt sucks.

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Luckily a school agreed to cover 75% of my tuition so the debt will be much more manageable now. Thanks for all of the suggestions and advice.

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Yes, it's doable, and you could knock it down to 3.5-4 years if you work 2 jobs like t2091 suggests.

 

Regarding retirement, 3 strategies to choose from:

 

1: Don't invest in retirement until debt is paid off. That will make you FEEL the fear of not saving for retirement, which can make you angry at your debt so you hit it hard. You'll only lose 3-4 years of investing which you could quickly make up starting in 3-4 years when your making great money and have ZERO debt.

 

2. Do the basic retirement investing, limiting it to ROTH and 401k but ONLY up to the match. You are limited in how much you can put into your ROTH ($5500/yr), and it grows tax free, so the more years (and the earliest years) you do that the better. (An HSA works even better). Also, investing in 401k up to match is getting free money. But don't invest ANY more than that, instead throw everything at debt.

 

3. Fully invest (15%) in your retirement at the cost of paying off your debt. This may stretch your debt to 5-6 years, even living modestly.

 

My suggestion is #2 for most people, but ya gotta keep the intensity/hatred for the debt and hit it in its face!

 

Alternatively, you could kept Fannin Mae around for 10-15 years paying the minimum payments, maybe get loan forgiveness somewhere (in exchange for being tied down somewhere), buy new cars every other year. Vacation a few times a year, and put it all on credit card....living the American Dream by being flashy, young....and broke!

Like me!

 

Sent from my SM-G935V using Tapatalk

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Luckily a school agreed to cover 75% of my tuition so the debt will be much more manageable now. Thanks for all of the suggestions and advice.

 

Son of a gun, I hope I'll be as fortunate as you once I'm in school!

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