Paying Back Student Loans SUCKS!

Paying back student loans sucks.  Paying back six-figures worth of student loans sucks even more.  I know, I know.  I’m the one who took out these loans to finance a medical education.  And I was able to actually become a doctor with a doctor salary, so at least the return on investment is there.  But still, paying back student loans sucks.  Let me show you why.


Student Loans and Our Expenses

Percentage of student loans and other expenses
Not my favorite kind of pie.

This was our spending in January, represented in pie graph form.  Usually I like pie, but not this particular one.  As you can see, my student loan payment accounted for 77% of our total expenses last month.  Home (mortgage) was 17%, while other (utilities, bills, discretionary spending) accounted for the remaining 6%.

Regular readers of my blog know that I’m currently on a $12,500-a-month payment plan with the goal of having my loans completely off the books by October.  Don’t get me wrong, I am fortunate to be in a position to even consider putting this much toward my loans.  Still, looking at that pie chart is painful, so just allow me the opportunity to vent a little bit.

As a human being, it’s hard to not think about all of the things you could do with that amount of cash.  For instance, I could go to the dollar store and have one heck of a shopping spree!  Or I could charter a yacht for one week.  Oh the possibilities…


Focus, SRGO-san, Focus

Student loans and focus.
SRGO not pictured.

Although my mind can wander from time to time, having clear financial goals and a solid plan help to get me back on track.  They are like Mr. Miyagi to my Daniel-san, helping me tune out the noise and keep my eye on the prize.  Another thing that helps is reading all of the debt-free stories of other personal finance bloggers and imagining how great it will feel to finally be free of my student loans.

The main thing that keeps my mind occupied, though, is planning for what I will do after my loans are gone and there is an extra $12,500 a month in cash flow.  Sure, I could spend that extra money and let my lifestyle catch up with my income.  But that’s not how I roll.  Even though I’m several months away from paying off my loans, I’ve already started to think about what to do next.


Accelerate Our Retirement Savings

With our current savings rate, my wife and I are on track to reach financial independence within the next eight to nine years.  Compared to my initial projections, that’s pretty fast… light speed kind of fast.  But you know what, light speed is too slow.  We’re gonna have to go right to ludicrous speed.  If we continue our current savings rate, take all of that former student loan payment money and invest it for retirement, we could reach financial independence within the next five years instead.  Now that’s ludicrous speed!


Pay Off the Mortgage Early

Another thing we can do with the extra cash flow is pay off our mortgage aggressively.  At the moment, I’m still on the fence as to whether I want to keep the mortgage around or pay it off early (topic for another post, perhaps).  But if we take that extra capital every month and apply all of it to our mortgage, we will be able to pay it off in full within the next three years.  Completely debt free in three years?  Inconceivable!!


Explore Other Investment Opportunities

Finally, we could use the additional cash to pursue other types of investments and asset classes.  Our portfolio consists primarily of low cost index funds, but I am thinking about expanding into other holdings such as real estate.  The thought of owning an investment property is intriguing, although I would prefer not to have two mortgages out at the same time.  Also, coming up with a down payment for property in my state (California) would take a fair amount of time.  One other possibility is investing in real estate through crowdfunding sites such as RealtyShares.  We would be able to get into the market with much less capital up front.


Preliminary Thoughts and Plans

At the moment, we’re leaning toward ludicrous speed and accelerating our retirement savings.  Even though the idea of being completely debt free sounds appealing, I think I would prefer the ability to PTFO from my job if I wanted to.  Maybe we’ll do a combination plan and put half toward retirement and the remainder in a “mortgage payoff” fund.  This will be a separate taxable account where we would invest the extra mortgage payments instead of using them to pay down the principle.  In this scenario there will be separate, non-retirement money that we can use to pay off the mortgage at a later point if we so desire.

Or, in the ultimate form of indecisiveness, we’ll do all three.  We’ll save a little more for retirement, invest a bit more in alternative asset classes, and make some extra payments towards the mortgage.


Paying Off Debt is Supposed to Suck

I know I started this post off as somewhat of a Debbie Downer.  The reality is that paying back any kind of debt is going to suck.  Doing so at a faster pace is going to suck even more.  As one blogger put it, you’re going to suffer while paying down your debt.  So whatever you have to do to stay focused and see things through to the end, do it.  For me, I’m thinking about that student loan debt free feeling.  Also, planning ahead keeps me motivated and moving toward the finish line.


Readers, how do you stay focused on paying down your debts, or any other financial goal for that matter?  Any thoughts as to which post-student loan option we should pursue?  Did you catch my references to classic 80’s movies?  Hint: there were three.  Share below!


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22 thoughts on “Paying Back Student Loans SUCKS!

  • February 20, 2017 at 4:35 am

    I would do a 70-30 mix. 70 percent investment and 30 percent towards paying down the mortgage with the extra cash. That way progress is being made in all fronts!

    • February 20, 2017 at 1:26 pm

      That’s a great thought. Two-pronged attack with a slight tilt towards retirement. Thanks for stopping by!

  • February 20, 2017 at 10:22 am

    Wow, you’re knocking it down hard! Good for you! My philosophy is to find freedom first.

    • February 20, 2017 at 1:29 pm

      Thanks for visiting, Primal Prosperity! It’s tough… freedom from debt or freedom from “having” to work? Leaning toward the freedom from work at the moment…

  • February 20, 2017 at 1:00 pm

    $12k a month! I’m excited for you! You’re going to have so much investing momentum come 2018.

    I’m betting on the So.Cal housing prices dropping sometime in 2018/2019, but until I see sufficient evidence to back my theory I’m going to invest in Realty Shares. My plan is a 48 month investment then a 36 month investment 24 month and several 12 month investments so that most of my investments will complete around 2021. The thought is if I jump into So.Cal real estate between 2018 and 2020 I’ll have a nice big chunk of money coming due in 2021 that I can throw at my California property to pay it down faster. Who knows I might get to 2021 and say screw it and move somewhere else to retire early. Bali keeps calling my name.

    • February 20, 2017 at 1:34 pm

      Thanks for stopping by, Stuart! No doubt, I’ll have a lot of capital come end of the year and early next year. Lots of options. I like your plan when it comes to RealtyShares. I’ll probably take the plunge myself and expand my investment horizons.

  • February 20, 2017 at 4:04 pm

    You are indeed in a privileged position. 12k/mo is insanely awesome. In the summertime, you’ll have to start thinking about ways to allocate your extra cash, cuz student debt will be payed off in no time. Congrats

    • February 20, 2017 at 10:41 pm

      Thanks for stopping by! Yes I am fortunate in that I have the ability to put so much toward my loans. I do have some ideas of how to use that extra cash… the main one being supercharging my early retirement savings.

  • February 20, 2017 at 6:37 pm

    Yeowch! Sorry for that high loan balance, SRGO. It’s INSANE that you’re able to apply so much income to them, so I applaud you for prioritizing a huge mound of debt. 🙂 Hell, $12k from this point forward would be put to fantastic use. I’m drooling at the thought!

    We currently apply about $3,500/mo to our student loans. Mine will be paid off in May and Mr. Picky Pincher’s will be paid off in early 2018. It’s all about getting rid of that debt, baybeh!

    • February 20, 2017 at 10:43 pm

      Yeah I try to focus on all the positives… paying off debt fast, saving on interest. But sometimes it’s hard when you see that almost 80% of your monthly household income is going to said debt. At least I can see the finish line now compared to when I was a resident. Thanks for stopping by!

  • February 20, 2017 at 6:50 pm

    Ok I’ll take the bait. I see Karate Kid and Space Balls for sure. Debbie Downer was an SNL skit. So I have to confess I don’t know what the third 80s reference movie is 🙁

  • February 20, 2017 at 6:55 pm

    I’ll take the bait and play the 80s game. I recognize Karate Kid and Space Balls but am really struggling with the last one. I know Debbie Downer is an SNL skit. So unfortunately I am going to need a lifeline for the last one 🙂

    • February 20, 2017 at 10:44 pm

      Thanks for playing along and humoring me, MSM. The third reference was actually very subtle… just one word to be exact. INCONCEIVABLE from The Princess Bride.

  • February 21, 2017 at 5:32 pm

    It’s a shame that doctors need to take out such large student loans to get through all of their education. Do you see any other way, or are you doomed to your pit of despair? (couldn’t resist trying to get a Princess Bride reference)

    I’m in the payoff your mortgage camp, but I despise debt and our payoff is in sight. That said, if you can be financially independent in 5 years, that would be very hard to resist.

    • February 21, 2017 at 8:54 pm

      Most need to take out some loans for medical school. They will have the honor of joining me in the Pit of Despair. There are some schools that offer merit-based scholarships, but they are few and far between.

      Being FI in five years sounds very appealing… might have to run some numbers and see if there’s a compromise between accelerated FI and early mortgage payoff. Thanks for the comment!

  • February 22, 2017 at 7:47 pm

    I vote for ramping up retirement savings. Take the additional money you would throw at debt and throw it into investments. You can always grow money in investments and then liquidate a portion to pay off your mortgage later. When in doubt, run the numbers and see which way works the best for you. Keep up the good work!

    • February 23, 2017 at 12:19 pm

      Yeah I’m leaning heavily toward ludicrous speed retirement savings. Like you said, if I at one point get angry at the mortgage I can use a portion of our taxable account to pay it off later. Thanks for the encouragement!

  • February 24, 2017 at 12:26 pm

    I am with you 100% on how much paying back student loans sucks. Holy wow @ $12.5k/month though. That would wipe out my $60k balance in no time. I’d like to present you with another alternative “investment.” Once your student loans are off the books, you can redirect some of the money this way for safe keeping. 😉

    We just got back from a doctor appointment today. Mrs. Dollar Habits tapped into her inner hypochondriac and had written herself off. Thankfully, we received news her angst was completely unwarranted. Needless to say, we quite appreciate what you doctor folk do. It is unfortunate the amount of loans often necessary to pursue such a noble profession.

    Enjoy your weekend.

    • February 25, 2017 at 7:52 pm

      Haha I’ll think about that alternative investment opportunity. Glad to hear that Mrs. Dollar Habits checked out okay. It is unfortunate that most people have to take out loans for medical school (or any other graduate degree in general). Thanks for stopping by! Looking forward to when your blog becomes official. 🙂

  • February 25, 2017 at 4:31 pm

    Outstanding payoff rate and progress towards your PTFO date! :). I love the 80’s references, especially Space Balls. My sons and I watch that movie at least once a year and it always has us all rolling..

    It took us a while to see the light, but we are hitting the ~75% savings rate now and have 29 months until we reach FI. In the meantime we’ll be combing the desert for ways to speed our journey to FI.

    • February 25, 2017 at 7:56 pm

      Thanks for stopping by, Mr. Zero! I’m a child of the 80’s, so I’m very partial to that era and all of the pop culture that comes with it.

      Congrats on that 75% savings rate! That’s awesome! Before you know it, those 29 months will have come and gone and you’ll no longer have to comb the desert. 🙂

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