Author Topic: CURRENT Grad Student living off loans seeking budget and FI prediction advice  (Read 450 times)

kk1241

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I am currently in grad school for physical therapy using student loans to pay for tuition and living expenses. So, basically, I am accumulating LOTS of debt, and FAST.

When I started PT school, my family was very encouraging and told me not to worry about student loans because I would graduate with a good salary and job security, so my loans would just be like any other monthly expense. However, I think we all underestimated just how MUCH debt I would accumulate, especially after I failed a class my first year and am now in the midst of repeating said year. This situation turned my 3-year degree into a 4-year one. Thankfully, I do not have to pay tuition for the year I'm repeating, but I am still accumulating interest, paying "grad fees" and paying for rent and other living expenses. I think that I'm in too deep to drop out without earning my degree due to the burden of my loans. Even if that assumption isnít true, I am still very passionate about becoming a PT, so dropping out to stop accumulating debt is not an option for me. I have two more years left, so I also don't think it is logical to start paying back my loans or the interest while I'm still in school (since I would be doing that with even more loans).

***My question is***: As I currently donít have a true income or savings or assets since my program is full time and I started straight out of undergrad (I do make few hundred dollars a week from a part-time job) how do I predict FI while living off loans and not knowing what my exact future income will be?

Also, I know that theoretically, I should be trying to spend literally as little as humanly possible while Iím accumulating debt and interest. However, that is not a realistic mindset for me to be able to formulate a real monthly budget. How do I decide/know how much is too much???

(I apologize if this or a similar question has been asked somewhere else)

Lepetitange3

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Why don't you have a part time job?  Your hair is on fire and you are pouring gasoline on it every day.  I went to full time undergrad and grad school on scholarship and worked 2 jobs on top of that for living expenses so I wouldn't need loans.  This can be done.  No one is saying it's pleasant.

What are you paying right now on expenses from these loans?  This forum can Definitively help you cut if you post a case study.  You need a job so that you stop reaching for more debt to support yourself.  Then you need to build a plan based on what you can earn right now while you finish out school.  Once you finish school and get the next job, you change the plan and build out to FI.

Right now, your FI date is never.  You can change this.  Give us more info, get a job, and get started towards freedom today.

honeybbq

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A PT is a good, stable job that you should be able to make decent income from.

I think the key is once you graduate to keep living like a poor starving student. Share a house with 4 other poor students. Keep taking the bus. Keep eating ramen. Do not let yourself 'creep' when the paychecks roll in and divert all extra money to debt until it's paid off.

Lepetitange3

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I'm concerned that OP isn't living like a starving student with the level of loans referenced.

MDM

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***My question is***: As I currently donít have a true income or savings or assets since my program is full time and I started straight out of undergrad (I do make few hundred dollars a week from a part-time job) how do I predict FI while living off loans and not knowing what my exact future income will be?
You need values for all the inputs to the Excel NPER function.  You may need to guess, so the result will also be a guess, but the calculation can't be done without those inputs.  See Getting Confused Trying to Calculate Savings Rate and links in that post for the math.

honeybbq

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I'm concerned that OP isn't living like a starving student with the level of loans referenced.

Hard to say with no numbers. OP, care to share what you loan amounts are and spending habits?

kk1241

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Hi everyone, thanks so much for all the replies! I really appreciate the thoughts so far, but I should have expected that the people who follow a blog and forum dedicated to some serious financial pursuits would have liked to see more specific numbers so here goes nothing!

As a caveat, my current spending is nowhere near the level of frugality and dedication compared others on this site. In fact, I just stumbled upon this whole idea a few days ago and have now "seen the light," so to speak. For background, my class had a financial advisor come to speak to us during my first year and I proposed the same question to him that I asked in my OP, how much is too much? This is my endless debacle because technically I should spend as little as humanly possible because everything I spend in school will cost so much more when I have to pay it back. However, I am not capable of doing that without going more insane than school already makes me...so I was after a number to be my monthly target that wasn't too depriving or too excessive. The estimated cost of attendance for my program (not including tuition) was stated as a whopping $1,800/month, which I thought was excessive. So I asked him what he thought about my budget of $1,500/month, and he told me that I should be fine...so I thought I was fine. Although, now that I've seen some of the budgets on here, I am beginning to rethink that.

To address an earlier comment, I do in fact already have a part time job and am currently looking for more options on that front. Whether or not they missed my comment about my part-time job in my OP, I understand that the overall point of Lepetitange3's comment was talking about boosting my part-time income to offset my reliance on loans for living expenses.  However, I do have to be careful with overloading my schedule because studying 5-6 hours per night is also my most important part-time job and my first priority.

After looking at my past few months of spending (now more like $1,700/month due to increased rent and decreased motivation on my part to stay frugal), I know that there are many line items that can be reduced, like food and grocery, entertainment, and miscellaneous purchases.

For even more specific information, the current average student loan debt for a new grad PT is $120k. I am currently at ~$80k which makes me right in line with the $120k after two years in school. But, I have been getting concerned lately because I will end up with even more debt due to requiring that extra year of living expenses. The current data on average starting salary for a new grad PT is $60-70k depending on location and PT setting (before PRN work). My current plan is to work as a travel PT straight after graduating because that typically boosts the hourly rate by at least $10/hr. I also plan on doing my travel PT on wheels in the form of an RV or something similar so I can pocket most of the housing and traveling stipend, ŗ la the Fifth wheel Physical Therapist blog. Although his blog has a lot of information on FIRE, I was having a hard time following his calculations without specifics, so then I stumbled onto MMM. If you're interested, this is the blog post from fifthwheelpt that first opened my mind to FIRE: https://fifthwheelpt.wordpress.com/2017/07/09/the-best-student-debt-repayment-option-for-those-seeking-financial-independence-fire/. In this post, he talks about using PAYE or REPAYE for student loan debt so that he has a greater amount of leftover income to dump into savings/investments. This is the approach I think I will use during repayment vs. the "pay off all my debt as quickly as possible first and start aggressively saving after" method. If I did that, I think my financial future would be quite dim.

My main motivation for writing this post was to get some clarity from more experienced minds with the calculation side of all this. Most of what I've seen so far have included an income, a mortgage, and savings/401k-- all of which I don't have. I have also seen calculations for people with debt that are currently in repayment, but I couldn't find anything with someone currently still accruing student loan debt (which although not ideal, is where I'm at). I will definitely look into the "Getting confused trying to calculate savings rate" thread and see what I can do with it. Luckily, I do have $17k in a mutual fund that I just found out about that can be the start to my net worth thanks to a lawsuit payout of $3,000 when I was 3-years-old because of an injury I sustained at an unsafe YMCA. I'm very thankful my parents had the foresight to invest it for me instead of just using it to pay my medical bills.

Lepetitange3

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I don't want to advise you torture yourself.  But if you bring expenses down, you should be able to make enough at a part time job for $1500/mo.  In your situation, I'd be living as low as possible.  Really even lower than that.  What part of this is housing and utilities? 

Also is this the only program available?  Could you finish at a cheaper program since you have to repeat part of it anyway?  $120k is a lot.

CindyBS

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So much information missing - how old are you?  I assume you are single?  Kids in the picture?  Housing situation? 

I suspect you don't have numbers on spending to post b/c you have not tracked them yet?


I agree with Lepetit - right now FI for you is never.    To use a PT analogy, you are talking about training for a marathon when you should be worried about learning to walk without crutches. 

If you have no children, no partner/spouse/dependents you should focus your energy into lowering your expenses as much as possible until you start working.  The only way to get a handle on it is to track expenses.   You may not have every single number available (especially if you use cash at all), but step 1 should be to sit down and using bank/credit card statements and figure out what you spent last month. 

If you cannot immediately move into a lower housing costs situation, one of the biggest places most people find they can cut back is eating out and groceries. 

Bee21

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How about you post your budget and people here will be able to help you with the specifics. In your case a dollar not spent is a dollar not borrowed, so looking at your spending with a critical eye will help you a lot.