How fast can you REALLY pay your loans? Forum

[Anonymous User]

I'm starting at a D.C. firm this fall. Looking at ~125k in loans. I'll be paying 1650 for rent (19800 for the year). No car, so no insurance or parking costs.

Take-home looks like it'll be approx 98k (I'm single n have no dependents). I'm an extremely low-maintenance male. Don't plan on taking any vacations within the first year. But, I do like to go out and drink.

What do you all think is a reasonable expectation for how much I can throw towards loans? I'd like to pay down 50 in the first year, and tackle the remaining 75k in the following 2 years. Anyone think this is reasonable/unreasonable? I'd be interested to hear what some TLS members were able to pay down in their first year living in either NYC or DC.

[09042014]

50 is really high. I bet you could do 40 if you really tried though. That should pay you off in 4 years.

Why is your takehome so low, mines a lot more than that but I live in VA.

[daleearnhardt123]

my online take-home calculator seems to indicate that that's just the going rate for D.C. Looks like VA is 3.5k or so higher for the year. Interesting thing to take into consideration for where to live, perhaps...

[dixiecupdrinking]

I'm starting at a D.C. firm this fall. Looking at ~125k in loans. I'll be paying 1650 for rent (19800 for the year). No car, so no insurance or parking costs.

Take-home looks like it'll be approx 98k (I'm single n have no dependents). I'm an extremely low-maintenance male. Don't plan on taking any vacations within the first year. But, I do like to go out and drink.

What do you all think is a reasonable expectation for how much I can throw towards loans? I'd like to pay down 50 in the first year, and tackle the remaining 75k in the following 2 years. Anyone think this is reasonable/unreasonable? I'd be interested to hear what some TLS members were able to pay down in their first year living in either NYC or DC.

$50k is possible (especially considering you should get a big tax refund after your stub year) but tough. It's definitely doable to do $4k/month much or most of the time, but to get to $50k on the year, you have to do that every month, and there will be times when you have to/want to go on a trip, go to a wedding, buy a couch, etc., etc.

I don't think I'd plan on doing more than $40k for the year, and if everything breaks right, then you can top that.

[Big Shrimpin]

MFH biglaw started with high 100s.

Not frugal but not wasteful.

Pay 3.5k/mo to loanz.

Expected payoff total of about 4.5 years or so, which I'm sure is about the time I'll get canned.

Fuck me for wasting so much money on LS.

Edit: the TYRANNY of 7.8% interest.

[jd20132013]

What would it take for you to do 5k a month?

[09042014]

What would it take for you to do 5k a month?

98k is

8k a month.

(1650 Rent)

(400 Utilities)

(100 for metro)

= 5860 and that's without spending a dime on anything else.

(2000 food, drinks, and entertainment)

(1000 random spending)

= 2860 is a pretty good realistic number.

[mickey0004]

I put in ~$5,000 per month. I live close by, so no commuting costs. On nights I work late, I order enough so there is leftover for lunch the next day. I go out and splurge on weekends, but on weekdays, I spend probably less than $30 over the course of the week. It's all about habit. Be frugal on weekdays and splurge to recharge on weekends.

Also, $160k in non-MFH.

[Old Gregg]

SoFi and call it a day. If your interest rate is at the 2.93%, you should be paying the minimum payment for all ten years and putting the money you save to work.

[09042014]

SoFi and call it a day. If your interest rate is at the 2.93%, you should be paying the minimum payment for all ten years and putting the money you save to work.

Did you actually get 2.9? I have good credit and got 3.9. But that's variable rate. My 15 year fixed was 5.9.

[Citizen Genet]

What would it take for you to do 5k a month?

98k is

8k a month.

(1650 Rent)

(400 Utilities)

(100 for metro)

= 5860 and that's without spending a dime on anything else.

(2000 food, drinks, and entertainment)

(1000 random spending)

= 2860 is a pretty good realistic number.

If you're being frugal, you can get by on much, much less than $2k for food, drinks, and entertainment. Even if you're going out every Friday or Saturday, you can still take it down quite a bit. Cut that down to $1k and you can hit over 40k per year pretty easily.

[mickey0004]

SoFi and call it a day. If your interest rate is at the 2.93%, you should be paying the minimum payment for all ten years and putting the money you save to work.

I don't understand this whole refinance to a lower rate and pay the minimum for ten years method. Yes, I get that money saved and invested will get you a higher return than your loans in the market. But, the thing with law school loans is that the principle is so high, your monthly payment will always take a big chunk out of your paycheck ($1500-$2000, @ 3%, for 10 years, depending on your loan balance.)

You will need to find a job that can support that type of payment for ten years. This is a huge risk, especially in the legal market right now. Even with Sofi, I think the better strategy would be to take down the balance to a manageable loan balance, where you would be able to afford the monthly doing shitlaw or whatever.

[dood]

Edit: the TYRANNY of 7.8% interest.

yes. FML.

[Orlandipo]

At 125k you're also going to be paying back ~9k in interest a year, so making 4k/mo in payments is really <40k against your loan.

[Old Gregg]

You will need to find a job that can support that type of payment for ten years. This is a huge risk, especially in the legal market right now. Even with Sofi, I think the better strategy would be to take down the balance to a manageable loan balance, where you would be able to afford the monthly doing shitlaw or whatever.

What? If shit hits the fan you'd still have all that money saved up to pay off your loans. Not quite getting you here.

[Old Gregg]

SoFi and call it a day. If your interest rate is at the 2.93%, you should be paying the minimum payment for all ten years and putting the money you save to work.

Did you actually get 2.9? I have good credit and got 3.9. But that's variable rate. My 15 year fixed was 5.9.

When I did SoFi, I got 2.9 (after auto debit adjustment).

[09042014]

SoFi and call it a day. If your interest rate is at the 2.93%, you should be paying the minimum payment for all ten years and putting the money you save to work.

Did you actually get 2.9? I have good credit and got 3.9. But that's variable rate. My 15 year fixed was 5.9.

When I did SoFi, I got 2.9 (after auto debit adjustment).

Damn, I wonder if my huge balance hurt me.

[mickey0004]

You will need to find a job that can support that type of payment for ten years. This is a huge risk, especially in the legal market right now. Even with Sofi, I think the better strategy would be to take down the balance to a manageable loan balance, where you would be able to afford the monthly doing shitlaw or whatever.

What? If shit hits the fan you'd still have all that money saved up to pay off your loans. Not quite getting you here.

To get a return that is more than 3%, after tax (I'm assuming you won't be investing in non-taxable investment, since there's an early withdrawal penalty for most of them), you will need to put your money somewhere for 5 years, or at least three years. So first, you will have to not get canned 5 years so your investment can earn a higher return than your loan interest. Then you will have to be sure that your balance in your investment will not be depleted so you can afford that high monthly payment for those years not working in biglaw. That's two layers of risk. A high monthly loan payment = high risk of default, it's why banks will charge you a higher interest for mortgage/car loan if you have a high monthly loan payment.

[09042014]

You will need to find a job that can support that type of payment for ten years. This is a huge risk, especially in the legal market right now. Even with Sofi, I think the better strategy would be to take down the balance to a manageable loan balance, where you would be able to afford the monthly doing shitlaw or whatever.

What? If shit hits the fan you'd still have all that money saved up to pay off your loans. Not quite getting you here.

To get a return that is more than 3%, after tax (I'm assuming you won't be investing in non-taxable investment, since there's an early withdrawal penalty for most of them), you will need to put your money somewhere for 5 years, or at least three years. So first, you will have to not get canned 5 years so your investment can earn a higher return than your loan interest. Then you will have to be sure that your balance in your investment will not be depleted so you can afford that high monthly payment for those years not working in biglaw. That's two layers of risk. A high monthly loan payment = high risk of default, it's why banks will charge you a higher interest for mortgage/car loan if you have a high monthly loan payment.

Where can you get a safe 3% ROI?

[smaug_]

Where can you get a safe 3% interest?

in his case, by paying off his SoFi loans outright

[mickey0004]

Where can you get a safe 3% interest?[/quote]

I'm using 3% because that was the Sofi refinance rate. The only way you get a "safe" return is to let your money sit for at least 10 years, then historically, you can get 7% in the stock market.

[09042014]

I'm going to pay my SOFI down until my payments are reasonable on a 100k salary and then buy a house instead.

[thesealocust]

Where can you get a safe 3% ROI?

10 year treasuries were flirting with 3% not long ago, and are "only" down to 2.548% now.

[09042014]

I'm going to pay my SOFI down until my payments are reasonable on a 100k salary and then buy a house instead.

Just looked at how much the mortgage interest deduction would save me. HOLY SHIT. I think I might buy earlier.

[Old Gregg]

You will need to find a job that can support that type of payment for ten years. This is a huge risk, especially in the legal market right now. Even with Sofi, I think the better strategy would be to take down the balance to a manageable loan balance, where you would be able to afford the monthly doing shitlaw or whatever.

What? If shit hits the fan you'd still have all that money saved up to pay off your loans. Not quite getting you here.

To get a return that is more than 3%, after tax (I'm assuming you won't be investing in non-taxable investment, since there's an early withdrawal penalty for most of them), you will need to put your money somewhere for 5 years, or at least three years. So first, you will have to not get canned 5 years so your investment can earn a higher return than your loan interest. Then you will have to be sure that your balance in your investment will not be depleted so you can afford that high monthly payment for those years not working in biglaw. That's two layers of risk. A high monthly loan payment = high risk of default, it's why banks will charge you a higher interest for mortgage/car loan if you have a high monthly loan payment.

LOL.