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I've been working in a really high paying state for a while now, and living nicely, but not to the extreme. We've always put away (at least) 20% gross toward retirement, and add to that an emergency savings and college savings. All in all, we save about 25-26% gross every year. That is in addition to paying off student loans (7 years out of residency).
I've had a side job for the past few years that is going away now. I knew it wouldn't last, so I took advantage of their 401k and kept anything else I got in the bank and never touched it. Now I have $30k saved up as cash in the bank and am looking for ways to use that money.
With the closing of the side job and the fact that we feel ourselves getting caught up in a rat race of our big city, my wife and I have decided it's time to move home. I've taken a new job in a different state that will essentially mean a pay cut of about 25%. But, the job is great, it's home and it's a life decision, not a financial one. So we are excited.
We've always budgeted, and we've figured out how to maintain a great lifestyle (albeit with a smaller house) in the new place on the new income, but there isn't much extra room in the budget like there used to be for big cash expenditures, which is something we've grown used to with my current income. I'm not worried about the change in income too much - the budget allows for all the things we care about, keeps the same savings rate, and I'm actually looking forward to living a little more simplified life and not having to play Keeping Up With The Joneses nearly as much (we are moving to a smaller town with a lot more relaxed lifestyle where house size and car model doesn't define you, unlike where we live now).
But, I was looking at my student loans today. I am paying down on $98k right now (started at >$200k) and forecast to be paid off at age 42. My goal has always been to be done with them before age 40, which would require a substantial amount/month more than I'm currently paying. That may be hard to do with my new job.
IF I'd been more disciplined, I would've been paying more aggressively for the past few years. But, I was really focused on saving as much as possible and avoiding any other debts (a very reasonable mortgage and student loans are our only debts). I wish I'd focused on loans a bit more, but it is what it is at this point.
I always want to keep a reliable side hustle going, with a goal of being able to decrease my clinical work slowly. It's possible I can find another similar to the one I had which just closed, but no guarantee, so I've been looking at taking my $30k and starting in real estate or some other non-medical business venture.
But, I also really want to get rid of debt. So, I calculated the scenario if I simply made a one time payment toward my student loan principal. If I did that, I would save $5600 in interest and 23 months of payments, just making it to my goal of pre-40 payoff.
If I just put that $30k into investments, I'd only need a 4.5% real return rate to yield the $5600 savings in interest over the same time period. When I consider that, in addition to the potential income I could create with that $30k over the next 4 years, I tend to want to use the money toward a business or investing rather than as loan payment.
BUT, I'm so ready to be done with loans, and it's sort of a personal defeat to see that I won't be done by age 40. I really built that age 40 thing up in my mind!
Of course, if I can find a side hustle in my new state or additional income vs what I think I'm going to have, I'll use it to pay off loans faster (I'm sure of that about myself), but that just isn't a guarantee at this point).
So, questions to the WCI followers:
1. Would you use the $30 to make a lump sum payment to student loans, or
2. Use it to invest into something else, accepting the possibility that I may have to pay on loans for an extra 2 years (and miss my goal) and lose that interest savings?
...and...
2a. If you would invest it, where would some of you go with it? I'd love to put it into something that can start a business that could begin to generate income, slowly supplementing my clinical work over time. My concern is that, as I said, extra cash may be hard to come by in this new job - at least for a while. It worries me that I won't have extra capital to inject into a growing business, other than the capital that business may generate.
Thoughts?
I've had a side job for the past few years that is going away now. I knew it wouldn't last, so I took advantage of their 401k and kept anything else I got in the bank and never touched it. Now I have $30k saved up as cash in the bank and am looking for ways to use that money.
With the closing of the side job and the fact that we feel ourselves getting caught up in a rat race of our big city, my wife and I have decided it's time to move home. I've taken a new job in a different state that will essentially mean a pay cut of about 25%. But, the job is great, it's home and it's a life decision, not a financial one. So we are excited.
We've always budgeted, and we've figured out how to maintain a great lifestyle (albeit with a smaller house) in the new place on the new income, but there isn't much extra room in the budget like there used to be for big cash expenditures, which is something we've grown used to with my current income. I'm not worried about the change in income too much - the budget allows for all the things we care about, keeps the same savings rate, and I'm actually looking forward to living a little more simplified life and not having to play Keeping Up With The Joneses nearly as much (we are moving to a smaller town with a lot more relaxed lifestyle where house size and car model doesn't define you, unlike where we live now).
But, I was looking at my student loans today. I am paying down on $98k right now (started at >$200k) and forecast to be paid off at age 42. My goal has always been to be done with them before age 40, which would require a substantial amount/month more than I'm currently paying. That may be hard to do with my new job.
IF I'd been more disciplined, I would've been paying more aggressively for the past few years. But, I was really focused on saving as much as possible and avoiding any other debts (a very reasonable mortgage and student loans are our only debts). I wish I'd focused on loans a bit more, but it is what it is at this point.
I always want to keep a reliable side hustle going, with a goal of being able to decrease my clinical work slowly. It's possible I can find another similar to the one I had which just closed, but no guarantee, so I've been looking at taking my $30k and starting in real estate or some other non-medical business venture.
But, I also really want to get rid of debt. So, I calculated the scenario if I simply made a one time payment toward my student loan principal. If I did that, I would save $5600 in interest and 23 months of payments, just making it to my goal of pre-40 payoff.
If I just put that $30k into investments, I'd only need a 4.5% real return rate to yield the $5600 savings in interest over the same time period. When I consider that, in addition to the potential income I could create with that $30k over the next 4 years, I tend to want to use the money toward a business or investing rather than as loan payment.
BUT, I'm so ready to be done with loans, and it's sort of a personal defeat to see that I won't be done by age 40. I really built that age 40 thing up in my mind!
Of course, if I can find a side hustle in my new state or additional income vs what I think I'm going to have, I'll use it to pay off loans faster (I'm sure of that about myself), but that just isn't a guarantee at this point).
So, questions to the WCI followers:
1. Would you use the $30 to make a lump sum payment to student loans, or
2. Use it to invest into something else, accepting the possibility that I may have to pay on loans for an extra 2 years (and miss my goal) and lose that interest savings?
...and...
2a. If you would invest it, where would some of you go with it? I'd love to put it into something that can start a business that could begin to generate income, slowly supplementing my clinical work over time. My concern is that, as I said, extra cash may be hard to come by in this new job - at least for a while. It worries me that I won't have extra capital to inject into a growing business, other than the capital that business may generate.
Thoughts?
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