Why I'm NOT Paying Off My Student Loans
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- Äas pĆidĂĄn 28. 06. 2024
- I've been wanting to make this video for quite some time now and finally sat down and crunched all the numbers to make sure I had everything perfect! In this video, I talk about my thoughts on paying off student loans. If you are in medicine of have student debt from other graduate school programs, I'm sure this thought has crossed your mind. Should you pay off your student loans or just let them be and pay them off slowly? I had the same choice, but ultimately made my decision on what was right for ME. I discuss the options for paying off loans and give you an example of what I decided to do. Hope you all enjoy!
03:43 - Pros & Cons of Paying off Student Loans
04:30 - Who Should Pay off Loans?
04:40 - Pros & Cons of Investing over Paying off Student Loans
06:10 - Who is Investing good for?
06:42 - What I decided to do
07:30 - Example of MY investment
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#studentloans #studentdebt #debt
Disregard the bruise on my faceâŠAndriana stuck me with needles đ
Should I be calling anyone about this, lol
*SWEET!* then im not paying mine either! dont have time to watch the video, but im no less inspired. -JC
also Au auto deducts student loan payments at an ever increasing threshold, like tax - before it hits your account. so you have no choice. tho it i is indexed but ~interest free ish. but that is only for tuition. -JC
I've heard that student debt affects buying a home. fact or fiction?
Blink twice if you are safe
I struggled w/the decision 2 pay đČ off OR retain my savings. In the end I paid them off, because it came down to PEACE of MIND. â€
I did it as well. It hurts but Iâm free in the long term. Plus, I have enough in my Savings to stay afloat. Shout out to the unemployment checks, stimulus checks, scholarships, etc for getting me through!!!!
You are wise.
Same here, MONUMENTAL weight lifted off my shoulders
Plus, after all, it is a loan, and people are supposed to pay back what they borrow. Itâs a moral obligation for many.
@@tmusa2002 It's a LEGAL obligation for all borrowers!
I think it really depends on how much money you make based with that degree. I didnât make more money when I graduated instead my loan of 35,000 turned into 50,000 in less than 2 years. Iâm not helping myself by ignoring those loans.
True that
Do what you can to pay the interest, even if youâre in forebearance. If not, you do end up with much higher principal. It can hurt to make those payments but youâll thank yourself later. I did the same thing as Leejpo and Iâm still paying on loans that I should have finished a long time ago.
Use existing loopholes to exploit forbearance until (I believe) student debt will eventually be forgiven. Use free online schools (People's University for instance), sign up for classes, notify your student loans you're in school, the loans go back into forbearance... either pass the classes or fail them entirely, it doesn't matter. Keep doing that forever lol = no student loan payments. I've been doing this since 2012.
@@roland1912 The only problem is you have to be classified as a full-time student.
@@roland1912 itâs never going to be forgiven cuz politicians can get people to vote for them by saying they will forgive loans but they will never do it then just blame it in the other party and keep running on the same issue every year never fixing anting
I'm so glad you went down this route in your CZcams channel. I'm definitely going to keep this info in mind later down the road! Great video 10/10
Thanks so much for the kind words!
Personally I donât trust the markets at the current levels as the everything bubble might pop just as it can continue to inflate. For that reason Iâm paying off debt⊠paying off debt leads to a guaranteed increase in your NET worth, also gives peace of mind.
I was fortunate enough to get out of medical school with only $5600 worth of debt. This is also including my undergraduate degree.
I know this is a year later but way to go Dr. Steven!
Did you go to school 30 years ago?
@@laurab9518 Yes
So grateful within the next week Iâll be 10k left to completely paying my off 100k debt.
How were you able to do it?
@@saanvi848
@@saanvi848
@@steffan683 who is your financial coach, do you mind hooking me up?
@@saanvi848 Her name is Mrs Loretta Wilkinson you can look her up online
The examples with the graphics definitely help to understand how property investment works a bit better
Dave Ramsey is punching the air after watching this
Thatâs hilarious i searched the comment section for this. I was going to comment the exact same thing.
czcams.com/video/oDNRbRcutdA/video.htmlsi=9S4uQUNXG52RgiTV
Yay!! Love these types of videos. Thank you!!!!
Glad you like them!
Awesome video, I was just talking about your various videos covering this topic! Thank you!
anytime!
Great video! Really enjoyed it. Going to have to start making a lot of these decisions soon...
Thx man!
Love đ the variety of your videos đč.
I really liked your channel before you made the changes in your content, But now I like it wayy more!!
Great advice Doc, this is exactly what I aim to do when I graduate as a Dentist in a few months!
Chose to put a pool of money into buying a condo in 2020 instead of my student loan which was on PSLF anyways. The condo will be paid off in 3 weeks. I just found out from fedloan my 120 payments are done as of July 2022. If I weren't holding a letter from the government I'd never believe it. Great video!
Your so smart. This will help so many!
Love these videos!
Great advice, new to the channel . Good stuff
I know the real estate investment route is great but I think we also have to consider that when we do this, we are taking away affordable housing from people that would have bought that property and used it as their main home. It's a lot more expensive to be poor.
I understand what youâre saying but if the property was on the market and available, it could have been bought by anyone. Someone could have made an offer on it and used it as their main home for sure.
But I donât think what Dr. C did was wrong. Heâs not a big real estate investment firm snatching up dozens of properties and using them for Airbnb. In a way, heâs made the property more accessible for people who maybe couldnât qualify for a mortgage on their own. By allowing them to rent.
Thank you for saying this, I'm not sure why this gets left out of the equation.
As a first time first time homebuyer looking in the market, this is extremely frustrating. How am I supposed to compete with buyers like Blackrock who are able to pay in cash?! My 5% downpayment is never going to be able to compete. Unfortunate that others more well off use it as a secondary property for passive income.
That being saidâŠit isnât their fault and the responsibility falls on our law makers to do something about it. Canât really blame them because Iâd do the same thing if I were in their shoes.
@@calvinmiguel4405 they foot some of the blame because its greed, how much more money do they need ? at what point will it be enough ?
@@EmpireRamzes I agree, they deserve some blame. But it isn't illegal and nothing is going to stop them from doing it.
Seems like a pretty easy fix from our congressmen if they wanted too...give priority to first time home buyers. But that won't happen due to capitalism.
Hey Dr. Cellini, how have you gone about property management? Have you been able to find good property managers in the areas where you've bought your houses or do you have a different method for ensuring each property is functioning well? How does that cost of a property manager factor into the equation?
When talking about cash flow donât forget to factor in maintenance and property management fees. Cash flow would actually be calculated as rental income - expenses - mortgage = cash flow. Your cash flow on this property assuming you arenât managing it and using average numbers for maintenance in the south is 2700/year at 9.7% coc return. This is because part of your cash flow goes to a savings account for future maintenance and vacancy.
Thank you this really helped me make a decision
Love how you're evolving content on your channel. Great job!
Internal Medicine resident in NJ...I do enjoy your videos and thanks for sharing. I hope to make the right decision as time nears.
I appreciate this route and I understand how it makes sense financially. Who knows how I will feel in 8 years once I am finally an attending, but as of right now my plan would be to buy/lease a nice car and continue the delayed gratification for everything else and try to pay off my loans in about 3 years if possible.
Why would you get a car you can't afford with the most expensive option for "owning" it? You aren't delaying any gratification.
Love this - super clear and helpful! I always wondered what to do once I have an income with all these loans hanging over my head. This is great!!!
Itâs not âgreatâ itâs HIS life!
Please take stock of your own particular circumstance in life and goals for your own life and future.
Risk must be accounted for - then it wonât knock you down - and set you back in a way you never planned for.
These ideas he shared are based on his own approach to risk - you must do the work to figure out your own way.
Wish you the best.
You say "Do your homework" and "Do your research" but can you go into what exactly that means? Are you talking to property managers in the area? Are you on Biggerpockets forums? What is your process to analyze these deals to guarantee at least 17% ROI?
Great content once again! What State did you invest in?
Can you make a video about getting your first job as an attending and how to negotiate your contract?
I don't know if anyone will watch it lol
Thanks man. Iâm from the south (Tennessee) Practicing in Florida. How do you go about finding investment real estate? So little time!
Love the dive out of the frame on the outro. Very smooth. Can you please do a video talking about which companies you used / considered to refinance your loans? (And what year that was)
Thanks for creating this video, i was stuck in the exact same predicament you described and this video showed up like it was sent from heaven. Thanks again for the knowledge!
Nice vid thanks. So you live in NJ but own homes in the South? How do you manage them and find/vet them without being in proximity?
This is just relieving to me. Iâm the only person I know over 150k in loans and seeing a community of people who have that or more, makes me see itâs really not the end of the world.
Depends on your life framework
A cautious view might say, better to reduce debts in case investments donât work out. Real estate is a huge money sink depending on issues with it. Also our personal circumstances can change - risk is variable and unexpected- thatâs why itâs risk.
So this is one view he is sharing - there are certainly others.
135k here.
What is your job or degree in? Just trying to figure out with that much debt why people pick the routes they do when looking at financial numbers it puts you in a bad position ( not trying to be critical). I think Iâm just curious if the projected income outweighed the burden overtime
So I asume you were raised maybe middle income like me,,no silver spoon...WHY did you do this? You could have gone to community college and transferred in toma four year college saving half of your debt right there! Didnt you work 2 jobs like I did? I went from community college where I worked and also off campus in a second job, transferred into a four year private college worked as a secretary THERE, graduated cum laude. Then went to Northwestern University the fourth or fifth ranked uni in the USA for my masters and phd d in clinical psych worked those years as well was a lecturer, then instructor and became faculty...a professor of clinical psychology and eventually an academic uni administrator. I graduated all my degrees with ZERO debt and my working did not affect my grades or honors or career path at all! I lived under my income all my working life TOO...I socked every penny I could into my 401 K and was able to retire at 50...15 years EARLY to sail the Caribbean with my husband. We sold the boat after ten years and moved to a beautiful tropical highland home on the side of an extinct volcano in Guatemala. I still HAVE the money I retired with...this after travelng by air and cruise ship to Europe many times over the past 7 years...we live on two social security checks and one tiny uni pension from an earlier job.
I had no debt because I worked my azz off while I attended classes and studied...no social life, nose to the grindstone,,no parties, vacations drove an old VW bug. ALWAYS drove very well maintained, but older vehicles. NO DEBT, no debt on credit cards. Examine your lfe NOW while you are still young ...you can do BETTER. Really you CAN. You arent going to get handed free.stuff your whole life. Best to learn the lessons NOW while they can still pay off BIG for you. Nobody handed me an education, my condo at 30, my 45ft sailboat at 50, my retirement fund that is 70% MY savings and profit I made investing, not my pension. No one handed me this gorgeous now $500,000 home in Guatemala I pay $97 in annual property taxes on. I was always researching how to get here and working, you have to work hard, but most important work SMART.
You are NOT alone. I have friends with way more and I had 110k myself.
Just a question, how are u able to get mortgages for multiple houses? It's hard enough to get mortgage for one house lol. Private mortgage or through bank? Thanks
How do you handle maintenance issues for your properties in the south? I assume you donât live in the south right now
This is helpful although when do you plan on paying off that debt?
By having multiple rental properties, how does managing them go? Also are these properties within your state or out of state? How does that work for making sure your tenants are treating the properties well?
Was thinking the same. I had some extra cash and was making payments when it was at 0% just to pay them down and then realized I was just burning through liquidity and started investing instead. Loving the finance content
You're amazing!
well thank you!
Great video!!!!!!! Quick question - do you factor in the recurring maintenance costs for the property?
Incredibly interesting video, right now Iâm not in the same position as you but I will definitely consider what you just said.
Great vid! Just curious in terms of real estate investments - do you use property management companies or manage them yourself/with business partners?
Great Question. Dr. C Iâm loving the financial content you are putting out. Where I am from homes are completely unaffordable (Toronto) - Iâm talking since family 2000 sq feet homes going for millions in multiple offers, often on the market for less than a day. Multiple factors in play here - lack of transparency in the system, tonnes of foreign money pouring in. It has completely squeezed locals out of the market. Itâs common here for most millennials to be living with their parents for this reason.
So I am obviously looking into real estate investing elsewhere in the US for rental purposes. Would you mind sharing where this $84K property you bought exists? City / county / state would really help.
More videos like this, please!
Love your explanation and thought process sitting at 500,000 for Med school loans and 2 kids done with college, was going to be DR gazelle intense to pay off but with new salary of 200,000 annually and paid off house going to consider your ideas, hoping my CFP will lead me right
Please take stock of your own individual circumstance - and most importantly life framework
Are you situated w a reliable, stable career industry that will allow you to bet on that stability to tide you through a bunch of spending? Are you confident about whatever investment youâre about to sink your faith and resources into - have you accounted for a certain percentage of inevitable loss- or perhaps substantial loss?
What about your personal circumstance. How much hedge do you have against something impacting your ability to earn?
This guy is taking his own chance with his life - which seems to depend on a lot of things going his way. Preparing for risk is an important aspect of creating a secure life and building wealth - focus on the granular details of your own situation and personal life goals not anyone else!
@@macummings7818 thank you for your thoughts I certainly have a lot to learn!
HOW TO PAY YOUR LOANS OFF THE SMART WAY: Consolidate your loans into a Direct Loan. Apply for a student borrower to defense application. This application gives you a forbearance until the application is processed. It takes an average of 6 years for the application to be processed by the Department of Education. This gives you at least 6 years of interest and penalty free forbearance. After 6 years just repeat the process!
Dont u also have to consider the money u make on investing will be taxed? Especially at a high rate if ur income is already high
It depends on the account. If you investments are tax deferred (meaning you havenât paid taxes already ie 401k) then yes itâs something to consider. If you are using post tax money in a private brokerage investing, you will only pay capital gains rate on the interest. And if you are using a tax advantaged account (think Roth IRA) you only pay taxes up front and the interest grows tax free.
I am also interested in Real Estate and in medical school, do you think its a good idea to study for the real estate license and obtain one
If you have down time it would be nice to just say you have lol med school is already insane as it is. Thereâs so many resources online, it should be sufficient enough in getting a grasp of the ins/outs of the market.
Hey Dr. Cellini! I am going to matriculate into medical school this July and I have worked in real estate leasing for the past 5 years while in undergrad. How do lease contracts work in terms of repairs in Georgia? I have worked in North Dakota and Minnesota and we as landlords are typically responsible for appliances, etc. Are you ever concerned that a $1000 appliance replacement or some other repair would eat up a couple months of cash flow? Or is this the renters responsibility? You touched on this briefly but how would you go about budgeting an emergency fund for the investment vs your personal emergency fund? Thanks!
Landlord always pays for damages and appliances. Of course that could happen, and I may have to replace a dishwasher or something, but it's ok. That's just the risk you take. If it happens, it's just 1 months rent that either doesnt cash flow or is even. It's a long-term play.
Appliances and repairs, heat, air conditioning, the driveway, landscaping, snow removal, hiring a real state management company etc. are all the landlord responsibilities. The cash flow on rental properties is best be use as emergency funds for the property management. Replacing a wall holding a driveway and parking lot after many research and negotiating cost me 10 thousand $. The increase in equity on a property is really what to look forward to. If you donât use your cash flow as emergency fund for the property, you will just be adding debt over your existing debt.
Hey Dr. Cellini, do you think majoring in Psychology BA or BS for my undergraduate degree is a good decision if Iâm planning to be on the pre-med track?
It doesnât matter what your undergrad major is just so long as you take the required pre-med courses.
Could you do a theoretical "500K+" for those of us unfortunate enough to be in that position? Thanks!
What about property tax and upkeep? That would depreciate your cash flow percentage, yeah? 2.42% average in Jersey it seems - so ballpark $2,800-$3k annual property tax on the $120k assessed value.
So, if I am interpreting this video properly. If I have any student loans over 6% I should focus on paying those student loans off before putting that money into an investment? Right?
You didnât include costs of maintenance, management, etc. Do you use a property manager?
GREAT video!! VERY SMART!!
Hi, im a pre dental student going to dental school, where can i learn more info about real estate? I would love to know this information to decide whether to pay student loans fast or slow
Hmm seems like a great idea, its a lot better than my idea. Using monthly dividend checks to pay off the student loans, but overall its the same concept. I think you did it best using real estate and having sufficient cash flow where you can use the money from the rental properties to pay off the student loans in a quicker manner. Maybe when I become a doctor I would use a combination method (using monthly dividend checks with monthly rental income) to pay off my student loans.
When the real estate bubble inevitably pops again, hopefully Cellini has the cash flow to keep his many investments and debts afloat. Many regular people (not doctors or CZcamsrs) were buying up real estate in 2004 during one of the last bubbles (look up 'the big short', great movie) and they lost it all. Many of the laws that were passed to prevent that from ever happening again have since been repealed. We're definitely back in bubble territory.
I was able to purchase 2 homes with student loans. They look at your monthly payment. As long as that is low you will not have an issue.
Have you considered buying commercial properties?
The alternate question is, if the student loans are paid off quickly, how much money that would have gone to paying principle would instead be available for investment over time.
Right
This is such a scary bet to me
If part of the ROI is going to the debt then yeah
I calculated it, $100,000 in student debt amounts to $1.5 million in lost wages over 20 years.
It depends on what âquicklyâ is and how old you are. The one thing he omitted in his proâs and conâs list is your age and projected time left in the workforce. The younger you are, the more compounding interest on investments can overcome debt. But as you get older, the interest rate on the debt becomes increasingly significant.
What about the cost of managing the property?
I'm glad that this info is out there since many assume investing is gate kept. But also it normalizes having 250k+ in debt but it's ok if you're clever which soothes my psyche đ
Interesting. You should probably put some money in an index fund and some bonds to diversify. In fact I think it might actually be a great time to invest in shares now but index funds are probably the safest bet. Or you should put some money in gold. It's a great idea.
What state in the âSouthâ did you buy in?
Rental Payment - Rental Balance = Your cash flow till The Bank gets back all their money first. $28,125 - $250,000 = negative $221,875 of cash flow.
Facts
In other words how did you find the house? You had all the privileges possible for an up and coming IR attending
Iâm not paying off my student loans because the government has to learn fiscal, responsibility. Who in the right mind would give $133,000 to an 18-year-old kid?.
You are right. We shouldn't trust an 18 year old to vote either with that logic.
@@nf3922 whyâs that? Would you rather give $133k to a kid with no job or have them vote.
Lol you went to college but don't know the difference between fiscal and physical
That burdens you more than the government so that doesnât make sense.
Someone who knew you wouldn't pay it off and wants you in their debt. Their goal is to shrink the middle class and control you through economic means. Probably should of known this before college. If it's too good to be true...
Great video, this is some really important stuff to know! The one thing I think you miscalculated a bit with your real estate example is your Capital Expenditure. You should be putting away X-amount of money per month or per year to cover any unexpected costs like the example you used of your roof caving in. It should be looked at as a necessary expense rather than a potential once in a while bump in the road because even with the best of tenants, you will run into issues, things need to be fixed up, re-done, upgraded, etc. I definitely still agree with you that real estate is a great route to go if you have the money. Even with the CapEx calculated in you will still likely be earning a much greater ROI than investing in the S&P 500. Overall, great video and thank you for getting the information out there for more people to hear!
Great Video! Curious if you made an LLC for these houses and then also what other tax deductions you use.
Literally just had my mentor at my job (an anesthesiologist) yell at me to do something else because the debt of going was high and the pay is continuing to get lower/ âhe has to work more hours to make the same amountâ and it is very discouraging.
Okay
I plan to get a second job and do both đ
What zip code do you aim for in the south?
I regret all my studies... I should have work, save and invest... university was an illusion
Say that Again!
I've been paying it off for 20 years now. Its such an injustice.
I heard they can suspend your professional license if you donât pay it back
Great video! I'm doing the same thing with my loans (paying the monthly payment and that's it)
My only feedback would be to put in other expenses when calculating ROI (vacancy, Capex, maintenance, taxes, etc) That will help your viewers calculate a more real return.
Looking forward to more videos!!
Hi Dr. Cellini how were you able to refinance your federal student loans? Did you have to switch them to a different carrier? Thanks!
Yep. Refi'd all of them.
I donât think real estate is a good idea for people right now though. The market is still over-inflated, the key event being Zillowâs massive screw up realizing they bought too many homes way over retail value. I want to get into real estate too, but I think 2023 is a better year
When you took a student loan you essentially invested on your education. Now maybe a year ago the interest on a mortgage mightâve been 3% now itâs at about 8%.
As an aspiring real estate investor, Iâm absolutely loving these videos!
I think many people radically underestimate the value of being debt-free or at least debt-manageable to both themselves and the economy they swim in. The greater societal "bills" of decades of insincere borrowing are only beginning to come due. Geopolitical analysts are well aware of the darkness this will create on top of other realities like demographic collapse.
I chose the IBR route and currently paying $0.00 per month. There was a severe problem in getting hired so I see this as a viable option. Reviewed the choices many times and still came out with this choice. Now hoping that Biden will get his magic pen out and help many people.
You are only accumulating interest. Don't depend on the government to bail you out. Eventually the bills will start coming in if you start making more money and you will regret having waited for the government to come save you. I recommend you at least pay the interest rate each month.
@@diegolara4202 Your comment does not make sense. He is not accumulating any interest right now. Even if in May they decide to put a stop to the COVID forbearance, if he is planning to do PSLF, he should pay as little as possible, which would mean not paying interests if at all possible.
@@diegolara4202, maybe you have not heard of discrimination and with unemployment, the income is not high. $0.00 per month is based on income or income based payment.
Iâm hoping for a loan deferment extension again lol
Worked my butt off while in college (I just graduated in May). Saved about $60k (working minimum jobs btw lol). I just paid off $28k for Parent Plus loans yesterday. I'm going to gradually pay off the $26K for the next 9-12 months. I'm very good with money, I can make it all back and more. Personally having the thought of being in debt gives me massive anxiety, feels like a weight is on my back. I'm just happy to almost be debt free. I wish anyone who is in massive debt luck. Just come up with a plan and remain determined, things will get better, just make the best decision for you.
I would try your best to get out of debt. Yes you could make money by investing in the stock market but you can also lose or or just not make any progress. It can also cause a bunch of stress as the market goes up and down and something you can't just ignore when maybe you should be concentrating on your work. I get the real estate though
Big Hustle, and thats why I love medicine.
I would argue that your net worth will increase much faster by paying off loans BEFORE investing, even though you may have a higher rate of return on investments when compared to your interest rate on your loans. Great insights though, loved the vid.
No property tax?
I had about $200,000 in student loans. Paid it off in 24 months. I just wanted it gone. I of course had an emergency fund and also maxed out my 401k and bought a Tesla, took a couple trips. It helps to have a rental property that you can sell.
Sir how much do you earn?
would like to see more
I havenât looked at my loans in⊠a long time đ
This would drive Dave Ramsey insane
I love this video as well as the direction this channel is going!! Please continue to make more finance-oriented videos like these please :)
I started school late so even if I want to pay off my loans it will not happen. I will be very dead before I can pay them off.
My husband and I paid off everything with the baby steps but this is really interesting to watch.
You didnât mention anything about maintenance and/or repair costs on your rentals. We know that this is a variable expense but can be costly.
Hmmm, I decided to allocate income to both student loans and investing, both paying off loans and making capital gains plus dividend income. I would prefer to go harder on student loans, the thought of servicers charging me dollars per day/week/month in student loan interest is just unfathomable.
How much work is it managing these properties?
Zero...A property management company manages them 100%
@@DrCellini how much does the property management company cost?
How much work is it to find these properties?