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Happy 2016! My yearly NYD entry

January 1st, 2016 at 09:05 am

Ahhh, New Year's, the time when old men's thoughts return to financial survival! At least mine do!

As usual, I am stressing big time over huge college costs and the resulting student loans for my kids. Throw in that I am nearing retirement age, so as Homer Simpson says, it just gets worse and worse! But time for the tough to get going, I suppose!

As much as you can get involved in a philosophical debate about how long to support your progeny (20s? 30s? OK, 40s and they are out!), to me it sort of comes down to survival. So far I have followed the usual advice to consider your own retirement first, but it kills me to see my daughter head into 5 years of low paying residency and letting those loans compound like a cancer if she has to do income based repayment. So my original plan was to cover the payments for those 5 years, but now that it is nearly time, I am getting a little sticker shock here! But mainly it is the fruitlessness of just paying a ton of interest every month. In retrospect, I certainly wish we had entered an "austerity" budget 4 or more years ago and paid as we went, but the costs were just so high that I guess I froze up and took the easy way out. So the only thing it looks like we can do now are somehow refinance and/or just try to pay them down.

I am bothering the forums asking about this, and I am getting some good input, like the loan forgiveness plan that was apparently put in place around 2007 for people in public service occupations, so I am doing some research, but it appears that most of the residencies my daughter is considering do not meet the requirements for that plan.

OK, sorry for such a bummer post to start the new ear, but I need to work on this and you guys are one of the best support systems around! Thanks for listening, if anyone is still reading, that is. Smile

Oh yeah, to add a touch of positivity, I did FINALLY manage to lose about 10 pounds last year, so that proves that longstanding problems CAN be successfully addressed. Like finance, it is a matter of simple math, but both can still seem to be wicked problems!

17 Responses to “Happy 2016! My yearly NYD entry”

  1. creditcardfree Says:

    Happy New Year! All you can do is move forward gather as much information as you can. Will you and your daughter be working on the repayment together? Refinancing is a good idea. You and your daughter might consider a side gig of income to funnel towards these loans in addition to regular payments (or to help with them).

  2. Ima saver Says:

    Well, I am still reading. I have a very dear friend who is burdened with a lot of student loans and I feel so sorry for her. I wish I could give you some advice, but all I can say is, hang in there! I was surprised at the amount of interest that my friend is having to pay. (We are holding her mortgage and I am trying to give her financial advice.)

  3. Ralph Says:

    Thanks, ccfree! A side income will be tough for her since they work residents to death. And a very long commute leaves me with little free time.

    The amount we are working together is sort of open right now. Of course her and her mother think I should help a ton, but that makes me nervous, to sink all my available income into helping her when I should be finishing strong on retirement saving.

  4. Ralph Says:

    Thanks, Ima! This is the problem of the future, I am afraid, and it makes CC debt pale in comparison. I say the root cause is absolutely absurd tuition costs. Add to that that the students have to live on usually no income for 4 years undergrad or 8 years professional (it is pretty hard to work during especially medical school) and it is just a financial tsunami. And her payoff is so far in the future. I personally don't know why anyone without very well-off parents would want to suffer through this. I hear that other countries make it much less harrowing to become a doctor.

  5. Mrs. Frugalista Says:

    Help if you can but do not neglect your retirement to fund your daughter's education. She has many years to repay the loans but you only have a certain time frame to beef up your retirement. My humble opinion.

  6. Petunia in a Flower Garden Says:

    Good to hear from you Ralph! No suggestions here I'm afraid - Daisy is still in high school. At least you are looking at this situation. So many play ostrich and then are shocked! shocked I tell you! when they discover what student loans actually mean. I would also be concerned about sinking all of my dollars into college costs when retirement looms - I don't blame you for wanting to finish strong on retirement. It sounds like things are/will sort themselves out to have some balance.

  7. creditcardfree Says:

    I do feel that your priority should be your retirement. I think you would regret not saving strong for that. And as we know you can't borrow for retirement.

    Even selling some excess stuff in your home could net a little assistance. Those are the type of side gigs I'm referring to. Credit card rewards for spending you do anyway could be funneled to the debt. It may seem like a drop in the bucket, but it has to help a little.

  8. rob62521 Says:

    I agree with most...don't forget to fund your retirement. I can't give any advice on the loans...I attended college decades ago and although I had to work like a dog to get it paid off, I did graduate not owing anything. I know I was indeed blessed.

  9. Carol Says:

    You might want to look at "the white coat investor.com." It's a blog geared to doctors and helping them to be smart about their money. The author is a doctor who also posts on Bogelheads.org which is where I heard about him.

  10. patientsaver Says:

    I can't help but get the feeling from reading your post that you are taking on your daughter's debt as your sole responsibility.

    For instance, "it appears that most of the residencies my daughter is considering do not meet the requirements for that plan."

    Given the stress you're experiencing and the sacrifices you are considering, might it not be better if your daughter at least thought about changing her residency so it would qualify for the loan forgiveness program? It's all well and good if your daughter is pursuing her dreams, but if she's saddling dear old dad with the burden of repayments, that doesn't sit right with me.

  11. Dido Says:

    Definitely check out the whitecoatinvestor.com. Doctors' finances are different than the average joe's. Once she is earning, she'll have a good income and much better than average retirement options (many doctors have some sort of non-qualified deferred compensation plans to allow them to save for their own retirement beyond the limits of the qualified plans), and she'll be able to deduct some of that loan interest. She'll be paying a lot of debt for about 20 years, yes, but when she's your age, she'll probably be earning more than you are today (adjusted for inflation), and she will have had a decade beyond the student loan payments to accelerate her own retirement savings and savings for her kids' education. I know the interest rankles, but, as with all debt, you can also think about it as leverage--it is enabling her to get an education which will greatly enhance her human capital and her future earning potential above the cost.

  12. crazyliblady Says:

    Would your daughter qualify to have part of her loan forgiven?

    https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancell...

  13. Ralph Says:

    A belated thanks for all the input, everyone - good points all! I wil investigate each of them (I have been a little but I need t get more serious as the deadline for repayment looms).

    I think we have have a dead end on finding a residency that qualifies for forgiveness. It is very hard to find out that information for hospitals, but I'll make another run at it.

    As in a lot of finance, diversification might be a good idea. I have heard that Citizen's Bank, for one, offers a pretty good refinance, so I might take some of it on, but they have a limit, so that can't be the whole answer. OK, I won;t get too involved in this answer, but I'll try to make a future post on the status. Thanks again for listening and caring - I love you guys. Smile

  14. Ralph Says:

    A belated thanks for all the input, everyone - good points all! I will investigate each of them (I have been a little but I need to get more serious as the deadline for repayment looms).

    I think we have have a dead end on finding a residency that qualifies for forgiveness. It is very hard to find out that information for hospitals, but I'll make another run at it.

    As in a lot of finance, diversification might be a good idea. I have heard that Citizen's Bank, for one, offers a pretty good refinancing, so I might take some of it on, but they have a limit, so that can't be the whole answer. OK, I won't get too involved in this answer, but I'll try to make a future post on the status. Thanks again for listening and caring - I love you guys. Smile

  15. PatientSaver Says:

    Citizens Bank has an educational refi loan...don't know if you have one in your area, but maybe something to check out.

  16. crazyliblady Says:

    I noticed this website today in my surfing.

    [urlhttps://services.aamc.org/fed_loan_pub/index.cfm?fuseaction=public.welcome&CFID=1&CFTOKEN=D3ADCE60-B544-6679-82EB218E8D3F6455[/url]

  17. crazyliblady Says:

    I noticed this website today in my surfing.

    https://services.aamc.org/fed_loan_pub/index.cfm?fuseaction=...
    I messed up the url the first time.

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