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Loans - whats been your experience?


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1 hour ago, ventana said:

And then there is another 30k in medicare a year..... making the 80k 110k (so I actually get a raise when retire)

I was with you until this statement which I don’t understand.  Are you referencing the 1.45% paid in off salary?  It’s a bit of a bummer that I haven’t heard anything further about lowering the Medicare eligibility age (not to 50 or 55 in my opinion but to 60).

Edited by GetMeOuttaThisMess
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16 minutes ago, GetMeOuttaThisMess said:

I was with you until this statement which I don’t understand.  Are you referencing the 1.45% paid in off salary?  It’s a bit of a bummer that I haven’t heard anything further about lowering the Medicare eligibility age (not to 50 or 55 in my opinion but to 60).

Oops I meant my social security payments.  Sorry

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1 hour ago, ventana said:

Oops I meant my social security payments.  Sorry

Not a problem.  I was just creating next year's budget (based upon this year's numbers) and adding in the COBRA costs to maintain our insurance after my wife retires in June (completion of academic year at her college).  I went ahead and did a full year for '23 as well since the end of the year is when COBRA will run out.  I haven't done a '24 budget when I hit 65 mid-year and start the Medicare game.  She'll claim everything in '24 at 63 y/o (pension and SS income since her SS income will be about the same as my spousal benefit would be since I'll have the higher payment) and I'll start one of my state pensions mid-year as well.  I'm going to see if I can hold off on SS till FRA of 66/10.

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4 hours ago, ventana said:

2m is 80k/year for a 4% withdrawal per year (widely accepted conservative standard)

as this is ROTH it is tax free

I'm curious how someone would get to a $2M ROTH account.  From the IRS:

For 2021, 2020 and 2019, the total contributions you make each year to all of your traditional IRAs  and Roth IRAs can't be more than:

  • $6,000 ($7,000 if you're age 50 or older), or
  • If less, your taxable compensation for the year

I haven't run the series, but even given a 40 year contribution history and an estimated 7% annual return on investments, it seems tough to get to that in a ROTH.  Now, with the much higher contribution limits on 401K's and adding in maximum HSA contributions, it's very possible to get there from all sources.

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21 hours ago, ohiovolffemtp said:

I'm curious how someone would get to a $2M ROTH account.

 

$500 per month for 40 years with an average investment return of 10% totals just over $3.1 million.  Personally I would say 10% is a bit of a high average to use for 40 years, but would "only need" 8.5% to hit $2 million.  Obviously that isn't taking inflation into consideration...so that would be a concern.

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from CNN

https://www.cnn.com/2021/06/21/business-money/how-to-retire-a-millionaire-feseries/index.html

Starting at age 20:
  • Assuming a 6% return, compounded monthly, you should aim to invest $364 a month toward retirement to reach $1 million in savings by age 65.
Starting at age 30:
  • Assuming a 6% return, compounded monthly, you should aim to invest $704 a month toward retirement to reach $1 million in savings by age 65.
Starting at age 40:
  • Assuming a 6% return, compounded monthly, you should aim to invest $1,444 a month toward retirement to reach $1 million in savings by age 65.
Starting at age 50:
  • Assuming a 6% return, compounded monthly, you should aim to invest $3,439 a month toward retirement to reach $1 million in savings by age 65.
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On 7/10/2021 at 8:33 AM, ventana said:

please provide a source - on my quick search it is somewhere in the 3-4-5%% right now - not 10%

The CPI is running 5.4% annual, but like ANY measure of inflation it is ONLY a measure of inflation of what is tracked.  The CPI is geared toward the urban consumer, and in today's weird covid-affected economy that is skewing it wrong.  Rental prices are up 13% everywhere but in the major metro areas, where they are down (but recovering), so this skews it.  This administration's energy policies have made gas prices shoot up 45% year-over-year.  

So, if you own your house, then you won't see the housing inflation. If you live in the city and take the train, you won't feel the gas inflation (well, yeah, you will, but it will look like more expensive everything ELSE that is brought in by trucks.)  And if you just look at the CPI you will follow the CNN-headline that "car prices make up most of the increase".

EVERYTHING is going up, and going up a lot.  Food prices are up.  Gas is crazy.  I'm constructing a house and EVERY SINGLE MANUFACTURER (other than the wood mill) I am dealing with is telling me that they are raising prices, so I'm trying to buy stuff before they do.  Jotul wood stoves went up 4% June 1st, and they expect another hike later this year.  GE appliances are going up January 1st.  Flooring, metal, windows, shingles, screws, nails, wire...all going up significantly.

Tractor prices are skyrocketing.  Two years into a 5 year lease on a 72K tractor and the company calls offering to buy the tractor back at $80K, effectively PAYING $8K for using the tractor for the last two years.  They would ONLY do that if they had a buyer for that same tractor at $88K.  Think that doesn't affect you?  It will next year when food prices go up even more.  

We have CREATED 40% of the total monetary supply over the last 14 months.  

Worst yet, the Fed has no way of combating it.  They CAN'T raise interest rates because it would explode our debt payments.  Remember, that almost $30 TRILLION in debt isn't financed like a 30 year mortgage, almost ALL of it is financed like an adjustable rate mortgage.  What I mean by that is that almost all of it is held in 6mo-5 year treasury bonds.  If the Fed finally figures out that we are in a bad inflationary period, the best tool they have to fight inflation is they raise interest rates (suddenly harder for people to get money, so they spend less, therefore buying less, therefore less people buying the same amount of things, and prices go down).  But if they bring the federal reserve rate up to 8% (from 1.75% today), within 3 years we will be paying 8% interest on that $30TRILLION.  In other words, $2.4 TRILLION in interest instead of half-trillion we are paying today.  Our entire federal deficit today is only $3.5 Trillion

So, where do I get 10% inflation?  It's just my opinion based on everything I see and read.  

 

Edited by Boatswain2PA
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19 hours ago, Boatswain2PA said:



So, where do I get 10% inflation?  It's just my opinion based on everything I see and read.  

 

 

2 hours ago, Boatswain2PA said:

https://www.cnbc.com/2021/07/14/wholesale-prices-rose-7point3percent-in-june-from-a-year-ago-for-new-record-surge.html

The PPI is up 7.4% year over year.  Second straight month of highest EVER measurement.

 

so 10% was not an actual stat

 

and the above is year-over-year change

I am seeing so many "record changes" year-year right now it is insane - course this is due to the massive changes COVID was bring last year (year-over-year last year) and then recovery this year.  

We had the biggest job loss ever - followed by the biggest job gain ever - course if you look over a longer time period it evens it out but the idea that this 'year-over-year' indication right now is anything but a COVID reflection seems unwise.  

 

Everyone panic's about all this but why you look at the longer term - even just 2-4 year span for right now backwards then things level out - and COVID effect is almost negated.... 

Now in full disclosure this only my idea, thoughts.  I have heard no expert proport any of this and this is the first time I have seen or heard the  "COVID Effect" used to describe it.  

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My PA program was pretty inexpensive and my VA VOC Rehab picked up the tab completely and paid me a good stipend. I took out less than $7K while in school to help keep a roof over my family's heads. I got a good paying job (for the 80s') and paid it off in 2 years.

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I graduated PA school in 2016 with $225,000 in debt. As a mid 20s single male, I funnelled everything into loans. Getting that first loan statement with interest paid during the year was absolutely sickening. I had paid something like $20k that had accrued during the time I was in school. It's a hard pill to swallow, having so much debt going into a field for the right reasons, to help others. I was able to claim the student loan interest on taxes one time when I had only worked for 6 months of the year, other than that I believe after an $80,000 salary, you can not get any credit for paying the interest in terms of reduction of income tax.

 

It was clear to me very quickly that I was doing this on my own. I did get $50.000 from my employer over 5 year contract for loan repayment which was given up front (Big difference in terms of interest accrual) but the rest of it was on my own. I worked 3 jobs at one time and every extra penny went to the loans. I cashed out PTO, ate cheaply, used coupons and did it. It was hard as hell, but that interest accruing gave me the most motivation. I paid them off in just about  4 years. 

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Easier present day to become an electrician, set your own schedule, typically make as much, and not have the debt like medicine.  Oh, and you’ll also be in demand, as will the other skilled labor positions.  If I were doing over today, this is the route I’d probably take.  Oh, and I could do my work without having to talk to others.

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15 hours ago, CAdamsPAC said:

My PA program was pretty inexpensive and my VA VOC Rehab picked up the tab completely and paid me a good stipend. I took out less than $7K while in school to help keep a roof over my family's heads. I got a good paying job (for the 80s') and paid it off in 2 years.

great move

 

I regret not having done this....  would have been a lot easier....

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On 7/15/2021 at 3:20 PM, ventana said:

great move

 

I regret not having done this....  would have been a lot easier....

MEDEX/NW  back in the 80's was the best deal out there, tuition and supplies totaled less than 10K, Seattle area was livable good public transit, housing wasn't outrageous, crime and community craziness were low.

 

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  • 3 weeks later...

Graduated with about 202k after PA school in 2018, (Includes 170k from PA school, 30k from undergrad)

I wish I -

1) went to a state school for an undergrad program (essentially had free tuition with a scholarship, instead went to private school to run track)/went to a PA program where I could live with my parents (who graciously offered to have me live with them if i stayed home)

2) understood how much interest compounds and not take out as many Grad Plus loans as I did

3) worked during PA school, even though we were discouraged from doing so, I think I could've managed 

Currently down to 164k after 3 years. Tried to be aggressive with the 0% interest

Fiance bought house, I help with mortgage. I maxed out my roth, contribute to 401k, and two investment accounts. My employer has a match + profit sharing. We don't have kids yet. I work in the ER, salary is about 100-120k depending on productivity. I can't really blame anyone but myself for my current financial situation. 

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1 hour ago, JED617 said:

Graduated with about 202k after PA school in 2018, (Includes 170k from PA school, 30k from undergrad)

I wish I -

1) went to a state school for an undergrad program (essentially had free tuition with a scholarship, instead went to private school to run track)/went to a PA program where I could live with my parents (who graciously offered to have me live with them if i stayed home)

2) understood how much interest compounds and not take out as many Grad Plus loans as I did

3) worked during PA school, even though we were discouraged from doing so, I think I could've managed 

Currently down to 164k after 3 years. Tried to be aggressive with the 0% interest

Fiance bought house, I help with mortgage. I maxed out my roth, contribute to 401k, and two investment accounts. My employer has a match + profit sharing. We don't have kids yet. I work in the ER, salary is about 100-120k depending on productivity. I can't really blame anyone but myself for my current financial situation. 

My goodness........just wow.

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On 8/3/2021 at 1:56 PM, Cideous said:

My goodness........just wow.

I wish I could say I was an isolated case, but the average debt in my program was about 150k.

Just lucky to have a very supportive partner and no kids at the moment 😅

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50 minutes ago, JED617 said:

I wish I could say I was an isolated case, but the average debt in my program was about 150k.

Just lucky to have a very supportive partner and no kids at the moment 😅

Yeah that does help.  Otherwise I'm not even sure what to say.  Just mercy.  I am rooting for you that Biden signs a bill that might forgive some of that especially as a health care worker but I am not holding my breath.

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On 8/3/2021 at 12:32 PM, JED617 said:

Graduated with about 202k after PA school in 2018, (Includes 170k from PA school, 30k from undergrad)

I wish I -

1) went to a state school for an undergrad program (essentially had free tuition with a scholarship, instead went to private school to run track)/went to a PA program where I could live with my parents (who graciously offered to have me live with them if i stayed home)

2) understood how much interest compounds and not take out as many Grad Plus loans as I did

3) worked during PA school, even though we were discouraged from doing so, I think I could've managed 

Currently down to 164k after 3 years. Tried to be aggressive with the 0% interest

Fiance bought house, I help with mortgage. I maxed out my roth, contribute to 401k, and two investment accounts. My employer has a match + profit sharing. We don't have kids yet. I work in the ER, salary is about 100-120k depending on productivity. I can't really blame anyone but myself for my current financial situation. 

you need to work for a company that has loan forgiveness

think coast guard, Public health, larger corporations with such - ie I think some of the AK native companies do this.  $20-50K per year adds up quick!  

It took my about 18 yrs to pay off 100k, got it down to 40k pretty quick, then let that one continue as it was at 2% fixed interest.

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18 hours ago, Cideous said:

Yeah that does help.  Otherwise I'm not even sure what to say.  Just mercy.  I am rooting for you that Biden signs a bill that might forgive some of that especially as a health care worker but I am not holding my breath.

Yeah, not holding my breath either! It's tricky- I don't want to refi just yet, in case the federal loans are forgiven to some degree. but the interest rates are so low!

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2 hours ago, ventana said:

you need to work for a company that has loan forgiveness

think coast guard, Public health, larger corporations with such - ie I think some of the AK native companies do this.  $20-50K per year adds up quick!  

It took my about 18 yrs to pay off 100k, got it down to 40k pretty quick, then let that one continue as it was at 2% fixed interest.

I briefly left the ER for an FM job in a company that has loan forgiveness. you needed to be employed for 10 years to receive full benefits. I was really unhappy at that job and decided my sanity wasn't worth continuing, so I went back to the ER. I make significantly more money in the ER that I'm able to put toward loans. Additionally, it's incredibly saturated where we live, and while I'm open to moving, my fiance is in a really good spot with his job and does not want to move.

People have told me to think of it as "just another bill", but when I do decide to have children, I won't be able to work to pay my loans or save some income. And that thought terrifies me. Once loan repayment returns, I'm looking at a payment of about $2500-$3000/month with a variable interest rate of 5-7%

 

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