popo

Ok folks. I'm 32 years old (on Sunday) and I'm in my 3rd year of a dental specialty program. I will be continuing for an extra 2 years to get another specialty. I'm married and have kids. My wife is a CPA, currently earns 90k and will be up for raises in the next 2 years that will push her to around 120-130k. When I finally get out of school (3 years from now) I will earn between 150-200k first year out. Within 3-5 years I should be earning 3-400k/year.

Now the downside. I've gone to very expensive schools and my student loans after I get out will be up to roughly 500k of *private* loans. I'm not a US citizen so my loans are not federal and interest rates are variable. I believe it's currently 6-7%. In addition, I can't consolidate private loans like you can for federal loans. Anyways, you can't consolidate until you enter repayment, which will be in 3 years. Who knows where interest rates will be then.

I'm very lucky that my wife earns a good living. Most guys I know have a wife who keeps a job just to stay busy earning 40k. Our plans have been to use my wife's full after tax salary to pay the loan and live off of my income which is more than enough. Because of the late start in life saving, I'll also be putting away large chunks into retirement plans. But we also would like to live. Entering the work force at 35 forces one to want the Mercedes, million dollar house, etc, especially since the income allows for it.

Is there any financial type here that can work the math and help me have a plan? I feel like I should seek a prof consult but have no idea where to start looking.

Many thanks.

eribrav

You actually can start really simple. My wife and I are in a similar situation, although we are about 5 years ahead of you in the process, and we did not have nearly as much debt.

Although you have already experienced delayed gratification, that's going to be the key to success for you. Buy a nice house, like we did, but resolve that you will only fully furnish one or two rooms a year. In a nice house, that's likely to be 5 or 10 K per year. Doing it all at once would just put you further in the hole, and ultimately you will enjoy knowing you're getting nice things over time and actually paying for them right then and there.
Second off, find some other cars that interest you. In 20 years, you can have your Mercedes. For now, think 30K and under.
And definitely fully fund your retirement each and every year.
If you can get through the first 2 or 3 years without blowing up financially you will have it made.

greeneyes

Seriously, be responsible if for no other reason than your children. Put off getting the Mercedes and the million dollar home until you have the majority of your debt paid off. Sock whatever you can into retirement investments. And why does entering the work force at thirty-five "force" you to want these things? Stop trying to keep up with the Jones'.

I think the only math that needs to be done here is for you to get your priorities straight.

/rant

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popo

I was being facetious with the Mercedes. But thanks for the lecture.

NoSoup

A few questions for you -

Where are you currently living - what is your current rental/mortgage expense?

Are you vehicles currently paid off, if not, what are the payments?

Are you happy with where you currently are living (could you put up with it for another four or five years?)

What is the price of the average newer home in the area?

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hawker rider

What type of plan are you looking into? It seems to me that you have the plan covered pretty good already.

If you're guaranteed to make 330K after 3 years and only going up from there, you can get your loans paid off in no time, AND get the million dollar house with a couple of merc's in the driveway. Just walk into your bank, ask to a loan professional ( not the regular $10.000 car loan-guy) about setting up an investment account where you'll get a tailerored plan in a few weeks.

popo

Currently living in an apt, rent is $1400/month. Can't get lower than that in this area and can't move to another area due to my wife and I commuting 25 (her) and 35 (me) miles each way in opposite directions to work.

One car is paid off, the other has less than $3000 left will be paid in a year.

Yep, happy with where we live. No need to move and moving isn't really an option.

New homes here start at $650 000. I wish.

hawker: does it really? I mean the amount of loan scares me but does it look like it's under control? Do the financials make sense?

BTW, not really up from $300k. I imagine a peak of around $400k but that'll take a few years. I should get to $300k within 3-5 years.

Thanks, I appreciate the responses.

Cynthetiq

for this financial plan esp the on that hawker is discussing how is it that you are guaranteed that kind of income?

I don't know of anyone in life that is guaranteed anything.

you hurt yourself, you lose the skill or ability for any reason.. you don't pass go and you don't collect $200.

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braisler

Ok, I've got to ask. How the f*ck does anyone manage to get into 500K student loan debt!?!?! Spell it out for me, b/c that just seems staggering to me. Were you using student loans to finance other things like livings expenses for your family, vacations, new cars? If you and your wife have been together for even part of that time and she pulls down 90K, with a $1400 rent you really shouldn't have any problem paying your tuition directly right now. Why are you still taking loans? And if you NEEDED student loans for your ENTIRE higher education, why wouldn't you also qualify for some level of scholarship. Particularly at the better (more expensive) private schools, scholarships are fairly easy to come by.

Besides my question above, I would heartily recommend that you start looking right now at the way that you are living. It sounds to me like you are currently living the lifestyle that you want to be living in a few years. You are living in advance of your earnings. Trim back the excess expenses and live below your means right now and going forward. Obviously, I don't know anything about your personal situation, but it seems like just about anyone should be able to live well enough on a 90K salary even in California or the Northeast US, even with kids, etc. So trim the fat, and start living with the money you have right now. The debt can be addressed when your income increases once you get out of school. It sounds like you already have a plan for that.

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NoSoup

If I remember correctly - although popo should probably confirm this - popo is going into a highly specialized dentistry field. Obviously, if he is going to be pulling in the income he is planning on it will be well worth it - He'll make more in two years than all his student loans combined, which is unusually decent return on your education.

edit: fixed quote

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NoSoup

Popo - If you are currently living within your means right now, I'd suggest keeping the same lifestyle after you graduate until your student loans are paid off completely and your and your wife are free from debt. I know that probably isn't what you want to hear, but it'll be up to you to consider if getting out of debt quickly is worth the wait for the rewards for you. Even now, start saving up some money that you can pay your student loans down with when you need to begin repayment. If you are currently living on 90k a year, It'll take about 3 years or less for you and your wife to be debt free - and that's a hell of a lot of debt. Obviously, when the time comes, pay down the loans with the highest interest rates first, and make it a priority. If you and your wife are happy with your current lifestyle, I see no reason to add additional debt until you are debt free.

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Sage

Dude... if you have both your cars almost paid off and are paying $1400 a month on a place you don't really want to move out of... I see no reason why you couldn't pay off your student loans in about three or four years with your income and your wife's income. I mean, ok, let's say your wife makes $90 K a year and you start out making... 200K your first year out.

$290 K a year... just to be ridiculous we'll say $200K a year after taxes.

Rent will be $16,800 a year which means there's $183,200 left over. Let's go ahead and pay off that 3K on the car... about $183,000 left.

Unless you have more credit cards than Donald Trump, and unless you eat at Spagio every single night, I have no idea how two people spend 183K a year. You two could live on 83K a year and pay off 100K a year towards your student loans, and you'd be done in five years.

I think talking to a finacial advisor would be a great idea for you- Have you thought about Edward Jones? My father-in-law works for them and they are really really nice and helpful with all things money related.

Above all, don't fall into the trap of "I'm making a shit-load of money and I have to go and spend it all." Martel and I live very comfortably on about 20K a year, and we couldn't fathom making 40K, much less 200K. When you said you'd be making a half million a year in seven years, my jaw hit the floor because if I made that much money I wouldn't know what to do with it!

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popo

Of course I have life & disability insurance which would do more than support my family if anything happened.

Braisler: a dental education at a private university costs ~$35-40k tuition/year plus living expenses & instruments, etc. Going to school in Boston where rent was in the $1200 range leads to around 60k/year with living expenses and instruments. That's $240k for 4 years. I'm doing a 5 year residency in a school that has that same tuition for 3 of the 5 years. That's another $115k plus. Add in a modest ~$30k for undergrad loans. As I already noted, my loans are private loans with high interest rates that have been accumulating interest from Day 1. It's around $400k plus what 3 more years of interest will do. 4 years ago my wife was earning $28k/year and has moved up to what she earns now. Over the past couple years she has just this month finished payed off her own personal student loans (~$30k). She maxes out the retirement funding to the poin t where she takes home less than half her gross. There are no scholarships available for this type of education. And no, I haven't financed family members or others, as you can see. I'm not sure how you get that I'm living the lavish lifestyle with a 1999 Altima (110k miles) and a 1998 Civic (160k miles and paid for). I commute 74 miles/day and my wife commutes 52 miles/day. Local gas prices average $2.55 now. Figure out the cost.

NoSoup: Yes, that would be a great idea to continue to live off my wife's salary and use mine to pay the loan. Of course, planning for kids gets in the way a bit (I'll get out at 35 years old). But the idea is really to use her entire take home plus a chunk of mine to pay the loan. I just wanted to see if there's a financial pro here who could work out the math, offer tips, etc.

Sage: good advice. I'm checking out Edward Jones right now. Thankfully, no credit card debt.

Sage

My father-in-law thanks you, I'm sure.

If you are used to living happily in moderation, and don't have any debt other than the student loans, there's no reason to panic. Taken by itself, 500K seems like a lot, but when looked at in the context of the salary you and your wife will be making and the lifestyle you two lead now, it's totally doable. The only reason you'd get that much in loans is if your pre-education self was like "I KNOW I'll be making enough money to pay these back one day."

Another thing a finacial advisor might be able to do for you is consolidate your loans by paying them off through a lower-interest loan. So that way you'd owe (say) Edward Jones 500K at 6% intrest instead of Al's Pawn, Bill's Savings and Loan, and Bob's EZ Money 200K each at 14%. Finacial Advisors are your friends!!!

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braisler

Thanks for spelling it out. I wasn't trying to be harsh. I was just trying to get my brain around that kind of student loan debt. I didn't mean to reflect anything poorly on you as I wasn't aware of your whole situation. Now that we know that your wife has only recently moved to a higher paying job, the other debt makes some more sense. I guess my comments were partially based on friends I had in college who took the maximum in student loans even when they didn't need it, then turned around and used the money to buy new cars, bikes, plasma TVs, you name it.

It sounds like you have gotten some good, sound advice on here. Best of luck with your future career.

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