Advice for a deep-in-debt FP?

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  • jfoxcpacfp
    Moderator
    • Jan 2016
    • 15838

    #16

    1. I don't understand the Roth IRA statement. It appears part of your sentence got cut off but, given the facts, you should qualify for a backdoor Roth contribution. If you have a pre-tax IRA and your moonlighting pays by 1099, it's a simple matter to set up a SOLO-k and roll your IRA into it.

    2. You said you moonlight "as needed". With no family responsibilties, "as needed" s/b "as much as possible" (imho) - of course, not so much that you reach burnout.

    3. I leave the loan forgiveness calculations to the student loan experts. I can give you the contact information of the person I refer to if you want to p.m. me. The cost for a detailed analysis is super-reasonable (< $500) and well worth it. If you can continue to work 6 more years at a qualifying institution, that appears to me the way to go.


     
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    • StarTrekDoc
      Member
      • Jan 2017
      • 8557

      #17
      This is going to sound weird for this forum. I applaud you for sticking to your chosen field and style of practice despite the huge economic disadvantages and available potentials out there. Money isn't everything.

      That said, there are a few things that you may be able to tweak with your chosen settings.

      Savings. Read up on the backdoor Roth. The front door is blocked by income, but the backdoor isn't. Therr is some steps there, so be familiar with the timing.

      Locums/earnings. Paid on the lower side. Your preferences appear to be in line with work that VA and jail system may have opportunities. They will negotiate rates and terms directly especially if you have availability.

      Expenses. Roommate perhaps? That would be the next if you don't mind that. Living in urban is the highest cost on your radar and this can help but not for a lot of people.

      Again, kudos for going into field of your choice. The hole is deep but the shovel is sufficient to get it going over a standard thirty year career.

      Congress better keep it's promise. Lots of public service folk banking on it over the years and first crop due this fall.

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      • hightower
        Member
        • Dec 2016
        • 1666

        #18
        Tell him to look into doing moonlighting in addition to his full time FP job.  I'm assuming he's young, fresh out of residency, used to the abuse of a residency schedule.  He should be able to work a couple of extra weekends a month as a hospitalist doing moonlighting.  It pays well and he can take all that extra cash and start paying off the debt.  Also, strongly encourage him to continue to live way, way below his means until he gets that debt under control.  That is an insane amount of student loan debt.  I had only half that amount and the stress of it hanging over my head was almost too much to handle at times.  I hope you're able to get through to him.  Tell him to start reading up on this website as well!  That's what finally got my attention.

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        • The White Coat Investor
          Founder
          • May 2011
          • 10108

          #19




          Dear All, thank you for your kind thoughtful comments and forgive me for the uber late response. I am the resident that Wealthy Doc was talking about. I am currently an attending at the same institution that I finished my residency as it qualifies for loan forgiveness. after reading your posts here are the questions you had answered:

          age 34

          single with no children

          income 170k through my family medicine job. I also pick up Urgent care and addiction moonlighting jobs as needed on weekends that pay about 100/hr.

          my loan is all federal and stafford and currently at 480K. my interest is 7.3%.

          4th year of IBR participation.

          I no longer qualify for Roth IRA due to include. I am matching my company’s 401K contribution.

          my two questions:

          1- how do you forecast the loan forgiveness in 6 years from now? worth waiting and hoping for the best? making minimum payments to IBR and investing my extra income?

          or

          2- should I aggressively start to pay my loan and negotiate a lower interest rate or should I invest?

          3- If I am to invest, should I invest in 401K or individual/brokerage account or both?

           

          currently I live like a resident still, drive a Prius, studio apartment downtown where i like to live and no additional loans or credit card expenses or expensive hobbies except occasional weekly dinner or yearly trip.  I appreciate your guidance and advice as i look forward to becoming debt free and be able to flourish my financial state.

           
          Click to expand...


          Welcome to the forum. I wrote this post with someone like you in mind:

          https://www.whitecoatinvestor.com/what-to-do-if-you-have-monster-debt/

          I recommend people keep student loan debt to less than 1X gross income. I think 2X is pretty doable without extreme sacrifices. In the 3-4X range, extreme solutions are required. Beyond about 4X, it kind of becomes impossible. You're at 480/170= 2.8X. Not insane, but recognize that even more so than most FPs, you need to live a very middle class lifestyle for quite some time in order to get to where you want to be by career end.

          PSLF could have a very dramatic effect on your financial life. Be sure to consider it very seriously. If you decide to go for that (assuming your job qualifies) then no, don't make any extra payments or refinance. If you don't decide to do that, then try to refinance, but don't be surprised if they don't let you, or only offer you a 15 year loan at 6% or something. Your debt to income ratio doesn't make you look like a great bet, so they will charge you more.

           
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