what to do with my money?

[siggy_freud]

IBR at your level of salary should still be paying off principle. Also, I think the term is 25 years, not 20.

Your incentive to paying off the loans is that you don't want to live with them over your head for the next 25 years. If you'd like to keep them and pay the minimum, I guess that's your prerogative. However, the government is NOT making money off of you. They won't until the point where your payments have recouped the principle and you're continuing the pay interest. They're still out 160k. The fact that you owe 190k doesn't mean they've made money. Since you're aiming to pay the minimum they won't ever make money off you, they'll likely lose it, so stop with the violin act.

I too would rather pay 900 in principle than 900 in rent. However at your salary level you may have a hard time getting a loan for what you want with nearly 200k in student loans + whatever other short term debt you may have.

[Wino]

Once again, the "king of no tact" will chime in. Apparently, the OP needs some straight talk more than he needs "advice." Let me see if I understand your feelings concerning the situation:

1. I borrowed $165K and I've been paying so little on the debt, I now owe $190K.
2. During the above loss of $25K which I still have to pay back at 7% or so, I "saved" $40K instead of paying down the debt, so really, only $15K of this money is "saved" while the rest really should have been paid rather than letting my balance increase, but this is not my fault. It's the way the evil government structured the loan they forced me to take out.
3. Not paying back my loan doesn't hurt anyone else, since it is "government money," which everyone knows is not really money at all.
4. Saying I should pay back the debt is mean and doesn't help, so I won't listen if this is your advice. And this advice is unimaginative. I need imaginary advice where the money is paid off without me actually paying it off. Where can I get more government money to do this? (See #3 above).
5. I need a house, because everyone needs a house, whether they can afford it or not. It's not right that I pay rent because I should have a house and not pay rent. If only the government would give me money to buy the house instead of asking me to pay back the student loan I can't afford because the government has unrealistic pay back terms.
6. It's all the government's fault, anyway. If you suggest this is my own doing, I won't listen to you because you're dull and unimaginative.

Did I pretty much sum up your feelings? No? Where am I wrong?

You have heard the advice: Spend less and pay off the loan before you try to borrow even more because you feel you deserve whatever you want to borrow money to buy. News flash: You're broke, so you shouldn't be buying anything you don't need to survive: Food, clothing, shelter. Buying a house is not the only way to have "shelter," so don't even suggest you need to buy a house you can't afford. Let me guess, you need to buy an $800K house, because you deserve a nice house, right?

I'll add some more advice from me: Quit blaming others for your prior choices. You made the decisions, and you will live with the consequences. How you handle it is up to you.

[PSF]

Student loan debt is not exactly a good debt to have since (I don't think) it can be written off even in the event of bankruptcy. For this reason my suggestion is to concentrate on paying down this debt asap by living frugal for now.

Being that you are a business owner you have an advantage, and that is to work hard on expanding your business. If more time spent on your business will help you expand it, do as many hours as possible. If more money will help it expand, consider using some of your savings on the business. However, make sure you do proper analysis before spending the money, any money spent has to result in more customers. The quickest way to pay off your debt is to expand your income, easier said than done I know.

I understand your feelings about the government's financial choices, student loans, etc. But unless you are a to big to fail banker you can't do anything to avoid it. Best choice therefore is try not to worry about those things and concentrate on expanding your own business.

Good Luck

[snafu]

I don't think you should buy a house, even if you can manage to qualify, because you will be compounding your student loan issue. You need to carefully examine and run the numbers on the mortgage you wish to apply for. First, you don't have a 20% downpayment [DP]. Without that substantial DP you will be required to buy mortgage insurance, separate from house and content insurance. Second, carefully examine an mortgage amortization table and note that it pre loads interest so that for the first several years only a few dollars each month goes to Principle, 99% goes to Interest. A bunch of the payment goes to mortgage insurance and PTI includes the escrowed property tax. Should you be part of an HOA - that is endless and all you can count on is that it will increase nearly annually.

If you think $ 900. is expensive rent, you will be gobsmacked at the time and expenses incurred by home 'ownership.' l After 15 years your only equity will be in appreciation - IF old patterns emerge. Given the demographics, mathematically that is a toss-up. You could be underwater based on geography and unknown factors. Just ask all those folks who got evicted when house values sunk and for profit lenders demanded big chunks to bring the mortgage loan in line with re-sale value. BTW, property tax didn't reflect the new, lower value to give the beleaguered a break. If there was an HOA in place, those fees often increased to make up for vacant/foreclosed homes.

Don't forget to add in decorating, furnishings and maintenance. You will need to spend significant sums on yard/garden annual landscaping and equipment all that requires. I'm just working that out for 2013 season - ouch. If the roof needs work, the hot water tank blows, the sidewalk heaves, or there are hidden problems invisible behind the dry wall - you will be paying trades and hoping they are legit.

I too wish whoever approved your student loans had denied your application. It seems you didn't read the details of your loans and didn't understand that you would be required to pay back the loans with interest. Apparently your payments are so low you are not even paying the total interest thereby increasing the loan. Fact is taxpayers funded your student loan and you have an obligation to them. Just think, part of the income taxes you pay are funding a student somewhere. If they don't get a job and pay it back, you get to pay more tax to make it up.

Your aren't ENTITLED to a university degree you couldn't afford to pay. You had the option of working for a year, living like an immigrant to save enough for 1 year college and repeating the process every other year. You had the option of the journeymen's route as gas fitter, electrician, plumber, carpenter, auto mechanic etc. earning while you learned.

If you're unhappy with your government's operations, get involved and work toward a better goal. Just think if you were unfortunate to live in Spain - the unemployment rate is 55% - that's fifty-five percent unemployment.

Good luck with your practice.

[today]

i think you guys are right...but

I talked to my boss, by boss I mean my fiance and her stuffed animals, and we came to a pretty quick decision. She is tired of being broke and will be damned if we are going to spend the next five years clawing out of debt, unnecessarily. She said the rules are set so that we should never have to pay more than 15% of our gross income as paybacks.... This currently puts us below the interest/principle threshold. So, for now, we are just going to let the loans grow and save cash in the bank. She also said that after 25 years the loan is forgiven, so unless i start making 500000 per year the gov does not really expect me to pay it off. She said I was being foolish and we need to think about saving for a wedding and kids and vacations, and we probably will never pay off my loan. I was just like, ok honey, and went back to my workout. I run about 5 miles per day. Big runner. Anyways, I am going to focus on my business and not worry about my loans for awhile. I think this makes more sense financially. I am in the unique position of being able to choose. Do i believe my money is better spent paying off my loans, or putting into the economy through my business a house and disposable income. I am like one of those little countries that America loans money to. But seriously, I am going to try and keep them from getting to 200K. Thats my new goal for this year.

Gotta go now. I have a fundraiser for children to attend. Some patients are buying me dinner tonight. I saved one of them from having back surgery, for about 300 dollars of adjustments and acupuncture. Best deal they ever got. Hope you guys have a good weekend! Thanks for all the advice!

Go heels!

[neatdesign]

I talked to my boss, by boss I mean my fiance and her stuffed animals, and we came to a pretty quick decision. She is tired of being broke and will be damned if we are going to spend the next five years clawing out of debt, unnecessarily. She said the rules are set so that we should never have to pay more than 15% of our gross income as paybacks.... This currently puts us below the interest/principle threshold. So, for now, we are just going to let the loans grow and save cash in the bank. She also said that after 25 years the loan is forgiven, so unless i start making 500000 per year the gov does not really expect me to pay it off. She said I was being foolish and we need to think about saving for a wedding and kids and vacations, and we probably will never pay off my loan. I was just like, ok honey, and went back to my workout. I run about 5 miles per day. Big runner. Anyways, I am going to focus on my business and not worry about my loans for awhile. I think this makes more sense financially. I am in the unique position of being able to choose. Do i believe my money is better spent paying off my loans, or putting into the economy through my business a house and disposable income. I am like one of those little countries that America loans money to. But seriously, I am going to try and keep them from getting to 200K. Thats my new goal for this year.

Gotta go now. I have a fundraiser for children to attend. Some patients are buying me dinner tonight. I saved one of them from having back surgery, for about 300 dollars of adjustments and acupuncture. Best deal they ever got. Hope you guys have a good weekend! Thanks for all the advice!

Go heels!

I've read this guy's posts and only one word comes to mind: TROLL.

At least I'm hoping he's a troll, because the alternative is repugnant and pathetic.

[kork13]

I talked to my boss, by boss I mean my fiance and her stuffed animals, and we came to a pretty quick decision. She is tired of being broke and will be damned if we are going to spend the next five years clawing out of debt, unnecessarily. She said the rules are set so that we should never have to pay more than 15% of our gross income as paybacks.... This currently puts us below the interest/principle threshold. So, for now, we are just going to let the loans grow and save cash in the bank. She also said that after 25 years the loan is forgiven, so unless i start making 500000 per year the gov does not really expect me to pay it off. She said I was being foolish and we need to think about saving for a wedding and kids and vacations, and we probably will never pay off my loan. I was just like, ok honey, and went back to my workout. I run about 5 miles per day. Big runner. Anyways, I am going to focus on my business and not worry about my loans for awhile. I think this makes more sense financially. I am in the unique position of being able to choose. Do i believe my money is better spent paying off my loans, or putting into the economy through my business a house and disposable income. I am like one of those little countries that America loans money to. But seriously, I am going to try and keep them from getting to 200K. Thats my new goal for this year.

Gotta go now. I have a fundraiser for children to attend. Some patients are buying me dinner tonight. I saved one of them from having back surgery, for about 300 dollars of adjustments and acupuncture. Best deal they ever got. Hope you guys have a good weekend! Thanks for all the advice!

Go heels!

...wow...

Well, as I said, it's all about attitude. Unfortunately, you & your fiancé (& her stuffed animals?!? ) are accepting an attitude that will only lead you to heartache. If you choose to continually be a victim, that's all you'll ever be. Not to speak ill of your bride-to-be, but if I may be frank, hearing the phrase "[I'm] tired of being broke and will be damned if we are going to spend the next five years clawing out of debt" from a woman you haven't even married yet should raise some significant red flags.

However, it appears that our advice is falling on deaf ears throughout this thread... So I'll simply wish you both the best and leave you to make your own foolish choices if that's what you prefer. Be well, and good luck -- you'll need it.

[today]

you appreciate the irony though... right?

I am trying to shed light on an issue here. The logic on my side surely cannot be denied. The math is there. Why should I pay 2000 per month for 12 years, when I can pay 350 per month for 20 years. I am surprised as math savvy as you SAVERS are, you cannot see that. And the kids who think like me are the MAJORITY. I am trying to enlighten you guys.

THINK about it, the conservative thing to do is pay the minimum, and save my money for a rainy day, especially when there is knowledge of loan forgiveness out there. To argue against that, is to argue against logic and math. Why is that repugnant? Frankly, Conservatives should be thrilled with Obama's student loan forgiveness tendencies. My mother and father are the STAUNCHEST Republicans on earth, and they are like "Dont pay a dime more than you have to son. Spend that money in your community." Oh, but thats the real rub isnt it? There are republicans who care about community, and those who are just ideological "debt is bad" people. This is a whole 'nother issue I could shed some light on for yous guys. Gotta love ideologues. I digress.


My bride to be is actually a math genius and a geneticist. Thank god she put some perspective on me. Also, every last one of my colleagues from school LAUGHED when I told them about how this forum told me to throw my money away paying down something the very Government doesnt expect me to pay. 15% of income for 20 years, no more, no less. Thats the new way... you will see school tuitions change to match that shortly. Watch.

[feh]

I am trying to shed light on an issue here. The logic on my side surely cannot be denied. The math is there. Why should I pay 2000 per month for 12 years, when I can pay 350 per month for 20 years. I am surprised as math savvy as you SAVERS are, you cannot see that. And the kids who think like me are the MAJORITY. I am trying to enlighten you guys.

THINK about it, the conservative thing to do is pay the minimum, and save my money for a rainy day, especially when there is knowledge of loan forgiveness out there. To argue against that, is to argue against logic and math. Why is that repugnant? Frankly, Conservatives should be thrilled with Obama's student loan forgiveness tendencies. My mother and father are the STAUNCHEST Republicans on earth, and they are like "Dont pay a dime more than you have to son. Spend that money in your community." Oh, but thats the real rub isnt it? There are republicans who care about community, and those who are just ideological "debt is bad" people. This is a whole 'nother issue I could shed some light on for yous guys. Gotta love ideologues. I digress.


My bride to be is actually a math genius and a geneticist. Thank god she put some perspective on me. Also, every last one of my colleagues from school LAUGHED when I told them about how this forum told me to throw my money away paying down something the very Government doesnt expect me to pay. 15% of income for 20 years, no more, no less. Thats the new way... you will see school tuitions change to match that shortly. Watch.

This isn't about politics. It's about personal responsibility. It's about repaying debts that you owe.

You came here looking for advice. Ignoring it is your choice, but don't ask us to agree with you.

[bjl584]

I have student loans. I don't pay the minimum, but I also don't pay so much that it puts me in the poor house. I currently pay about double the minimum amount due. It's a nice balance, and I will have them paid off very early. I think that you need to find a balance.

You should pay your loans back. You voluntarily chose to take them out and go to school. You have an obligation to pay them back. That doesn't mean that you need to live in poverty to do so, but you do need to pay back that money that you owe. The same as you would pay your mortgage every month, your car payment every month, or whatever else. You took out the money, you now owe it. So, pay it back.

[jpg7n16]

I've read this guy's posts and only one word comes to mind: TROLL.

At least I'm hoping he's a troll, because the alternative is repugnant and pathetic.

Agreed

I am trying to shed light on an issue here. The logic on my side surely cannot be denied. The math is there. Why should I pay 2000 per month for 12 years, when I can pay 350 per month for 20 years. I am surprised as math savvy as you SAVERS are, you cannot see that. And the kids who think like me are the MAJORITY. I am trying to enlighten you guys.

Sorry, why did you post this "question" again? Your post was framed as someone who needed help deciding what to do with student loans, and now you're trying to "enlighten" us? If you already knew what you were going to do, why did you post the question?


Let me pose a question for you, why shouldn't I steal food when no one is looking? THINK about it, the conservative thing to do is save money on groceries. Tons of people get coupons all the time, and I need food. If no one notices, I can't get in trouble. Free food is certainly less expensive than food you pay for. So, math is clearly on the side of stealing. But:

Thou shalt not steal.
-Exodus 20:15

Hmmm. There is more at play here than just math.

THINK about it, the conservative thing to do is pay the minimum, and save my money for a rainy day, especially when there is knowledge of loan forgiveness out there.

No, the selfish thing to do is pay the minimum. The right thing to do is pay what you borrowed, at the terms you borrowed it on.

It's not very complicated. Did you, or did you not, sign a LOAN agreement in order to pay the school for your education? Were you, or were you not, aware of what that school cost at the time you enrolled? And how did you intend to pay for that education?

So you borrowed money to pay for your school, and now just don't want to pay it back. That's not conservative, or "saver"-minded. It's just childish and selfish.

My bride to be is actually a math genius and a geneticist. Thank god she put some perspective on me. Also, every last one of my colleagues from school LAUGHED when I told them about how this forum told me to throw my money away paying down something the very Government doesnt expect me to pay.

Are you sure that wasn't just the stuffed animals again?

[phantom]

I am trying to shed light on an issue here. The logic on my side surely cannot be denied. The math is there. Why should I pay 2000 per month for 12 years, when I can pay 350 per month for 20 years. I am surprised as math savvy as you SAVERS are, you cannot see that. And the kids who think like me are the MAJORITY. I am trying to enlighten you guys.

Let's play with the numbers a bit. I don't think waiting till the loan is forgiven is the home run you think it is.

First of all, if once you're married, you worked with your fiance to get your loans paid off as quickly as possible, I think you could pay off the loan in less than 12 years. I threw 7 years in a loan repayment calculator and came up with payments of $2850/month. If you did that, you would pay $190,000 in principal and $49,322 in interest for a total of $239,322.

You keep changing your income based repayment number. In one post you said, $400/month, and in this latest one you said $350/month. Also, you keep saying 20 years, when you should still have 23 years to go if you're only 2 years out of school. If you do manage to make 60k this year, 15% of your discretionary income will likely be higher than $400/month. Also, your income should continue to rise over the next 23 years, so your income based repayment number should continue to go up.

In order for forgiveness to be the better deal, 15% of your average discretionary income would have to be less than $239,322/23 years, or $10,405/year. So, your discretionary income would have to be less than $69,369/year. Maybe I overestimate how much chiropractors can make, but I think it's entirely possible that your average discretionary income will be higher than that over the next 23 years.

Another number to take into account is the amount of tax you will have to pay when your loans are forgiven. As far as I can tell, under the current law, student loan forgiveness is taxed as income. If you still owe $190,000 and are in the 25% tax bracket when the loan is forgiven, that will be $47,500. Maybe the laws will change, maybe I'm misunderstanding the current law, or maybe you won't owe that much. There are a lot variables, so I didn't include this in my calculations. But, it is something to be aware of.

I'll admit that my numbers also don't take into account the other things you could be doing with your money rather than throwing it all at student loans. They certainly do not leave you a lot of room to buy a house right away. But, I think my point still stands that the amount you would pay by just paying off your student loans doesn't have to be that much more than you would pay by waiting for forgiveness.

There are a lot more variables that you have control over when you're talking about paying off the loan. You have the ability to get rid of it more quickly, saving yourself more money. You also have the ability to bring in more money without being penalized for it.

Finally, as I said before, I don't think it's ever wise to rely on laws to set your repayment options. I worked for an outsourcing company that handled billing for power companies for a short while. One of the things that amazed me was how big a mess people got themselves into by trying to take advantage of laws designed to help them. One state had a law stating that power companies were not allowed to turn off the power in a residence where someone used a medical device requiring electricity to stay alive. The power companies would keep billing these people for the electricity they used and sending bills each month, but they could not actually stop providing power just because the people didn't pay. The problem came when either the people failed to get their paperwork in or the family member using the medical equipment passed away. Then they people would suddenly have to pay at least some of what they owed to avoid having the power shut off, which could be a very large amount if it had been a long time since they last paid.

Maybe the income based repayment and student loan forgiveness programs don't have pit falls like the one I described, or maybe you'll be smart enough to avoid them. But, you will probably have to be careful to make sure you continue to qualify for the program, and there will always be the risk that either you will miss something or some law will change, causing your plan to fail.

[seen]

I hate to play devil’s advocate here, but I’m intrigued.

She also said that after 25 years the loan is forgiven, so unless i start making 500000 per year the gov does not really expect me to pay it off.

I did a bit of research on IBR and it says that a student loan can be forgiven after 25 years provided certain requirements are met. OP, do you know what those requirements are? It sounds pretty vague, and I’m not sure if that’s intentional so that each individual can be reviewed on a case-by-case basis. In other words if you do end up with a successful practice, it sounds like you could be on the hook for the full amount plus the crazy interest you’re racking up regardless of time.

I don’t see anything illegal going on here. IBR is a government policy which may work in one’s favor should they never become successful. However OP, you should be aware that since you’re not in the public sector, any amount forgiven at the 25 yr mark (provided you qualify) will be fully taxable as income. At the rate you’re going, what you’ll wind up owing in tax will still be over $165k. Unless you die of course.

The only thing I’ll add is that when you owe money to anyone, you’re at the mercy of their terms for repayment. This forum is full of individuals who, among other things, strive to stay above debt so that they won’t be subject to said terms and limitations. If you’re comfortable with being the former despite knowing a lot can change in 25 years, more power to you.

[PSF]

Your logic is against what most people here believe is how a member of a community should act.

In a community such as ours, the individual makes certain sacrifices for the benefit of everyone (everyone includes the individual here). This usually consists of taxes and it is these taxes that have provided you with a loan to go to university, a loan that if repaid would benefit the rest of the community by giving future people the opportunity of an education as well.

By not trying to pay off this loan you are not just ignoring your responsibility, you're also ignoring the principles of the community for personal gain and therefore you will be shunned by the community focused person.

Does this mean that you should repay the loan? Entirely up to you. If you choose not to, you will not be alone. The banks (including their shareholders and bondholders) have done exactly the same thing by receiving taxpayer-funded bailouts when they should have all gone bankrupt with their poor investment decisions.

If you don't pay the loans off you may be personally better off, but everyone else will be a little worse off. So, by all means, don't pay back the loans, it is your choice, however know that (just like the banks) you are part of the problem our society faces.

By the sounds of it, your choice is an easy one, so just get on with it and don't complain about any negatives that come from your decision.

[TylerHartman]

Wo

All I can say is wow! Ill never live my life with loans for school of 190k that just makes my jaw drop, dang! And the way this guy acts is truly childish! I guess the gov should handout free money and we shouldn't have to reply :P