Dear Young Chiropractor:
When I first started writing this blog, I wanted to gear it towards young chiropractors that are trying to take control of their lives, both in practice and finances. Whether that be student loans, retirement accounts or just simple practice building tips that you didn’t have to sell your soul to the devil in order to grow a successful practice.
I sometimes feel as if I am on an island all by myself in the chiropractic profession as I feel that most young chiropractors don’t actually understand how to attack student loans and all of the options that are available to you in this adventure.
Personal finance has been an obsession for me for the past couple of months, I have been reading a lot of blogs and articles that show how the path to financial independence can be achieved. You don’t need to make a million dollars a year in order to make this happen, you just need to take a few steps onto this path to freedom.
The article that peaked my interest this week was about an orthodontist in Utah that has over a million dollars in student loan debt. He makes roughly $250K a year and makes a monthly payment of roughly $1600 a month to student loans, that may sound like a lot but his interest accrues at $130 dollars a day. He will pay that amount for the next 25 years at which point the remaining amount will be forgiven. Early estimates indicate that the amount forgiven will be roughly 2 million dollars, which would leave him a tax bill of roughly $700K. Now I don’t agree with this method at all but if you actually run the numbers this may end up being a pretty good deal for him, as he would end up paying roughly 1.2 million back. Honestly, that would be about what he would have paid back over a standard repayment plan.
The reason I bring up this story, is because most people on income based repayment will end up paying more money back then if they were to just suck it up for a couple of years and get aggressive in paying back your student loans.
Just being able to plan is a huge advantage, my financial advisor recently passed way and I have been delving into the world of personal finance more than I ever thought I would. Mutual funds, retirement accounts and other such terms have become common discussion in our home recently. I think my CPA thinks I’m crazy for all of the things that are going on and the questions that I ask but she helps guide me through some of these things.
Young people just want things NOW and not have to put the effort into the journey, I’m as guilty as the next person but all of this thinking and planning has essentially put everything into perspective for me. An article in MONEY magazine recently indicated that you need to save into a retirement account for roughly 13 years before your money actually starts to make money for you, up to that point, you are essentially just saving money into an account, but after 13 years that compounding interest starts to take effect and your money will start working for you and for itself.
My brother in law has got me hooked on a couple of podcasts and one of the quotes that came from a CFP on the show was: You wanna know how to get rich? Don’t have any debt is the first step. Whether that is student loans or business debt, mortgages don’t typically count against you but if you don’t have a mortgage, that is even more money in the bank.
So to all of the young chiropractors out there, I’m begging you to at least examine your situation and try to start taking some proactive steps to getting rid of your student loans, you don’t want to be 45-50 years old with a massive student loan debt number over you and then have to turn around and pay taxes on a bill that was just forgiven and that’s to say that the current rules stay the same, there are rumbling that the system is going to have to change. If you are waiting for the federal government to forgive your student loans, good for you but I’m not going to hold my breath.
I have refinanced my loans twice and have gotten my interest down from 6.8% to 3.75%, I hope to have my student loans paid off in the next 12-18 months. If you have any questions or would like to look into refinancing, click on the link below or send me a message and I can answer more specific questions.