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Loan Repayment Strategies for 2X DTI - Student Loan Planner.com

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  • tylerjw12
    replied
    Commondbond offered me a 5 year fixed, 5 year variable. We don't intend to get to the variable portion.

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  • TravisRADMD
    replied
    So I'm going to refinance. I going to do a 10 year fixed refinance for the flexibility in case unexpected expenses arise but I do plan on paying at last 50-75% more than the monthly minimum payment and likely refinance into a shorter term loan in a few years if the numbers make sense. My question is how short of a pay period is required for a variable rate to make more sense?

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  • xraygoggles
    replied
    Originally posted by Sergio Estavillo View Post
    40% effective tax rate includes federal & CA income tax, Social Security and Medicare tax. If the effective rate is too high, then additional free cash flow. This would support a more aggressive repayment strategy.
    I live in CA, and have less than 40% effective tax with a much larger income. Pre-tax deductions help a lot.

    I think he likely has more cash flow available.

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  • KaxainSmile
    replied
    What types of investment opportunities do you feel you’d be missing out on? Retirement accounts? Real estate? Are you in a hot real estate market? What is the interest rate on your loans? Lots of needed information.

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  • Sergio Estavillo
    replied
    40% effective tax rate includes federal & CA income tax, Social Security and Medicare tax. If the effective rate is too high, then additional free cash flow. This would support a more aggressive repayment strategy.

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  • xraygoggles
    commented on 's reply
    Agree with jacoavlu, more like 35% effective, and probably even less if you are in a tax-free state.

  • jacoavlu
    commented on 's reply
    40% effective tax rate is way too high for AGI $300k

  • TravisRADMD
    commented on 's reply
    Thanks Sergio. When I run the numbers I also seem to get total payments for each that are usually within short range of each other plus or minus. I've used the fed's website as well as studentloanplanner.com's calculators. Do you mind sharing your IDR calculator? is that excel? I like it lot.

  • Sergio Estavillo
    replied
    Out of curiosity, ran some numbers through my IDR calculator. I think most of the fields are self-explanatory.

    Not captured is if you refi the loan. Assuming you're able to secure a 4.5% for 10 years, your monthly on $600k is $6,218 or nominal cost of $746,200. Also assuming an effective tax rate of 40% at an AGI = $300k, net after tax is $180k -> net after refi payment = $105k. Your after tax, after refi payment income suggest an aggressive repayment strategy. My thoughts...
    Click image for larger version  Name:	TravisRADMD.PNG Views:	0 Size:	44.0 KB ID:	173449
    Last edited by Sergio Estavillo; 12-28-2019, 06:35 AM.

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  • xraygoggles
    commented on 's reply
    Hmm, I'm just letting you know that your worth is being undervalued at your current job. There has been a sharp uptick over the past year in rads hiring demand, so you can easily find a better job, if you wanted to.

    I'm on track to pay down 300k+ debt in 2 years, and can't wait to be finished in 2020. You can certainly do it in less than 5 if you keep your eyes on the prize.

  • Brains428
    replied
    If you're sitting on over 500k of debt, I think it would be worth talking to the student loan adviser. I would still shoot for under 5 years. I get the numbers that were said in the podcast. I paid mine in 16 months. No regrets.

    Oh, and I would probably question any "alternative work model" that gets you to 2:1 DTI as a radiologist.

    Leave a comment:


  • TravisRADMD
    commented on 's reply
    Thank you. Agreed.

  • TravisRADMD
    commented on 's reply
    Thanks for responding. 2:1 is conservative. I have an alternative work model but my salary is still very competitive. I also rather not include moonlighting and side hustles but yes I will maximize every source of possible cash flow. I would agree though. Also, not interested in being in potentially variable contract with the fed for the next 25 years. I'm going to pay it off.

  • Lordosis
    replied
    Wow rads makes that much? Good for you guys.

    The nice thing about paying it off quickly is the behavioral aspect. You flex that frugality muscle for a few years paying back that loan it is not easy to turn it off. Once the loan is gone you direct the firehose of cash into a brokerage account and before you know it you are light-years ahead of everyone else.

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  • 2thFxr
    replied
    .
    Last edited by 2thFxr; 08-28-2021, 02:14 PM.

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