I'm sure my story will be redundant. 42, psychotherapist with MSW-75K in debt, cannot get ahead, living to save up for my quarterly taxes. Very good at what I do and my specialties are sought after but cannot seem to pull in more than 85K/year without working myself into the ground.
Paid off all extraneous debt in 2020 and all my debt is federal student loans.
I've tried cutting down expenses but it only just helps but doesn't yield enough to pay more than my $600/month on my loans.
I'm just at a loss. I wish I was more motivated by making money for money's sake. But investing, real estate and so on bore me.
This is my first post here and I'm just curious how some of you conquered debt.
How do some of you overcome this debt?
byu/Entire-Ear-3758 inStudentLoans
Posted by Entire-Ear-3758
12 Comments
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Are you on an IDR plan?
Have you checked out whether or not your state offers any relevant loan forgiveness? Some states offer loan forgiveness for those in the helping / healing professions.
Don’t pay extra on federal student loans at the expense of an emergency fund and retirement savings.
Allocate any extra payments to the loan with the highest interest rate.
Do you own your own PP? If not, would you want to? It would be more work, but more income, and you could expand the practice to take on more therapists/patients.
Two full time and one part time remote jobs, one job can no longer pay them off regardless of discipline
live with roommates or family and keep your expenses bare min. and throw everything at the debt until it’s paid off and then you start to live more freely. or you find a balance and know the loan will be there for a long time. or do you do a job you dislike that either pays you a lot more or lets you go for forgiveness after 10 years and you trade your soul for 10 years in hopes forgiveness happens.
I’m in a different field but adjacent. More loans and much less income. I’ve started saving for the tax bomb. There’s really nothing else I can do.
I graduated with both a bachelor’s and a master’s degree leaving with about $67K in federal student loans, with interest rates ranging from 3%-7%. From the start, I decided I wanted to pay them off as quickly as possible rather than aim for forgiveness or lower monthly payments.
I managed to pay them off through a mix of strategies: living at home for the first seven months after grad school, strict budgeting, budgeting tricks, aggressive saving, moving to a HCOL city but sharing apartments with roommates, not owning a car in this HCOL city, prioritizing high-interest loans first, and taking advantage of the federal loan payment freeze.
What do I mean by budgeting tricks? I have changed jobs three times since finishing my master’s, each time with a salary increase. However, I only allowed myself to slightly increase my monthly budget, putting the rest toward loans. For example, my first job paid $45K a year, and I budgeted $1,600 per month for expenses. When I switched jobs the following year and started earning $65K, I only increased my monthly budget to $1,800. All the extra income went straight to debt repayment.
I also took advantage of how I was paid. Since my jobs paid biweekly, I received 26 paychecks a year: two per month plus two extra ones in certain months. I treated those two extra paychecks as if they did not exist and put them entirely toward my loans. I did the same with tax returns, filing as normal but mentally excluding that money from my day-to-day budget and putting it straight into loan payments.
I paid off my loans in 4 years and will be making my final payment in about a month. I know not everyone has the option to live at home, and I was very lucky not to face major health issues or emergencies that would have forced me to drain savings. However, I do believe paying off loans quickly is more possible than many people think. During this time I was still able to travel, save for retirement, build an emergency fund, and enjoy myself. To this day in my HCOL city, I make an average income, yet I am still able to make it work.
DM if you’d like to chat more about specifics.
Do you have a company 401K with or without match? Save money on taxes and put more in your account with each 1% you contribute to your 401K plan. I pay half the taxes of others in my field by putting the maximum for my age in my 401K.
I’m also a psychotherapist. To echo another commentators question, are you in private practice or work for an agency? Imo, private practice might be a good route to get ahead. It has its own challenges and can be a good amount of work to set up but I personally prefer it much more compared to working at an agency
If you’re already in private practice, maybe it’s time to reassess your hourly and which insurances you take. Feel free to DM me if you want, it is TOUGH advocating for your own finances as a psychotherapist
Put all the money you can into your 401k or whatever you have to lower your AGI which will lower your monthly payments.
Because my consolidation federal loan is at 6.63%, nothing I save in a low risk HYSA would make me more in interest than paying it down. Even most of my investments don’t currently consistently make more than that outside of retirement.
So from day one of the first covid pause, I have thrown everything I could at what was then 79K on an original 42K borrowed for undergrad. As a result, I’m now down to 17.5K, and have only stopped to change plans back to old IBR.
That zero interest period was a game changer for me.