How I Take Charge of My 375k Student Loan

The following is a Q&A guest post from a good friend of mine, who wishes to be anonymous. We have no financial relationship to disclose.

Here’s a list of great lenders to refinance your student loans with. (Note: by using the link, you will be supporting my website and getting a cash bonus yourself upon loan closure.)

 

  1. Prior to refinancing with DRB, what payment plan were you on for your fed loans? What was your monthly payment requirement?

 

Prior to refinancing my loans they were through the Federal government.  At that time I was doing income based repayment with a payment plan of $443 a month.

 

  1. What are the amounts of your student loans and their respective interest rates and lengths of terms? (For example, private bank loan at 8% fixed rate to be paid off in five years)

 

My loan total was around $375,000 with a 6.75% rate over a 30 year repayment plan.

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One of the strongest lenders with lots of funds, quicker closing and best rates. Apply here and get the DWM reader bonus!

 

  1. Why did you refinance your student loans at the beginning of pgy4, instead of waiting to see if you can qualify for public service loan forgiveness?

 

I refinanced because I wanted to start taking action towards my loans.  With the 6.75% my interest per month was near $2000. It would be very difficult to pay any amount above this much interest; in other words, I was watching my loan balance ballooning over time.

 

I didn’t feel that loan forgiveness was the best option for me because I didn’t want my job selection to be limited.  I didn’t want to stress about finding a place that qualified for the forgiveness program.  Plus I want to aggressively pay my loans off once I become an attending and not prolong the payment period to 10 years when I believe I can pay them off in 7.  I agree with you that since no one can guarantee they CAN find a forgiveness-eligible job immediately after finishing training, it is definitely possible that people will make IBR payments more than 10 years total.

 

  1. What additional information, other than the initial online application did DRB request from you?

 

DRB only requested my tax forms from the prior year, some income verification forms and a 45 day payoff from the company they were going to buy the loan from.  It was a very smooth process and their customer service is amazing.  Never a long wait and they are always happy to answer your questions.

Dr. Wise Money Image - DRB

Apply to DRB by clicking here, you will get $300 cash bonus and WCW will get a referral fee when you sign your contract. Win-win!

 

  1. What refinancing options did DRB offer?

The options I received from them were:

 

10 15 20
Rate* Fixed 5.65% 6.00% 6.25%
Variable 4.01% 4.26% 4.46%

*These rates include the 0.25% discount with monthly automatic debit.

  1. What interest rate and length of term did you refinance to?

 

10 year fixed 5.65%.

 

  1. Why did you choose fixed interest rate over variable interest rate?

 

I choose a fixed rate because I didn’t trust the market right now and the potential for the interest rates to increase over the next couple years.  If I could start paying off the loans aggressively now, I would have considered variable.  But the reality is I won’t be able to do that till 3 years from now.

 

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Apply to Common Bond by clicking here, you will get $300 cash bonus and DWM will get a referral fee when you sign your contract. Win-win!

  1. Does refinancing your student loans to lower interest rate change how you direct your cash flow? For instance, are you redirecting the difference between your pre-refinance payment and post-refinance payment towards retirement savings?

 

I’m using that extra money to invest in a Roth IRA and 401K, something I haven’t had the opportunity to do before refinancing my student loans.

 

  1. What were the pros and cons you considered prior to signing your refinancing contract?

 

The benefit of DRB was the lower interest rate, which will save me money in the long run.  Additionally, benefits of their service was only paying $100 per month instead of the $443 I was originally paying.  They also don’t capitalize your accumulated interest until you finish fellowship, instead of capitalizing every year like most other companies.

 

  1. DRB advertises a wide range of interest rate from 2.13% to 7%. Why isn’t your interest rate lower than 5.65%?

 

Answer by DWM:

4 major factors determine the interest rate: variable vs. fixed, length of term, debt-to-income ratio, as well as supply and demand of these student loan refinancing opportunities. In general, fixed, longer term, higher debt-to-income ratio, and smaller supply of these refinancing opportunities lead to a higher interest rate.

 

Upon finishing training, he can refinance his student loan again, where at least 3 of 4 factors would have improved: shorter term (7 year instead of 10), lower debt-to-income ratio, and many more companies refinance attending doctors than the current 2 refinancing PGY’s. When the companies compete for his business, he gets to choose the best interest rate/term.

How I Accelerated My Student Loan Payoff

  • I charge all my expanses that are chargeable onto my credit cards and funnel my (limited) cash flow towards debts with interests. There are lots of variation in terms what can be charged on a credit card. Some people’s circumstances even allow them to pay for rent on credit card. For example, before medical school, I would pay my landlord by buying whatever she needs on my credit card, including gas, grocery etc. This takes a little more effort than just writing a check. In my current situation (written in year 2015), I will buy grocery gift cards in the 1000’s of dollars (for 6 months to 1 year because there’s once a year 10% discount on gift cards)… and pay my electricity 1 year in advance. Funneling this way, often gets me NEGATIVE 1-5% interest for 1-1.5 years. That makes my savings for paying down my student loan even higher. but there’s a limit to this.
  • this 2nd method usually allows for more aggressive pay down of a higher interest debt. balance transfer checks. the cheapest balance transfer checks i got was with travelocity american express at 1% transaction fee for 0% APR for a year. So by writing a check of 15k towards a debt at higher interest (at least point for me, it would be my 3.375% mortgage), I would be saving 2.275% for the next 12 months. the balance transfer transaction fee is charged up front, just be sure that if your limit is 15k, that you write a check in the amount lower than the limit enough to pay for the fee or the check may not go through or worst still they charge a fee of some sort (over limit fee. i have never gotten a fee before, cuz always err on the safe side).
  • some banks allow you open a new checking account by funding with your credit cards. You need to be very cautious with this. You need to know that the action of FUNDING is equivalent to a PURCHASE, not a CASH advance. The big difference between how the act of funding a new bank account when processed by your credit card company is that purchase will bring you CASH BACK (if your card has cash back features), but cash advance will charge you interest @ 20-30% starting the day the transaction posts. So this method ONLY works if your credit card company processes your funding a banking account as a Purchase.
209x209_SoFi_SLR_Doctor
One of the strongest lenders with lots of funds, quickest closing and best rates. Apply here and get the DWM reader bonus!

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Apply to Earnest by clicking here, you will get $300 cash bonus and DWM will get a referral fee when you sign your contract. Win-win!

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Apply to Common Bond by clicking here, you will get $300 cash bonus and DWM will get a referral fee when you sign your contract. Win-win!

One of the only 2 companies that will refinance residents and fellows (PGY income) during training. The other companies only refinance a typical attending (high income) with typical student loan burden.

Dr. Wise Money Image - DRB

Apply to DRB by clicking here, you will get $300 cash bonus and DWM will get a referral fee when you sign your contract. Win-win!

Email drwisemoney@gmail.com to get personal referral & $200 bonus when your loan closes. DWM gets a referral bonus too.
Email drwisemoney@gmail.com to get personal referral & $200 bonus when your loan closes. DWM gets a referral bonus too.

DWM readers:

You get $300 bonus when your student loan refinancing closes with DRB, Earnest, or CommonBond when you apply from this site.

Click above to start your application, and you will get this bonus and support this website at the same time (I get a referral fee after you sign your contract.)

Note – you must click the “APPLY NOW” button after clicking on the link above.  If you navigate away from the DWM link, your participation will not be tracked.  If you would like to explore the site before applying, I recommend you do so in a separate tab.

To get First Republic Bank $200 bonus, you need to email drwisemoney@gmail.com for personal referral so the banker can track and credit your application when your loan closes.

Read more about how refinancing student loan saves you money here.

 

6 Things PGY2 Skimps On

I wrote about 6 things I splurge on with my limited PGY2 60k annual income. Today I’ll share 6 things I skimp on which gives me the money to splurge on what I care about without stopping me from accomplishing my financial goals, including paying off my student loans, maxing out 23.5k of Roth space (18k in Roth 403b and 5.5k in Roth IRA), and this year maxing out 14k in Mini Wise Money’s 529 college savings plan.

 

  • Clothes
    • I bought my entire professional wardrobe with $300 in Jacksonville when I was living on a boat docked at a marina. I was auditioning at Mayo Clinic-Jacksonville August of my 4th To save on expenses, I found myself room and board on boat for $100 and cooking for the boat captain. It was a really fun experience, having the sea-man’s rock while sitting in the reading room, sailing out to sea, finding giant clams and then making the freshest clam chowder that very dinner. There was a Good Will close to the Marina, where I bought silk Ann Taylor pants in nearly new condition for $4. With a mere $300 bucks, I bought an entire wardrobe to last me decades (as long I don’t get bigger.) I’ve had the good luck of fitting perfectly into a dress I bought at the age of 18 for our residency graduation dinner 14 years later.
    • I wear scrub for as many days of the year as possible. They are comfortable and multi-purpose. I wear them to work, as pajamas, cleaning, working out… I have innumerable pairs of scrubs which I wash and change between purposes.
  • Haircuts
    • My wonderful now 8 year old daughter Mini Wise Money started cutting my hair after she secretively cut her own (to our dismay) at 2.5 years old. I figure since she has the interest, I might as well encourage her. The first time she cut my hair, my hair turned out 2 inches shorter on the left than the right. She was so happy to play with mommy’s hair, I didn’t really care much about the length discrepancies between sides.
    • After more than 20 some haircuts, Mini now is a pro and I have life time free haircuts from her.
short hair tod
This was my attempt cutting Mini’s hair… not talented as MWM is with hair cutting. So we agreed that I can’t cut her hair but she will cut my hair for free for the rest my life!
  • Car
    • Is a total tool and nothing but a tool in my opinion. I need it to get from point A to B. in 2007, I walked into Honda dealership wanting to purchase a Honda Fit for the most economic price and gas millage to transport Mini and me safely. I walked out that very same day with a Honda Pilot… That goes to tell you, one the salesman was good, two, I really don’t care what box with wheels my means of transportation is.
    • I have a Toyota Prius, which is a pass me down from Mini’s dad. I love its gas millage and am determined to drive it until the wheels fall off.
  • Shoes
    • I don’t skimp on the quality of the shoes, but I do skimp on the quantity of my shoes.
    • Mini says, “Mommy, let me buy a new pair of shoes, your shoes have holes right now… I can see your socks which also have holes… through the holes of your shoes…” My response is, “Honey, I don’t need to replace these shoes yet, look where the holes are? They are on the sides and they are small… don’t impact the functionality of these great shoes at all… just cosmetics.”
    • I don’t care about how things look, just how they work.
  • Fancy meals
    • One of our favorite treats is a local authentic, mom and pop Mexican food shop that cooks everything from scratch. No cans in their kitchen. Going there is like eating at home, without the dishes, with excellent service and attention. We sometimes also use the $10 off $30 above coupon, which is incredible. We spend about $25, tips included for our family of 3 and have plenty of left overs for the next day. What’s best is that $25 at McDonalds (most of our society believe the cheapest food is fast food) will only get you Empty calories, nasty food-like petroleum products, and horrible health consequences and no left overs.
  • Spend less and live more
    • This is more of a principle than an item that I skimp on.
    • Notice how I ramble on more with this Skimping article rather than the Splurging article? It’s because not spending requires more creativity than spending. Anyone can make the dollar bill rain, without thought, consideration, or resourcefulness. No wonder Americans keep consuming, keep feeling more bored and need more stimuli which they keep seeking in more consumption. This is madness. Let’s break the cycle and stop splurging. Or at least think about what splurging brings to the sum happiness and meaning of your life.
    • Challenge yourself to consume/purchase nothing other than food/gasoline/electricity and other necessities to survive for a week. See how you feel. You might just end up loving the detoxifying effects of not consuming endless materials you have no need for.
    • Go for a night walk, make a yummy organic seasonal vegetable medley tonight, star-gaze, write a letter to your kid, read a book, or turn on YouTube and do yoga! I find these things immensely more enjoyable than going shopping… after all, what do I need that I don’t already have?

What do you skimp on? Flip side, what do you splurge on? Are you happy with your skimp/splurge balance?

 If you like this article, you might enjoy other DWM articles on Personal Finance, Investing, Retirement, Practice Management, & Lifestyle.

All articles by DWM are for informational purposes only and not intended as a substitute for professional advice. Please consult a professional accountant, financial adviser or lawyer, before making financial decisions.

Get Money Wise & Support Mini Wise Money!

I recently started writing for Physician’s Money Digest.

It has been great fun, reaching so many doctors/ aspiring doctors on such a reputable discussion forum.

 

An awesome bonus is every unique reader/visitor of any one of my articles on PMD generates a small payment, on which after I pay taxes, I’m contributing to Mini’s 529 college savings.

 

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Mini has always be a loving & giving kid, even before she could talk. She was 6 months old here, feeding her grandma seaweed in her little clutch, at a tender age when she prefers to use her hand over a spoon.

 

I’m currently publishing Wednesdays and Fridays, 2 articles a week. I may slow down the frequency to once a week As my wise radiology residency program director Dr. G told me, “people don’t want to read that much. Publish less frequently, and people will be more eager to read your articles.”

 

If you know Mini or like Mini from learning about her on this blog, help contribute to her college fund by reading my fun/informative PMD articles.

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If somehow debt terminator or making $400/hr being your own boss bores you to tears, you can just click and share without reading at all.

 

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Your clicking & sharing will help a young aspiring artist, Mini Wise Money, pursue her dreams and aspirations. This is Mini’s version of Jackson Pollock. She plans to Jackson Pollock her room ceiling this year.

 

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Here you can find all the articles by Dr. Wise Money on Physician’s Money Digest. 

Thanks to you all, my articles have made the top 5 favorite the first and 2nd weeks I published on PMD. Let’s keep the awesome trend going.

 

Seems Costly, but Definitely Worth It.

“If you are depressed you are living in the past.
If you are anxious you are living in the future.
If you are at peace you are living in the present.”
― Lao Tzu

 

pure joy
How could I wish Mini to continue emanating pure joy, when I wasn’t doing the same?

 

I have rarely felt peace this past 10 years; I’m turning 32 this June. This last decade, I was too busy living in the future or in the past. When I slowed down and looked around me, I was shocked to find how pleasant and amazing the now could be.

 

Recently, I arrived at a heart-wrenching decision to live separately from my partner of 10 years. He is a good-hearted man. I love him. I’ve worked really hard to love, serve, and collaborate with him for my daughter’s sake and for my own idealism. I met him at 22 and have always wanted to grow old with the singular man for the rest of my life.

 

However, I finally had to acknowledge that I could not force our relationship into a functional and nurturing one, at least not in our current living arrangement. We are not making each other better people. I looked at my life, closely for once. I realized I was miserable.

 

I’ve changed, so gradually over the last decade that it was imperceptible to the un-reflective and numb me.

 

I used to cook up a storm and invite 20+ girl friends over for dinner in my college apartment (much smaller than my current home, though it felt plenty spacious for my gregarious social life.) I used to laugh and giggle about the smallest things. I used to swim backstroke while singing Pocahontas’ Colors of the Wind.

 

I used to praise more and criticize less; sing more and yell less; love more and fear less; smile more and frown less; admire more and envy less.

 

I used to like who I was. Realizing the contrast between my glorious distant past and my recent past is depressing.

 

So I chose to take action. Now. Today.

 

As much as it is scary and hurtful to live separately from him, I have to do it. It is by all criteria: logical, emotional, spiritual, the best thing for myself, my daughter, and him.

 

Timing is never good.

 

I chose the toughest year of my professional life to live separately from him. I will be working at the hospital 10 weeks on night calls and 6 24-hour-weekends. I dare not think of the logistical nightmare of finding childcare, trusting someone else with Mini while I’m gone from 7pm-8am, 7 continuous days at a time.

 

But I’m determined. The fear of the unknown future should not stop me from living today.

 

So I’m sticking to my decision.

 

As my sister said, “Unfortunately no matter how much an endeavor makes sense or how worthwhile it is, those merits cannot overcome the pain that might accompany the undertaking.”

 

I have reflected over the pros and cons of separation from my 10-year-partner; the former outweighs the latter by a landslide. But the action of severing from the known, familiar, “safe” habits is still painful and frightening.

 

Yet for the peace I can embrace today, I’m sticking to my decision.

 

Life is too short to live in a future that I dreamed up or

be stuck in the past that I wished I could return to.

 

I am living the life I want. Today.

I will be posting the financial consequences & impacts of living separately from Mini’s dad soon.

Yes, it is a financially costly, as it is opposite of WCI’s mantra “one house, one spouse, one job.”

Yet the intangible & deeply perceived benefits are priceless.

peace

I want to see her eyes of peace & joy again.

I want Mini to laugh without a care for anything around her.

I want Mini to sing & dance upon waking each morning without worrying about disturbing others (exactly what I love doing too.)

If you were in my shoes, wouldn’t these wishes warrant you giving your all?

 

dream home
This is Mini & my dream home, 7 minutes from Mini’s dad. Fingers crossed, final offer submitted 5/6/16.

 

Dear close friends and family members,

Do not worry. This decision is truly for the better.

Mini’s dad is a wonderful man. He just needs different things from what Mini and I need now. Mini and I are gregarious; we enjoy hosting play dates & dinners. Mini’s dad works a lot & cherishes his peace and quiet. All 3 of us think the Mom’s house & Dad’s house set up is beneficial. We get the best of both worlds.  I’m purchasing a home close by, & Mini’s Dad’s buying our current home. We get to spend family time whenever we’d like & also relish different lifestyles in 2 separate physical dwellings 🙂

More happy updates to come!

Love and peace,

DWM & MWM

 

 

  • Have you ever made a seemingly costly decision which you knew was totally worth it?
  • Are you living the life you want today? If so, how did you accomplish so?
  • If you’re not living the life you want today, what is stopping you?
  • Have you ever heard someone, (a miserable partner) said, “we can’t afford to live separately?” Do you think this is a matter of affordability?