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Old 10-08-2018, 07:25 AM
 
4,980 posts, read 2,696,664 times
Reputation: 9150

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850k at 7.5% is a major ouch and should be paid off ASAP. Before a house before a 401k before anything that thing needs to go bye bye.

 
Old 10-08-2018, 07:28 AM
 
1,626 posts, read 534,672 times
Reputation: 3492
I rate this post a 2/10. Decent trolling is believable at first, that way it sucks us into the conversation and gets us invested before going full blown troll.

Re-roll a new account and try again.
 
Old 10-08-2018, 08:44 AM
 
7,335 posts, read 11,507,173 times
Reputation: 8111
Quote:
Originally Posted by Quietude View Post
I'm getting that troll-y feeling here, but then, anyone who needed a (borrowed) million dollars in education to get to this level of questionable ethics probably doesn't measure up to most trolls.
I agree with you about OP, but I don't think you are correct.

If you die, education debt is discharged.

If you pay for 25 years, the debt is discharged.

So, in practice, yes, you can just pay the loan in perpetuity, although if you are making 450K a year as a married couple, there's no way to avoid the loan companies from charging you an enormous monthly payment, and with the interest, you might be only barely chipping away at the loan.

I know a few people who are doing this with smaller loan amounts. They'll pretty much either have their debt discharged after 25 years or die with it, and it becomes just another monthly payment, like cable, utilities, rent, etc.
 
Old 10-08-2018, 08:53 AM
 
Location: Houston area
760 posts, read 805,412 times
Reputation: 1737
I think you should not be able to buy a house if you have unpaid student loans.

And by the way, taxpayers foot your college education and we want our money back.
 
Old 10-08-2018, 09:45 AM
 
2,700 posts, read 1,725,690 times
Reputation: 5851
Quote:
Originally Posted by Whyrallnamestaken View Post
I think you should not be able to buy a house if you have unpaid student loans.

And by the way, taxpayers foot your college education and we want our money back.
That’s pretty terrible rational. Student loans are already attached with many strings. I don’t see a single legitimate reason why limiting acquiring covanents for unrelated debts makes sense. And if they actually did that, perhaps it would be time to reduce the interest rate to accommodate for the lower risk?

Also, don’t have too much sympathy for the poor poor taxpayer. Just a few years ago, the federal student loan program was the third most profitable entity in the world behind Apple and Exxon mobile.

Last edited by Thatsright19; 10-08-2018 at 10:05 AM..
 
Old 10-08-2018, 11:50 AM
 
Location: Raleigh
8,229 posts, read 6,103,669 times
Reputation: 11449
From a very practical perspective, even if he lives somewhere like NYC or SF, OP can easily pay off all his debt in short order. Like, eight years or so still leaving himself $100K to live on.

And even if he just leans into it for a year or two, the amount of his income required to service the debt will go down.
 
Old 10-08-2018, 12:31 PM
 
2,404 posts, read 3,638,856 times
Reputation: 4674
Quote:
Originally Posted by City Guy997S View Post
weird part for me: Who makes 440K a yr and specifically mentions the 50 hours a week worked? I have never heard of highly paid people speak about how many hours they work.

My guess is a Surgeon or other Medical Specialist working for Medical Practice Company which provides these services on a contracted basis to various hospitals. With this arrangement the hours/week can be relatively stable.
 
Old 10-08-2018, 01:59 PM
 
Location: Raleigh
8,229 posts, read 6,103,669 times
Reputation: 11449
Quote:
Originally Posted by City Guy997S View Post
weird part for me: Who makes 440K a yr and specifically mentions the 50 hours a week worked? I have never heard of highly paid people speak about how many hours they work.

Cutting the gross wages in half (220K) and breaking it down weekly indicates a $84 an hour job (not specifically calculating overtime).
Doctors and CRNA's spring immediately to mind. A CRNA (Certified Registered Nurse Anesthetist) often works at two or three places. IE, they work full time for a hospital then might work part time at an outpatient Surgery Center or for a Plastic Surgeon, etc...Scheduling is "weird" due to the nature of the work.
 
Old 10-08-2018, 03:00 PM
 
Location: Watervliet, NY
4,209 posts, read 1,548,476 times
Reputation: 7758
Quote:
Originally Posted by PriscillaVanilla View Post
$23,000 car loan? You could have just bought a cheap cash car instead.
IKR???? And to think I'm driving a 7 year old car that I paid $9,800 CASH for 6 months ago and owned outright when I drove it out of the dealership??? The only things it's needed done are wear items that would have to be replaced anyway.
 
Old 10-08-2018, 03:49 PM
 
Location: The South
5,177 posts, read 3,605,526 times
Reputation: 7763
Quote:
Originally Posted by jackwhite99 View Post
I recently started another topic on 401K vs IRA.

But this thread is a little bit different topic.



Between my wife and me, we got 945,000 in loans total.

850,000 federal loans with 7.5% interest.
$50, 000 private bank loan at 7.75% interest

$15,000 credit card loan consolidated with a bank at 10% interest
$7,000 on two credit cards at 12% interest
$23,000 car loan at 0.9% interest


My current income is low and so is my wife's. Next year we will be grossing $440,000 if we work 50 hours per week. That's puts us at 35% bracket.



How do I approach such a big loan? Is it even worth paying off? I was thinking for awhile about this.
We are both on Income Based Repayment (IBR) which means the more money we make the more we have to pay towards the loan. Uncle Sam gets to tax us higher if we work more.



Here is what my friend and his wife did (both in same situation)


He decided that he will never pay off his school loan, he bought a house for $1,000,000. He works 50 hours per week and will pay off the house in 8 years. His loans in 8 years will be $1,500,000 but he will never pay them off. Instead he will cut down on the amount of hours he works to 20 hours per week so he can pay less taxes and less towards his income based repayment. His income based repayment will go down from 15% of 500,000 to 15% of 120,000. Then he will retire and continue to pay that 15% of his maxed out 401k in addition to taxes.



15% of 500,000 is 75,000 per year for 8 years. So he actually pays $600,000 in 8 years towards his loans. Then he will probably work for another 12 years at 120,000. 15% of that x12 years is 216,000. Then he retires and pays 15% of maxed out 401k which i would presume would be very little.

So total money given away to loans is about $816,000. Total money made $1,000,000 in property and maxed out 401k.


What do you guys think of that?


Obviously the other alternative is pay off the loan. We could probably contribute 200,000 per year for 7 years. We would pay a total of $1,200,000. 7 years from now we would still have no house, meager 401k contributions.
You spent the money, you pay the debt.
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