Hello fellow monkeys~
How much student debt do you guys have and how much is your monthly payment? I have about 90k and paying 1000/mo, which is pretty depressing. Living off 60k salary doesnt help either...
My question is.. is it worth consolidating your student loans for lower monthly payment? but it will increase your payment term length?
I feel like i made a very illogical choice to fund my college tuition and having so many regrets and sleepless nights.
Please share your stores!
Thanks,
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Student loans are terrible. I'll have more than 90k when I get out. If you can consolidate, do it. If you can possibly pay any extra, do that too.
If i consolidate it, will it increase my payment term length? I think mines set at 10 years...
Just came to thought because i've been getting a lot of loan consolidating spams through my mail.
.
If you consolidate you can still pay more than the required amount each month. And yes, loans are very depressing. Although If I didn't have loans I would have quit my job within the first week and moved to Colorado with my hippy ski bum friends, so I guess it's for the better.
Are they government loans? Get yourself into the pay as your earn program.
19k of it is federal loan. I might look into that program. I currently have about 20k in my bank account. Not sure if i should totally pay the federal loan off or hold on to the savings for the rainy days....
Don't worry about payment term length; under no circumstances should you be planning on taking 10 years to get out of this debt. Consolidate and get a lower monthly payment in order to give yourself some breathing room, then develop a plan to start attacking this thing and get rid of it in 4-5 years.
You can do the mathematically responsible thing (pay minimums on all, then all available cash flow at largest interest rate) or the behavioral thing (pay minimums on all, then all available cash to the smallest loan)-- I would do the latter because I find it more satisfying and studies show that people who do this method of debt relief do a better job of it.
Regardless of which method (mathematical or snowball), once a loan is dead, take all the money you were paying on it (extra cash flow + it's minimum payment) and just apply it to the next loan on deck. Rinse and repeat for 4-5 years (~20K per year at your current salary) until it's dead.
I graduated with around $50K, and was out of student loan debt about 5 years later (also paid for a wedding all cash ($30K), paid off my car (18K), and paid of some CC debt(15K). It isn't always fun, but its worth it in the end. Knowing what I know now, I would have probably bought a cheaper car and gotten debt free sooner, but I don't sweat it much because I stayed the course and executed the plan. And that's what matters in the end.
wow mad respect doe. you're an inspiration to me lol
Do you recommend any banks to consolidate the loan? I've been getting a lot of no name 3rd party banks to consolidate. not sure if safe or not.
Do some research on them to see if they are legit or not; there are plenty of no-name or local banks that are just fine. Alternatively, you could look at SoFi: I don't have any experience with them, but I believe they started with a focus on student loan refinancing.
I'd just watch out for any fees or charges; credit card companies are notorious for letting you transfer a balance and pay 0% interest...for x% of the balance you bring over. I don't know if student loan consolidation works the same way, but I'd watch out for it.
If you're going to bother with consolidating them, the only thing you should really care about is getting a lower monthly payment; as I said before, the payment term isn't going to matter because you are going to get motivated and knock this thing out in 5 years anyway. Just watch for setup fees and any fees for paying your loan off early; lots of unscrupulous players out there.
+1
Great Job!
I'd give you a SB if I had one.
Dat John Doe.
Dude, why would you need $20,000 for a "rainy day" at your age? Pay off the federal loan of $19,000 and save $1,000.
Currently have $55,000 in loans but should be able to pay off in 18 months if I focus.
Life is unpredictable you know. I got blood tested last week and my doctor wants to meet me this week O_O I hope its nothing too bad..... pray for me lol
I was told I had lymphoma once by a doctor and I didn't (he was just...wrong), and another time I swore (thanks to the internet) that I had skin cancer and didn't. Keep your head up.
For all kinds of reasons you should have a rainy day fund. It's called emergency savings for a reason. Granted, I keep mine in my brokerage account because anything that bad that comes up I can put on a credit card and just sell some losers to cover it, and get a tax break. But it's still a rainy day fund. Flexibility is amazing when something shitty happens, like losing your job. Or realizing that your boss is an utter douche and you can't stand working for him for another minute, thankfully you've got 6 months expenses under your mattress at home and can quit in a great blaze of glory if you really wanted to. Not that I'd recommend that route, but it's a comforting thought for peace of mind.
I disagree with the above poster. Keep the rainy day fund. You never know what will happen.
Consolidate your loans and extend the term out as far as possible (assuming it doesn't significantly,impact interest rate). You do this because it gives you more optionality. Then work to pay off the loans as quickly as possible out of your monthly cash flow. Extending the loan term doesn't mean that you should pay it on that schedule.
Thanks for the input. I will need to do some research on that.
$20,000 is very large amount for a "rainy day" fund. You should keep 3-6 months of living expenses as your "rainy day" fund and use the rest to pay down your loans. You are probably earning next to nothing interest on your savings, so it makes a lot more sense to pay down your loans now so you end up paying less in interest in the long run. I would also recommend you consolidate the rest at a lower rate if possible. I consolidated with SoFi and it has made it much easier only paying one payment each month at a lower rate than my initial loans.
Dude, he's on a 60k salary. $20k is far from a large amount in reserves, hell it's less than the 6 months of living expenses you reference. I'd be comfortable around 30K with a $60k salary, but if you're a 23 recent grad, and lets be honest here, you probably are ok with much less. What's the latest stat I saw? Something like 50% of Americans are paycheck to paycheck? That's ridiculous. And while it's normal for the average American, it's not how you SHOULD live. I would keep 30k in the bank(on 60k salary) and use every other dime to be as aggressive as possible paying down debt. Without your emergency fund, you lose all flexibility in any kind of family emergency or any of that.
I would feel comfortable at 30k. Since I am left with 1500/month after making rent and min. student loan payment, its very hard to be aggressive on paying the loan down. I may need to stay frugal on the spending for my living expenses. I need to get my sh1t straight first tho
@smokay72, hope everything is alright with your health. If everything checks out, I'd take stock of my expenses, use that to right size your emergency savings, and then use the rest to pay your debt.
I consolidated my federal loans with SoFi as well, no fees at all and shaved a couple of percentage points off my interest rate.
reddit.com/r/personalfinance
Read all threads related to student loans and success stories. I paid off $10k of student loans on a $17k salary in roughly 1.5 years. Granted I had no rent to pay.
It's completely possible. You just have to attack it aggressively.
Surprised that WSO is not telling OP to move to Manhattan and spend money on models and bottles. Apparently, and thankfully, the consensus has changed.
OP may want to consider IBR.
At this point, for an interest rate above 8%, it is probably worth it to devote $10k of your $20K savings to paying off the loan. It may be better to pay off the private student loans first.
I graduated with ~65k at around 7% avg. FIRST thing I did a month after graduation was refi down to a lower rate. People don't realize how much that little change in interest matters when you're talking 10s of thousands of dollars over the course of years. I refied with So-Fi Lending. Highly recommend them. They've saved me thousands at this point.
-Hermes
From my memory, I believe my federal loan has the highest interest rate fixed at 5 ~ 6.8% (19K) and my other 2 private loans (70k) are standing at 2.5~5% variable. I'm not sure if it would add any benefits to consolidate. Unless if i were to pay off the federal loan off and i would only have to make the payment to 1 lender.
Calculate what you absolutely need to survive for 5 months if you were to get laid off. Take the rest and put it towards your federal loan. Focus all payments on that federal loan. Soon enough it'll be paid off and you'll not only be free of one loan but you'll also be mentally relieved.
Did you go to top private school or something? I had thought most schools didn't allow >50% of tuition paid by loans? At least that's how it is in my state.
No, I went to a large public school. I never heard of that rule you speak of. Maybe it has changed since i graduated?
Refi, get a cheaper rate and then pay everything you can afford to so you don't have to worry about this stuff when you're older... at least it's what I'm doing.. looking at 5 years if it all works out.
Before you pay any loans off, make sure you contribute at least what your employer will match in your 401k. 100% return on day one. That's hard to beat.
Unfortunately, my current start up company don't offer 401k. I did contribute to 401k for 2 years when i worked for F500 company. Currently, I'm trying to jump ship again to the F500 scene.
10 year term is way too short for your income level. There's no need to be so aggressive in your repayment plan if you can't support it. Change to 30 year.
This topic boils my blood every time. I got 120k in loans, mostly private because my family falls into the category of not poor enough for the government to help but not rich enough to pay in cash, so I got 20K federal and 100K in private. I went to a non-target but through some luck and perseverance broke through into the industry. Now, 1 year out of college, I'm making 6 figs and still can't manage a savings due to the massive 1100 monthly payments.
There is so much help out there for govt loans, so I don't know why people complain on that front, but anyone know anything about help on the private front aside from consolidation (which I've already done)?
Wow! Did you consider going to a local state school?
I feel you bro. I'm pretty much is same situation as you except you broke into high finance. Look on the bright side. At least you have huge bonus potential which could ultimately pay down your loan. I'm just a corporate accountant making crap money :(
Hey, last month I turned down a notoriously expensive NYC target school for a "not really a target, but possible semi target" NYC school because of cost. I would have been a solid 90-120k in debt after college. It hurts BC that was my dream school and I cant believe I got in but after reading this I guess it wasn't a bad Idea to turn down taking all those loans. Basically I was debating between going to a Target and having crazy loans, or sort of semi target school with little to no debt.
You made a good decision I think. Even my dumb ass non-target charged 40K a year. After rent, loans, food, and bills, there is nothing left.
I think once it's 50-70k+ of debt it's very tough to pay off. I don't really get why op didn't just go to his local state college or a junior college first because a ton of "non-targets" recruit to big 4.
You will thank yourself when you graduate without the 120k debt. Meanwhile, good luck with college!!
Some food for thought: www.financialsamurai.com/financial-freedom-maybe-you-dont-want-it-bad-e…
This financial samurai is motivated person af. I don't think i have the will power to pick up multiple jobs lol Maybe i should start hustling....
Don't want to hijack, but curious for opinions. I'm graduating this may with $27k in loans (all government). I'm signed for a $60k/yr FLDP in a low COL city in the Midwest where I'll be living with my brother for the first year.
I plan to finance a new car right away ($25k-$30k range). Would you advise to maybe get a used car, or a cheaper new one and focus more on my debt?
My thinking, until reading this thread, is that I'll be totally fine and can pay of the car and my debt easily in a couple years. This thread makes me a little scared and makes me think I should pay off all debt first. Thoughts?
You're going to buy a car that is worth 50% of what you make in a year (post-tax closer to 75%)? Does that sound like a smart decision?
Definitely doable especially when you're going to be living with your brother (assuming rent is split). Financing a car within that 25-30K range will put u at $350-450/month range (with maybe like 5k down payment) if you're okay with that. Since your government loan is small, I would try to pay it off asap. U can easily pay it off in 1 n 1/2 year. If i were you, i would lean to more 19k-24k budget. Although my dream is to drive a subaru sti, I'm driving a hyundai elantra lol
C'mon man, you STARTED this thread talking about how depressing it was being in debt and how hard it was to make ends meet.....and you're telling someone else in debt (and at your same income level) that it's ok to take on a $400 a month car payment?
Absolutely not. Many would say that you NEVER should buy a new car, but you definitely shouldn't be doing that when it's so expensive compared to your salary and you have so much debt.
One of my MBA classmates just bought a great 2013 Volkswagen Tiguan.....for $16K. All the nice touches you'd expect from a foreign car maker (including heated seats). What the hell kind of car are you looking at buying?
I'd say get a used car 3-5 years old in good condition down around the 12K range, get out of debt in 3 years, THEN see what you want to do about upgrading your car. Consider it a reward for good behavior.
Edit: What is with young men going out and buying cars they can't afford the first time they get some money? I used to bang my head against the wall when my Marines would show up with a new car. A "deployment truck" was one thing (bad but understandable) but really guys?
I wouldn't buy a 30k car on a first year IBD analyst salary, never mind FLDP. Cars are the biggest waste of money.
Is $60k in student debt a lot to pay off? (Originally Posted: 01/28/2015)
Graduating with around $60,000 in student debt. Starting as an Analyst in a top group at a Euro BB (DB / UBS / Barc) in the summer. $85k base
For those of you who had to finance undergrad, is $60k in student debt a lot to pay off after you graduate? Interest is pretty high so I would like to pay it off as soon as possible, however I would also like to save a good portion of my income because I will graduate with minimal savings to begin with.
What would be the best approach to this?
I graduated with around $15K of debt, and it was all gov debt, so low interest rate. Interest rate was low enough that I have paid only the minimum while saving as much as possible. But in your situation it sounds like the interest rate is high, and thus probably the most effective thing to do is to pay off as much as possible in lieu of savings. It's always nice to have a buffer, so I'd aim to save a small amount of your salary and a small chunk of the bonus, but use the rest to get rid of the debt ASAP.
With a good bonus and living below your means, you could pay off a significant chunk of it. Just depends on your lifestyle really. Aim to keep total spending
Thanks, I think I can keep spending below $3k per month (hopefully).
Only problem is that this is in NYC and my rent is going to be around $1,730 per month. Rent & repayment should eat away most of my income
Sub 3K per mo may be a bit optimistic, but if you can do it then thats great. Great thing is if you watch what you spend on lunches then you can spend barely anything on food.
Taxes will kick you in the ass, total tax rate will probably come in around 38-39% on your first full year of salary + bonus. But if you did $130K all-in, 39% tax rate, and $3K/mo non-debt spending, that brings you to $43K to go towards savings/debt repayment. Minimizing your withholding by increasing the number of allowances on the W-4 will help in terms of cash flow, you dont want to owe the IRS money at the end of the year but you also dont want to get money back, especially if you have high interest debt. Paycheckcity is a good calculator to use to plan these things out.
I would consolidate, go with 25% extended repayment to create cushion to pay minimum of necessary ($350 per month or so) but pay more whenever you can and pay off early
I graduated in May 2014 with only 13k going to a private school, 60k is not bad. Atleast you're not like most NYU students with over 100k. If your loan is in multiple pieces, start paying off your highest interest loan.
Awesome, thanks for the tips.
Do you think I should try and relocate to cheaper apartment, or is it not worth the trouble over a couple hundred dollars extra per month? Figured it would be best to cut fixed costs as much as possible during the first couple years
$1,730/mo is already towards the lower end of the people I know. I don't know that you are going to find someplace meaningfully cheaper without starting to make serious sacrifices. If you want to go 'extreme', Jersey City / Hoboken saves you big money on taxes plus rent, but is a hassle if you work in Midtown. It would save you maybe $4K in taxes and a few hundred dollars per month in rent. If you are going to a sweatshop obviously forget it, but I know in my case I probably could have made it work if I had wanted to. Long Island City is another option, but wouldn't help with the tax situation and is getting almost as expensive as Manhattan at the lower end.
Could be worse. Just crush it with your bonus and repay it as soon as you can. Student loan debt is part of the game for most of us.
Not sure who in his or her right mind would take on $100,000 in debt. Makes absolutely no sense at all especially at the undergrad level.
Average loan debt is 30k for new grads this year. It's a growing reality because college costs are inflating at a ridiculous rate.
Graduating with Student Loans? How Much? (Originally Posted: 04/04/2007)
I just found out im graduating with $20,125 worth of student loans.
$11,625.00 @ 4.75% and the rest at 6.8%
How much are you guys graduating with?
Do you plan to pay it off right away or just make the minimum payments?
Let me know!
I'm graduating with close to $60,000. I plan to not be a baller my first few years, and dump my whole bonus into that. It's def doable to pay over time, but I just don't want that shit hanging over my head accruing interest.
$60k? Damn.
Get a load of this...one analyst I worked briefly admitted he had over $80K of UNDERGRADUATE debt!
I have one set of loans ($30K now) with an interest rate of 1.50% locked in for 30-years. I never plan to pay it off early since the real interest is in negative territory.
With the bonuses we are getting now, I think you should pay off the high-interest ones within your two-year stint. When I got done with my first-year I had about 15-20K in credit card debt + some other shit, which wiped out most of my bonus back in 2005.
Only if I had graduated last summer...
How did youget a 1.5% interest rate?
Well, back in 2004 interest rates were at historical lows and since it was a federally-backed loan, I consolidated in the fall of 2004 and got an awesome rate. The rate was 2.00% at first, but after 6 or 9 months (I can't remember if it was 6 or 9) of on-time, automatic withdraw payments it got bumped down.
Crazy rate, eh?
yeah i thought i got out good when i consolidated at 4.75
That's not too bad. My private loan is now at 8.375% and I intended to pay those off this July.
If I were smarter, I would have taken out the max on the federal loans and invested it.
There are a lot of ppl who sort of fit into the middle class and get fucked. We don't have enough money to pay for college straight cash, but we still make too much to get a substantial amount of financial aid. The end result is that the only way to do it is through a ton of debt.
I'm gonna be at a net positive of around $15K by the time I get out.
Guess that's the benefit of being at a nontarget with a full ride...
How is this so? I'm at a target state with a full ride, yet I've somehow accrued ~$4000 in debt over the course of my freshman year alone. (1100 in tax I owe from my internship high school senior year, 1800 for the IBM ThinkPad). My goal is to graduate in the black, with NO assistance from my parents.
92k at 11%. No parental co-sign. when it's all said and done that is.
double ouch
Reason #2 for going into investment banking: So my kids don't have to take out student loans.
I get money for tuition and living, meaning that as long as I live off-campus and relatively frugal, I get to pocket the difference.
That's what I figured. They charge us 8000/year to live in a shit hole so I'm living off campus next year and hope to pocket ~3/4000. I plan on investing it.
Good plan. Given the choice of paying over $1000/month for university room and board, or paying $375/month in rent plus utilities and groceries for your own place, def live off campus.
Besides, who wants to live on campus after freshman year?
total $53k. $9k is riding at 9% with sallie mae, the rest are consolidated at 4.75% since they are federal loans.
I plan on paying the $1.5k accrued interest on my sallie mae once I get a place in NYC and know my CF situation. Don't want that shit to get capitalized.
I'll prob try to pay off $3-5k in interest this year so I can claim a nice int tax deduction (last year to do it assuming you make over $100k in 2008 - can't deduct student loan interest over that comp level).
I will try to pay down most of it with the first bonus (implicit assumption: the market will keep on rolling...).
$60k in Federal loans at 2.6% and $90+ in Private Loans at 8%. Worth it???
.... lol wtf. By the time I graduate I'll be sitting on somthing like $150k sitting at 7-8% for the most part.
Sigh.
what about if you had 150K in a trust fund after it was all said and done, my friend is in that position... amherst grad. we call him il bastardo.
Although obviously not everyone here will make it in IB, its good to know that most of us wont have TOO much trouble paying off loans.
Think about those stupid comm or art or whatever the fuck else majors that are gonna come out of undergrad making 30-40k/yr. They are FUCKED.
Word.
I know I will be owing a lot of money (private college) but not sure how much yet. I am transferring this fall so I don't know my financial aid yet.
A quick lesson on Student Loans...
Anyone who pays off their loans outright is a fucking idiot and should be ashamed of themselves if they are in the financial sector.
I have $160k in debt (BBA/JD/MBA). I pay about $1500 per month and will do so for 10 years.
Just estimate that you will pay $100 for every $10k in debt that you have.
If you are an undergrad Ill assume that you have $40k in debt...therefore you will pay $400 per month in loans for the next 10 years. That is nothing! As long as you make $4800 per year more than you otherwise would have (without going to college) then it is a good move...obviously you will.
The reason that you should pay the $400 is a simple lesson in oppurtunity cost. If you pay the $40k outright from your first year's bonus then you are foregoing the investment potential that the market would provide. Most loans have a ridiculously low i-rate (lets say 6%)...I think it is safe to assume that your $40k will be better served earning 15% plus in the market than saving 6% in debt service. This is why microsoft, who has billions in cash reserves, will still take out debt to finance new ventures, b/c they can get such a low rate, and they can use the cash to invest in intercorporate securities or M&A ventures.
Also, it is worth having the 40k in your pocket for consumption reasons...why live poor by spending all of your bonus. Pay the measly $400 per month and bump up your lifestyle.
Or use the $40 k as a downpayment for a condo, then in 4 years refinance your condo, use the funds to pay off your debt in full, then continue to pay your mortage and you can deduct the interest from your taxes AND it gets amortized over 30 years instead of ten, plus you get a lower rate (more than likely) since it is secured by the condo.
There are a dozen more reasons but just remember, dont pay off your loans outright...Pay them off over time...AS LONG AS YOU CAN MEET THE PAYMENTS, LEVERAGE IS GOOD!!!!!!!
Go talk to Henry Kravis about that...he can expand that argument!
For some people it isnt about the cash. If the difference between paying them off sooner, and paying minimum and investing the money elsewhere is minimal some people will still go ahead and pay it off now.
The reason being that people don't like having it weighing on them. It's not always purely a financial decision
So basically you are worried you will miss a payment. The "Weighing down" phenomenon is strictly mental. My point is that this IS a financial decision, so if you want to be rational, you need to only factor in financially relevant factors. It would be STUPID of you and you would be basically wiping your ass with money because you feel you are being "weighed down" with debt.
Be smart.
Student Loans - How much? (Originally Posted: 02/16/2007)
how many of you have student loans? how much?
ill start. my dad is a prick and refuses to pay for any college. he just bought a new car, we live in a $4mm house, but "i need to take a personal stake in my education."
when it is all said and done ill have about 120K.
I have more than a bonus-worth. Even a top-tier bonus-worth. Not only did my mother not contribute to my college, a couple of times I had to give her money while trying to work/borrow my way through college.
I also have approximately a half-bonus-worth of revolving debt. You can't live only on student loans; those don't pay for your clothes, your car and car repairs, your standard personal expenses, or your healthcare. The revolving debt will go first, and the student loans will go whenever they can go.
Personally, I don't think your dad is a prick for making that decision. As brutal as moneymaking is, I'm not sure I'd ever just hand my kids anything more than a standard subsistence. The rest they would need to earn. I don't think anything can compare to the feeling of reaching for your education with every iota of your strength, desperate to hold onto it, willing to give up everything, anything, in order to just stay in school for one more semester. When you've worked until midnight yet again before a final exam, when you have to beg financial aid officers not to kick you out, when the rich kids whose daddies pay tuition laugh at your five-year-old clothes, when paying each semester's bill is as big a triumph as the 4.0 you earned... THEN you've truly chosen to be educated. That's a very different experience than the kids who do the default four years because it's just what you do after high school.
If my kids can't get sufficient scholarships, then they will have to manage as best they can. The resources are out there if they work hard enough and want it badly enough. I will give them all the advice and mentorship I can, however.
Undergrad: $80K+ Grad: $25K
All in all it's not bad to pay your way, that way you don't owe anybody a damn thing (except for Sallie Mae and the like). You can deduct the interest from your taxes at then end of the year...keep or get a little extra cheddar.
My kids are definately paying their way and my spouse can kiss my ass if she doesn't like it.
MBA's cost a hell of a lot more than that.
Tuition: ~$30-40K PER YEAR (2 years typically) + Living Expenses
Note that a lot of the best programs are in very expensive cities (NY, Boston, Chicago) so the costs add up quickly.
You mean divorced spouse :) I am sure she will tell you that you can kiss her ass too :)
"My kids are definately paying their way and my spouse can kiss my ass if she doesn't like it."
Nah, I wouldn't tell him to kiss my ass.
Dude, if your wife complains, just tell her, "Honey, we earned this money for us. It's something that everyone has to do for themselves, just like our kids will have to do someday. Now tell me where you want to travel for our anniversary." Bet you it works.
100k is a lot of debt to hold. i always worry about not being able to make the payments when i graduate.
2 things:
1) What does your dad expect you to do if you don't end up going into investment banking? If you had a normal job making 40-50k/year, in order to service your debt at a minimal level, you would be living at around the poverty line after your loan payments are done for the month. If you were in NYC, you wouldn't survive unless you started maxing out credit cards. 100-120k is a ridiculous debt level for an undergraduate to hold unless their father knows they are dead set on going into a field like investment banking or private equity. This is even more so the case if the father has money to put forward. If he wanted to teach you a lesson, he should have left you with about 50k in loans which is a managable $600/month-ish payment.
2) Who pays for the $3500 suits at Leonard Longsdale that you always talk about?
One more thing, if I was in your father's financial situation, I certainly wouldn't want my kids to worry about money. I'd want them to learn the value of a dollar, but I would want them to go into the arts or sciences, certainly not business or ruthless money making. That's clearly taken care of and will be for them with inheritances.
LOL dan is so full of shit
he doesn't live in a 4 million dollar house
does nobody remember the bullshit dan bush fed everyone before he got banned the first time?
i dont get it. why would someone lie about how much debt they have?
before you believe a word this guy says, remember some daniel bush classics:
http://www.ibankingoasis.com/node/929 http://www.ibankingoasis.com/node/927 http://www.ibankingoasis.com/node/856 http://www.ibankingoasis.com/node/883
$3,000...used it to buy a ThinkPad
Let's see... probably about $90K in debt all-in. 1/3 from undergrad and 2/3 from MBA. My monthly student loan bill is about $700. Good news is I don't have ANY credit card debt. Ok, I'm lying... maybe about $3K right now. Relatively speaking that's not shabby.
I think I walked away pretty good considering that some of my friends have $30-40K from undergrad and anywhere between $80-120K in MBA so all-in that's between $110-$160K.
A lot of MBA students take out extra loan $$ in order to keep up with the Jones's, travel for interviews, vacations, pay for cars, apartments etc. I have a friend from UofC who graduated with about $120K from the MBA program.
Sure, I worry about paying all the loan money off. If things go well career wise, I estimate paying off the entire debt in about 3-4 years. I do feel that I have the golden handcuffs... I won't pay off all my debt with my first bonus check because there are other things I want to do with bonus money too... e.g. buy more property, start a family etc.
Would I take on that debt burden again? Absolutely. I think education is worth every penny.
Am I self conscious about it? Sometimes. As a woman, I feel unattractive with the debt level. It's stupid...
Well, do you plan on quitting your job and "deciding to get married" after 4 years in the business world while expecting your hubby to finish paying off $90k in loans?
Unfortunately, I do not have any debt at all whatsoever. But if I go to MBA, I will of course fund it via debt - it would be ridiculous to spend equity, when you can inevst it.
what?
Exactly what I have told. Cost of debt raised via student loans is very low, while return on own equity may be many times higher
Daniel T Bush,
I can't believe you questioned Ivan in her post, ever taken a finance course?
And you're the guy mentioning your huge debtload, you would imagine that you would have researched the benefits of the debt (tax reduction via interest deductions, etc.).
I've only been on this site a few weeks but in general your posts are ridiculous and unhelpful. You're a joke.
Actually, it's very high right now. Somewhere around 8.1%, I think.
Eh... Aadpepsi has been around in "the business world" for a little while already, I believe. In IB, she's senior to many of us.
Probably? But I don't want to risk my livelihood on "probably". I don't want to pour my 401(k) into emerging markets under unstable regimes.
Additionally, aren't you a tad suspicious of buying anything that has just experienced a 50% rise in price?
I, for one, am following a balanced strategy of investment and paying off my debts.
Well, if to talk about me, I have about 75% yearly return over last 2 years, both years over 70%. Yes, there are risks (if you don't believe in BRIC concept and prefer to invest in US Treasuries and to lose additionally due to weaking USD, that is), but for managing risks, there are methods you may use: put options to hedge your long positions, diversification (always helpful, and if you're a banker, you should have understanding of at least what industries are hot currently, and to invest accordingly), and just such simple things as to follow a trend, but to have stop levels in mind.
That said, portfolio investments are by no means my profession, I'm an I-banker, and because of lack of time to follow the market cautiosly I miss a heck of a lot of opportunities. But not to invest in booming BRIC countries...your choice:)
I worked for years in wealth management for Goldman, Wachovia, Prudential, and the like. I can say that in my experience, your attitude towards investments and diversification is certainly unique.
Of course, if my wealth manager came to me and showed me a 70% annual return on my portfolio, I would fire him immediately. If my portfolio returned 70% in a single year, I would also be embarrassed to admit it. Such a level of risk-taking could not possibly lie along the efficient frontier... and I would hate to see that Sharpe ratio. All the professionals I've worked with have been very displeased with high-volatility results, even when the actual return was positive.
I understand what you mean, and of course you are perfectly right when talk about investment guidelines that should be followed. But please consider a 4.5-4.7 (approximately) profit / max.drawdown ratio, it is not that bad. A ratio may be much better, if to follow the markets regularly, but with 80 hours of job per week it is hard.
Then, there is another important moment to keep in mind. Talking about 70% and volatility, you probably compare it with what US market as a benchmark, and measure your returns in USD. Maybe there are reasons to do so for US citizens living and working in USA. Not the case for me though, and my numbers are not in dollars either (would be a bit higher if dollar-denominated).
If we look a bit further, I suppose that after Russia and India would be kinda old story, we will be able to move to Vietnam and Argentinian markets, probably Brazil will be hot for quite a while, too. So, I think it will still be a very viable strategy to raise debt (including student loans, of course) instead of spending own equity on such things like MBA and other significant expenses, and not to repay the principal prematurely, when you get extra cash (bonus or the like). Debt may last. Just my view of course
LOL
You do realize that none of that efficient frontier shit actually works in practice right. Even if it did, you'd have to invest in emerging markets to get the 'market portfolio.'
Volatility is not measured in dollars. Percent returns are not measured in dollars either. I'm unsure what you mean by assuming that I'm measuring my volatility in USD. A percent of volatility on the NYSE equals a percent of volatility in Singapore. I'm not getting your drift here.
I never told you volatility was measured in dollars :), and talking about returns, percent return depends on the currency very heavily: I measure returns in my local currency, but some investments are made in other countries and thus in other currencies, so the total return depends on the changes in currency exchange rates movements (as I measure my return in my local currency).
As USD is weakening significantly over last couple of years, US currency movement significantly decreases percent returns for investors in US markets, who measure their returns not in dollars. For US investors, USD weakening is not relevant in terms of percentage return on USD-denominated securities, here you are right.
Getting back to volatility: many people are afraid of high volatility, but as I already have told, we now have plenty of stuff to use, from stop orders to options contracts, to limit the risks. Besides, I dont think there is a goal to buy on a minimum and sell on a maximum (it is very hard), but to take a significant part of the trend as a profit (i mean, be in Long during a 40% price rise, and then sell after a price drops 10% and you are afraid that trend might has finished). If we look at it from this point of view, volatility might actually be a good thing for emerging markets - it allows for a quick market rise! - and it is of course an understandable characteristic of those markets.
If you look at the risk levels from the perspective of the Profit/Maximum drawdown ratio, you might agree that its the same thing for 1) 15% yearly income, 3.5% maximum drawdown and 2) 70% yearly income with a 15% maximum drawdown - for a given year in terms of risks taken.
Of course, for a multi-million dollar portfolio, it might not be a best way to go (plus, liquidity problems would be serious with such amounts in emerging markets), and you will invest more in developped markets, deposits etc. But when you are in the beginning of your career and only posess, say 50-100k USD of equity to invest, some 10k which are at risk and might be lost (I presume, it is not realistic to assume that you may lose more than 10-20% of a portfolio if you manage your risks and dont play with margin, even in a high-volatility market) do not probably change much (when a flat costs 200-400k USD, an MBA is an at least 100K investment, and when you, as a i-banker, have a significant income anyway, many times more than what you have at risk).
When you hedge out risk, you hedge out returns. You're not going to create a low-risk portfolio with a mu of 70% annually.
Sure, Corgi. I do invest in emerging markets. I base my portfolio off GS's "aggressive" private wealth model, which was the best I ever saw. 5% in emerging markets funds. Indirectly, not directly.
And yes, of course you can't invest in "the market portfolio", but the general idea is that you want to invest as efficiently as possible. When you reach the point of diminishing returns for marginal risk, you stop taking on more risk. That's the real-life lesson that the idea of the efficient frontier teaches us.
Military paid for my ugrad, yet I racked up 150K from b-school. 2/3 are running 8-10% interest rates. Oh, and Citibank makes sure to come "visit" you at school just before you graduate to remind you that you can never escape student loans. You die, they go to your family. You declare bankruptcy, they stay with you.
Military paid for my ugrad, yet I racked up 150K from b-school. 2/3 are running 8-10% interest rates. Oh, and Citibank makes sure to come "visit" you at school just before you graduate to remind you that you can never escape student loans. You die, they go to your family. You declare bankruptcy, they stay with you.
not if your family didnt co sign
Even if your family didn't co-sign, the debt goes to your estate, I believe. So if you're young and single any living relatives will get hit with your debt. And a portion of that had to have a co-signer. If you go over the official student budget you need a co-signer (with no exceptions) because you are not employed. And when the official budget is only somewhere between 55 and 70 at top schools, you will most likely either need to dip into savings to cover extra expenses or take out additional loans that require a co-signer.
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