pharmacist paying off student loans

YFP 342: Replay – How Two Pharmacists Paid Off $250k of Student Loan Debt

Posted on January 18, 2024January 18, 2024 by YFP Media

Kristen & Nate Hedrick share their journey paying off $250k student loan debt from the motivation to the role of side hustles and real estate investing.

Episode Summary

How do you go about aggressively paying off a $250,000 student loan debt without feeling overwhelmed? To help answer that question, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, is joined by fellow pharmacists Nate Hedrick, PharmD, and Kristen Hedrick, PharmD, BCACP. The Hedricks tell us how they successfully paid off over $250,000 in student loan debt, their motivation for tackling that debt, the pivotal moment that sparked making repayment a priority, and the role a side hustle and real estate investing played in their journey. After a brief history of Kristen’s background, listeners will hear what motivated the couple to take an aggressive stance on their debt repayments, how a life-changing event and one book altered their financial philosophy, and how the pandemic helped them focus on their strategy. Nate and Kristen share their reasons behind paying their debt off now instead of putting their money toward investments and how they found an additional $3,443 per month to make their goal attainable by reducing expenses and increasing their income. This earnest conversation takes us through the possibilities of working full time, raising a family, making investments, and paying off a huge debt, all at the same time. Nate and Kristen talk about their life after paying off this debt and share some advice for pharmacists who may be struggling with a similar debt situation.

About Today’s Guests

Nate and Kristen Hedrick met at Ohio Northern University and were married in 2013. Nate is a pharmacist with Medical Mutual and a real estate agent with Berkshire Hathaway. Kristen is a pharmacist with Bon Secour Mercy Health. Together, they graduated with over $300,000+ in student loan debt. They enjoy visiting National Parks as a family. Today they live in the suburbs of Cleveland, Ohio, with their two daughters, Molly and Lucy, and their rescue dog Lexi.

Key Points from the Episode

Kristen’s background, how she ended up in pharmacy, and what she’s doing now.
What their student loan debt looked like at its peak.
How student debt can creep up and surprise you.
The initial feelings the couple had towards their debt and their plans to pay it off.
What motivated our guests to come up with an aggressive plan for paying back their debt.
How a life-changing event (and a book) in 2016 changed everything.
The global pandemic as a moment of inspiration.
What they had to change in their lives to be able to make the monthly repayments.
Paying off debt now versus investing for the future.
The way the couple used ‘double motivation’ to reconcile an age-old debate.
How our guests were able to raise a child, invest, and pay off a huge debt at the same time.
Nate’s decision to pursue real estate investing and what that meant for their debt repayments.
The approach the couple has taken to make real estate investing work for their family.
Other strategies that helped to pay off the debt aside from cutting expenses and real estate investments.
The benefits of receiving objective, third-party advice.
What life is like now after paying off their massive debt.
How paying off the debt helped Nate make an important career decision.
Kristen’s advice for the pharmacist struggling with debt.
Nate’s parting words of wisdom.

Episode Highlights

“That was the worst that it got and, that same month, for what it’s worth, we had a negative net worth of $306,000. We had about 10k to our name and a bunch of debt to add on to that.” — Nate Hedrick, PharmD [0:03:44]

“I had no plan early on until we developed the ‘why’, which was getting our financial house in order so that we could live the way that we wanted to.” — Nate Hedrick, PharmD [0:06:23]

“The expenses were the catalyst, and then it was the extra income side of the equation that really boosted everything to actually make it possible.” — Nate Hedrick, PharmD [0:13:37]

“Spending more time with the kids without having that student loan debt, and being able to do more things and travel more, it feels like it’s definitely paying off in the end, with making some of those sacrifices.” — Kristen Hedrick, PharmD, BCACP [0:17:16]

“One great thing about real estate investing is even if something happens, you still own a building.” — Kristen Hedrick, PharmD, BCACP [0:22:00]

“Find something that is going to supplement your life that the more effort you put into it, the more reward you get out of it. That is a really great way to set yourself up for success.” — Nate Hedrick, PharmD [0:29:32]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[0:00:00.4] TU: Hey everybody, Tim Ulbrich here. Thank you for listening to The YFP Podcast, where each week, we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, I had the pleasure of sitting down with Kristen and Nate Hedrick to discuss their journey of paying off $250,000 of student loan debt. In this show, we discuss their motivation and why, for aggressively paying down the debt. What the pivot moment was that motivated them to make the debt repayment a priority, how they were able to come up with more than $3,000 per month extra to throw towards the loans, and the role a side hustle and real estate investing played in helping them pay down the debt.

Before we jump into the show, I recognize that many listeners may not be aware of what the team at YFP Planning does in working one-on-one with more than 240 households in 40-plus states. YFP Planning offers free only, high-touch financial planning that is customized for the pharmacy professional.

If you’re interested in learning more about working one-on-one with a certified financial planner may help you achieve your financial goals, you can book a free discovery call at yfpplanning.com. Whether or not YFP Planning’s financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacists achieve financial freedom.

Okay, let’s jump into my interview with Nate and Kristen Hedrick to learn how and why they aggressively paid off $250,000 in student loan debt.

[INTERVIEW]

[0:01:23.4] TU: Kristen and Nate, welcomed to the show.

[0:01:24.7] NH: Hey Tim, good to be here.

[0:01:26.1] KH: Hi.

[0:01:27.0] TU: So Nate, obviously, you’re a frequent flyer. You’re old news so I’m not even going to spend a whole lot of time focusing on you. Many folks have heard you on the podcast before, whether it’s this show, talking about home buying, whether it’s the Real Estate Investing podcast on Saturday mornings, of course, Nate being the cohost of that show.

So, we’re going to focus a little bit more on Kristen’s background as we get started, and we’re going to jump into more about your debt-free journey and how ultimately, you guys were able to knock out $250,000 of debt, and what that has meant to you guys personally, to your family, as well as also the financial goals and plan that you have going forward.

So, before we jump into that debt payoff and that journey, Kristen, let’s start with you. Tell us a little bit more about your background, what drew you into pharmacy, where you went to school and the work that you’re doing now.

[0:02:13.0] KH: Yeah, thanks. I had some extended family members in pharmacy so I just thought it would be a good career path, and looked at the different pharmacy schools and found my way to Ohio Northern in the middle of cornfields, and no cellphone reception and for some reason, that’s where I wanted to go. I think we all know it’s a great campus and community there.

So went to Ohio Northern and that’s where Nate and I met. I completed my residency here in Cleveland, Ohio. Now I work for a large health system doing population health on clinical pharmacy, and following patients with their chronic disease states and helping them with their medicines, and helping in here in Cleveland.

[0:02:50.8] TU: Kristen, it’s funny you mentioned the cellphone reception in Ada Ohio, Ohio Northern University. I remember, I maybe as a P3, P4, just a few years ahead of you guys, but it was a big deal that they added a tower on campus, and I think we got one bar, maybe two bars, but not a whole lot going on in Ada Ohio. I had the chance to go back recently and take Jess and the boys. It was so fun to see campus and really relive some of the memories in that place.

So Nate, tell us about the student loan debt at its peak? What were you guys working with and then, from there, we’ll get into more of some of the motivation and journey of paying it off.

[0:03:26.4] NH: Yeah. So, when we graduated and totaled everything up and, I think it was even a month or two after we graduated that I even wanted to look at it. Because it was the initial plan of, “I just won’t look at it and then it won’t be a problem.” And when we totaled it all up, looking back at our highest count, we were at $316,000 in student loan debt at one point.

So, that was the worst that it got and, that same month, for what it’s worth, we had a negative net worth of $306,000, so we had about 10k to our name and a bunch of debt to add on to that.

[0:03:54.8] TU: I’m curious, did that surprise you guys? One of the stories I often share is that, it’s somewhat embarrassing, but when I was in pharmacy school, it felt a little bit like monopoly money, and it was all of a sudden when I crunch the numbers and I was like, “I owe how much, and how much interest, and what’s my net worth?” It just caught me off-guard, and it shouldn’t have. Were you expecting that or was that number somewhat a surprise at that point?

[0:04:15.4] NH: I agree, it was just totally like made up funds, you know? Every quarter or every semester, I’d have to go and submit for what I needed, and it was the tuition plus a little bit of living expenses, and I would just submit for it and it would get added into this imaginary pile of money somewhere, and I don’t think I ever checked the balance while I was in school, I don’t know why, I don’t know why I would have.

[0:04:35.7] TU: You’re dating yourself Nate, when you talk about quarters by the way. So that ain’t a thing anymore.

[0:04:40.7] NH: Old school, how I work.

[0:04:42.7] TU: Kristen, tell us about the plan that you guys had for the student loans after graduation, after you got married in 2013. How did you feel about the debt overall and then, what was the thought in that moment about how are you going to pay this off?

[0:04:55.7] KH: I think our main thought was it’s overwhelming. It’s just such a large amount that it feels so ambiguous that we thought that we had this plan. We had always wanted to try to pay it off within 10 years. I think I was a little more on track of, “Oh, I want to pay this off in 10 years” and we had some advice from a previous financial advisor that had said, “Oh, it’s just student loan debt, everyone has it, it will be okay.” We changed it to 30 years so we could have minimum payments but always pay extra if we wanted to and, ultimately, we just found that that eventually did not work as well for us.

We needed a more targeted plan to get us on track with what we were doing. We had always been paying the amounts, but I think it was how we were planning to target to actually pay it off. It always felt like this end date that we were never going to get to.

[0:05:44.4] TU: One of the questions I like to ask folks, and we’ll talk more in a little bit about how aggressive you guys were to really get a chunk of this paid off, but I like to understand, what’s the why? What’s the motivation behind it? It’s one of these things, as you mentioned, you can take them out 25, 30 years if you want to. Obviously, you guys made a good decision to be much more aggressive. Tell me more about for the two of you, for your family, why was that important?

[0:06:08.2] NH: It’s funny you say that because I think until I had a why, it wasn’t important. Like I said, I didn’t look at it, I barely wanted to check it. I think at one point in residency, I put myself on the graduated repayment plan and my only motivation was because the payment today is lower and that seems like—that seems better, right?

I had no plan early on, until we developed the ‘why’, which was getting our financial house in order so that we could live the way that we wanted to. Travel, work less, work in the capacities that we wanted to, all the things that have led us to this point. Until I had that in place, there wasn’t a why and it didn’t matter.

[0:06:42.7] TU: Yeah, I think that’s such a good encouragement for folks that are in the midst of their journey, or maybe have wondered into the repayment or for that matter, the financial plan at large, and feel like, “Hey, maybe I’m progressing but not as quickly as I would like to. I’m a little bit stuck.” Really going back to what gets us excited, right?

The topic of money, money is a tool. So, what gets us excited, why do we care bout this topic of money, why do we care about debt repayment, why do we care about saving/investing for the future, why do we care about giving? And then using that as the motivation to drive some of the action and the plan going forward.

So, Nate, what happened in 2016 that was really a motivation to say, “Hey, we’ve got to do something different?”

[0:07:22.0] NH: Yeah, that really is when it changed for us and, again, we’d been paying on them and, every once in a while, we get the idea that, “Hey, we should throw in some extra money because these loans are huge.” We would do it for a couple of months and I feel like we just were inconsistent. But in 2016, we got pregnant with our first child and, again, I tell this story on the podcast several times, but I read Rich Dad Poor Dad and it completely changed my mindset about money and what I wanted to do with money and what I wanted to do with my life and work, and just how I looked at finances.

It’s crazy it took that long to figure that out but I had no formal financial education. We go through pharmacy school, not business school, and until I read that book and changed how I wanted to approach finances in general, again, I didn’t have that why behind it. I didn’t have that motivation, so that’s what really jumpstarted us. I think it was a combination of, “Oh crap, we have a kid on the way and we have to pay for a lot of stuff” and again, this mindset shift that occurred, at least for me.

[0:08:16.1] TU: Kristen, I’m curious. I can just see Nate, because I know him now, I could see him like this totally nerding out over Rich Dad Poor Dad and coming to you with all these ideas and, “What about this, what about that?” Were you equally on fire in that moment or was there different motivations that really led you to say “Hey, we’ve got to do this differently?”

[0:08:34.4] KH: Yeah, I think I had always wanted to pay off the loan. Again, it was just so—it was a large amount that I think I didn’t know how to get there. When Nate said he read Rich Dad Poor Dad, he kept talking about it and talking about it. I think finally, in 2019, I read it, I said, “Oh, this is a really good book, I should have done it sooner”

So, I think we are a really good team together, in trying to work together and get those payments down, and Nate was very much more into it. I think at the time, I was like, I’m growing a human, I’m just going to keep doing what I’m doing, and that was the time that Nate entered real estate. He’s told this story before but, I’m six months pregnant and he goes, “Oh, I think I want to get my real estate license.” This is a time most people would have been getting board certified.

He’s like, “I’m going to go get my real estate license.” He had classes multiple times a week and I’m pregnant, trying to take care of the house and do all these things, getting ready for a baby. So, it paid off in the end and I’m glad that he did it, but I think in the moment there was also that stressful situation for me, but he’s a jack of all trades. He does lots of things and keeps busy, so it’s good.

[0:09:36.0] TU: We’re going to come back to that in a little bit, of what role did that play, Nate, for you, in terms of pursuing that, as you call, a side hustle. It’s much bigger than that, the work that you’re doing now, obviously, but why was that so instrumental, and not only to the numbers but also to some of the mindset and the motivation behind the financial plan and the journey that you were on?

I want to first talk about, though, Nate, walk us through what happened in the pandemic that really allowed you guys to say, “Hey, we’re going to get specific about when we’re going to payoff a big chunk of this debt, what it’s going to take each month.” Talk to us about what happened during the pandemic that led you to the decision around how you were going to pay off a huge portion of that debt.

[0:10:15.5] NH: Yeah, so, like I said, 2016 is where we started getting pretty serious, but even then, it wasn’t truly resolute plan, right? It was just, “Okay, we really got to be focusing on throwing extra money at this” and we did a lot better. But in 2020, we had a month or two in the pandemic and realized, “Okay, we’re not traveling as much, we’re not going to be going out to eat as much, everything shut down, let’s use this time to take the extra money that we’re not spending and really attack that loan.” At one point and, again, we were talking this morning, it was right at the end of the year, we said, “Okay, this thing is not going away, let’s really use next year to just get rid of this loan.”

So, right in December of 2020 and going into the beginning of the New Year, we said, “Let’s figure out a number. What is it that’s going to take to get this loan knocked out at the end of the year? Who cares of the balances right now, we’re going to do it in a year, let’s make sure to get it done.” So, we did some crunching of some numbers and basically said, “Okay, if we can pay everything we’re paying today but also throw an extra $3,443 at the loan every single month, mine will be gone by the end of the year and it will be just knocked out.”

So, that number, I wrote it on the big note card over here and it became like—actually got it here, I’ll grab it. Here you go, so there’s the evidence, right? 3,443. So, that became—I put that everywhere and it became the mantra of like, “If we can do that every single month, this will be gone” and that was such a huge motivator for us.

[0:11:32.8] TU: I don’t want to brush over that, because we’ll talk about it, I mean, that’s a big number, so we’re going to talk about the how of that, but tell us more about how you were able to get to that conclusion and get on the same page with that conclusion? What I’m specifically getting at here is, was it a, “hey budget status quo and we’re going to find ways to grow our income”? Was it a, “we’re going to cut some expenses”? How did you guys work through the details, Kristen, to ultimately say, “Yup, it’s $3,443 and this is how we’re going to do it.”

[0:12:04.5] KH: I think it was a little bit of a combination of both. During the pandemic, we had a little bit more interest. I think also, in doing some real estate investing and had an opportunity, we said, “Okay, do we take this money and do we put it towards real estate or do we pay down the loan more?” and eventually, we decide real estate, but we said, “Hey, like, maybe we should aggressively pay off our loan a little bit more if we are traveling and doing these things.”

So, I think in December, we had a lot of discussion about it and both of us just decided yes, we both want that to be our goal, that starting January 1st, we really start cutting back on what we’re spending. I think, really, from any area that we could, we went thorough our budget, we scrubbed it. We said, “What are we spending money on, what are the subscriptions we have, what can we cut out, what can we save money on?”

“Which of those little purchases can we just stop doing? Which things do we think that we need, can we actually hold off on buying?” and then, certainly, Nate’s side hustle helped with that as well. So, I think it was both a combination of, let’s cut back to really bare minimum spending. We weren’t eating out, we weren’t getting the extra cups of coffee from Starbucks, we weren’t doing the purchases at Target that said, “This is what you need, and this is in the dollar spot.” We just stopped all of that. And Nate worked as hard as he could with his real estate; it really is a motivator to keep putting that extra money towards it as well.

[0:13:22.3] NH: Yeah, I think we quickly realized that trying to find for an extra $3,000 in the budget. We weren’t over spending by three grand every month, that was not it, so it became my challenge to say, “Okay, well, how can I work at this side hustle to really get us the rest of the way?” So, the expenses were the catalyst, and then it was the extra income side of the equation that really boosted everything to actually make it possible.

[0:13:44.7] TU: Yeah. What I love about that is, certainly, cutting expenses, especially short-term, if you’re focused on a goal, you were talking about debt repayment, can be really valuable but it also can be a grind. I mean, it can be soul sucking sometimes, you know?

I think that one of the things I love about the approach that you took is that if you’re moving both sides of the equation, there’s a different level of momentum and mindset that come from that. Maybe the numbers aren’t as big for other folks that are pursuing ideas, but if you can both focus on, “Hey, how can we draw the income and how can we keep the expenses?” you all of a sudden feel like you’re picking up momentum in a significant way, but I don’t want to brush over that number.

$3,443 per month, that’s, for many pharmacist, if we assume, hundred, $120,000 of wage, it’s like, it’s about half of take home pay. I mean, for a lot of folks, we look at that at a monthly basis so that’s certainly commendable, and that’s a big number. Nate, I want to ask the question that I know the listeners are thinking, which is Nate, Kristen, you guys are smart. $3,443, why not invest that money?

Why not put that out so we could see that grow and compound over 20, 30, 40 years? Like, how did you guys reconcile this ongoing debate, which is maybe a little bit of a moot point right now because the administrative forbearance, but this ongoing debate of, “Should I pay down the debt or should I invest for the future?”

[0:15:03.9] NH: Yeah. This is something we struggled with for years. Should we go out and buy another rental property or should we just take this money and throw it at the loan? That’s been the back and forth. Like Kristen was saying, we were evaluating whether we should be doing real estate or paying down the debt.

We challenged ourself to say like, “Can we do both?” and so, for me, again, working and trying to add extra income to the equation. It became a game of, “Okay, if I can make $3,000 a month extra, that’s going to get us there. But if I can make 4,000 or 5,000, that’s another couple of grand I can put at the real estate investing budget.”

So what we have, we had a bucket in LI, in our LI bank account, that was the real estate investing fund and we still have that, we still use it, it is a great way to separate our money. I had to pull from that in any month that I didn’t make enough income to really make the difference, I had to pull out of that. So it was like this, I was afraid to give it up. So it became a challenge to myself and to us.

We need to cut our expenses and raise our income in a way where I can keep padding that account, that bucket, while also meeting our number. It was a double motivator of let’s get rid of the debt and I don’t want to lose sight of the other thing that I’m really passionate about. So, let us find a way to do both.

[0:16:09.8] TU: Kristen, we both know that kids could be expensive. We love them, but it can be very expensive. I think one of the challenges folks have that are raising young family, whether it is debt repayment, whether it is achieving other financial goals, is it’s an expensive phase of life, right?

The data suggested it’s multiples of hundreds of thousands to be able to raise a child, and I am curious of how you guys were able to reconcile this with young ones? I know you guys are so active and intentional as a family now. When you’re looking ahead to say, “Hey, this is a sacrifice now but it is going to allow us to really push our goals forward as a family later in the future.” Tell us about your thoughts on that.

[0:16:46.9] KH: For sure. I remember being pregnant in 2016 and just thinking like, “Oh my gosh, I already feel like we’re living paycheck to paycheck, how are we possibly going to raise a child and afford daycare?” We even joke now, our big expense is mortgage. Childcare and student loan debt was there, our mortgage was the least expensive of all of those.

So yes, certainly having kids is—we always felt like we knew we wanted to have kids and it was just figuring out how do we plan for that. I think, especially now, spending more time with the kids too without having that student loan debt and being able to do more things and travel more, it feels like it’s definitely paying off in the end with making some of those sacrifices or making those adjustments.

Really, that mindset change, I was joking this morning, like you said Tim, it’s mindset changing. In 2021, we actually kept a list of things of, what are things we didn’t buy that we’re going to buy when the student loan is paid, and I was laughing because I’m like, “I still haven’t even bought these things yet.” We just found that maybe we don’t actually need them.

[0:17:44.7] TU: Yeah and some of those behaviors. That’s what I always encourage folks, whatever goal you’re working towards, some of those behaviors you implement in that season will stay with you for the long run. Certainly, there’s a time and place to loosen the reigns a little bit and make sure we’re living a rich life today as well as planning for the future, but we’ll talk about what that looks like for you guys.

But some of those behaviors can stay longer, which I think is really an incredible part of the journey. I want to touch on two things we’ve mentioned I think play a really important role to this journey, which is, number one, that you talk about the side hustle you had working full-time as a pharmacist, as a real estate agent that allowed you to accelerate some of the goals and momentum.

Then the second being the investing in real estate, which much of our community already knows the work that you there on the Real Estate Investing Podcast but talk to us first about the side hustle as a realtor. When did you become a realtor, why did you become a realtor and you know ultimately, how have you been able to balance this while you are also at the time working full-time?” You are raising a young family, tell us about the decision to pursue that work and the role that it played and the debt repayment journey.

[0:18:51.3] NH: Yes, I mentioned that mindset shift that occurred in 2016. I realized I needed something else that was going to be able to supplement my pharmacy career, something where I could put extra effort in and get extra reward from doing that, real estate became a natural fit. Again, it is mentioned a dozen times in Rich Dad Poor Dad and I started reading other things about ways to diversify income streams and, you name it, right?

Real estate was in that conversation. I talked to my father-in-law who has been in real estate for years and he’s like, “You should just get your license.” At the time that felt like, “Well, that’s a different career. I can’t do that” but as I looked into it, it was actually a really reasonable option to supplement that. So I went, like Kristen said, to classes in 2016, got licensed in early 2017 and I assumed that everyone was all of a sudden coming to me, right?

All my family and friends were going to flock to me and say, “Nate, buy and sell me a house” and it was, I think, eight months before I had a real client and actually closed the deal. I mean, it was a long time, and that’s because I wasn’t putting the right amount of effort into it and I wasn’t targeting what I needed to be doing, right? I wasn’t niching down and, again, that’s what led to the creation of real estate RPH and all the work that I do with pharmacists and the real estate community.

All those things progressed down the road to the point where I am at today where, again, now I get to work with a bunch of active clients here in Cleveland. I help people all over the country with our real estate concierge service and it is a really cool way to put my passion for real estate into the world of pharmacy that I started out in and, again, it’s also been a great way for us to supplement our income stream just because it is something where I could put more effort in and get more dollars out as a result from doing that.

[0:20:21.6] TU: Yeah. I want to put a plug in, just so you don’t have to as well, but I think that service has really been so valuable to the community. So, if folks are looking to buy a home, sell a home, looking to buy an investment property and they’re looking for an agent that would be a good fit for them. It is okay if you’re not in the Cleveland area where Nate is, he’s built a network of agents all across the country that have supported other pharmacist.

So, if you go to yourfinancialpharmacist.com, you click on home buying, you’ll see a section for find an agent and from there, you can get connected with Nate further.

Kristen, I want to ask you about the real estate investing side just because Nate talks about this on the podcast every week but I know, because I’ve seen it offline through some of the times I am talking with Nate, you guys are crunching numbers on the property and you’re on the spreadsheets punching numbers, “Is this a good deal, is this not a good deal?”

Tell us more about the vision that you guys have had for real estate investing for you as a family, why that’s been a good fit, and the approach that you’ve taken thus far in your real estate investing journey?

[0:21:17.5] KH: Yeah, I think we always had an interest in real estate investing. You know, my family has some experience with that, like Nate mentioned, my dad is a realtor, so we knew its something we eventually wanted to do. It was just figuring out ,how do we put it in as part of our plan? But when Nate said he was interested, I was all onboard, but I was also that type-A risk averse pharmacist as in, “How do we do this? I have no idea.”

I vividly remember a lot of my commutes, listening to Bigger Pockets, reading a lot of real estate books just to fill my brain with the information I felt that I needed to feel comfortable with real estate investing, and we always knew that we wanted to have those properties. I think one of the biggest things I had learned from Bigger Pockets was, one great thing about real estate investing is even if something happens, you still own a building.

You still have something physical there that you could sell and we just—we always knew we wanted it to be something to supplement with one of our investments.

[0:22:13.4] TU: Yeah, so right now you guys have property, correct me if I am wrong, you’ve got property in Northeast Ohio and then you’ve also got property outside of the area, correct?

[0:22:22.0] NH: Yes, so we’ve got properties here locally and then some up in Michigan as well.

[0:22:25.7] TU: Awesome, love that. And folks can tune in to the Real Estate Investing Podcast for more stories of other pharmacists real estate investors. So, we’ve talked about really three main buckets that were instrumental in paying off this $250,000 of debt and that was, I categorize it as hustle, cutting your expenses that more than $3,000 per month, growing the income through the side hustle, and then also looking at how you’re able to build a real estate investment portfolio. We’re there other strategies that helped you along this way of paying off this debt?

[0:22:55.8] NH: There are little things. I think one that comes to mind for me is that we refinanced that loan, I think four different times, and a lot of that was because we were getting low interest rates every single time, and the other is because we were able to get big bonus. So, if you have been on any of the YFP resources for loan pay down or for loan refinance, you get cash bonuses depending on your loan balance.

A couple of times we would go out and refinance it, wait a couple of months, refinance it again, and we’d get a check and a lower interest rate, it just made a ton of sense. So, that was a little thing that helped quite a lot along the way.

[0:23:24.2] KH: I think another thing that really helped us was working with Tim Baker and the planning team at YFP. They were very much instrumental in guiding us through and helping us make the decisions. You know, I grew up putting my money under a mattress making sure it was nice and crisp and counting it every week. When we started this journey, Nate wasn’t financially savvy until 2016, when he got more into it after reading Rich Dad Poor Dad.

So, I think working together in having a third party objectively look at everything and give us some guidance was really helpful as well.

[0:23:55.9] TU: You don’t have to make Tim’s ego any bigger. No, I’m just kidding. I can see he is listening to that. So the question that I am begging to know the answer to is, you guys were throwing a huge amount of money at this debt. Obviously, at some point, you got that debt paid off and, all of a sudden, you’re not having to make that big of a payment anymore. I often think about this in the context of my journey and I often chalk it up to where did that money go.

Well, more kids, kids got expensive, other things come along the way, but I also know you guys have been really intentional as a family about what are we trying to do in terms of experiences and how we want to be intentional with the resources and the money that you have each month. So, Kristen, talk to us about this journey after the $250,000 of debt, where no longer making this massive monthly payment. What’s happening? What are we doing?

[0:24:43.5] KH: Well, we went to Disney World. I feel like that’s the most appropriate thing, you know? Honestly, in some parts, it feels like it hasn’t changed at all. We still have a lot of that mindset with being frugal and still saving for our future, but also trying to live in the moment, and we have done a lot of life planning as well and things that we want to do. I think we’re working on travelling more.

Like I said, we went to Disney, hopefully some other trips coming up, just being able to spend more time with the kids I think. People with children understand that the first five years before they start school is just hectic and overwhelming. We were just trying to take in all these moments before they head to school officially.

[0:25:20.1] TU: I love that. Right, it goes quick and everyone says that, but it’s real, and I think the intentionality around these experiences and making sure there’s the budget there to support those experiences and to be able to enjoy those moments along the way. Nate, you recently shared publically your decision to go from full-time to part-time work in your pharmacist role. So we’re going to officially call you a pseudo pharmacist now.

[0:25:41.7] NH: That’s fair.

[0:25:42.9] TU: How much of a factor was getting to this point of having this $250,000 of debt paid off, how much of a factor was that and being able to approach that decision and ultimately, feel confident in that decision.

[0:25:55.4] NH: Yeah, it was huge. I mean, I can’t say that when we stared off that was the plan but as we get closer, we realized that it was a possibility, and I looked at the timing and I looked at where we were at and I said, “Look, this is like the last summer before our oldest goes off to kindergarten and then it is just going to get crazier and crazier as time goes on” So I took a step back and said, “Now that this debt is gone, we really can take a step back.”

Kristen has been so supportive and helpful in allowing me to do that, but it’s been really cool because now I can just focus on them for the summer and those extra 20 hours that I found every single week is just, I’m on the kid’s schedule. Like the other day, it was raining in the morning and so we went to the movies and we saw a kid’s movie and then we got out and I was like, “Hey, it’s sunny. Let’s go to the playground” and so we did that.

It was just really cool to be on their schedule rather than some work schedule or something else that I had to do or had to get done. There wasn’t a timeframe anymore and that’s been really cool and again, without that debt being gone, there is no way we could have done that.

[0:26:51.3] TU: Yeah, what I love is I think both of you are such a great example. Where yes, you’ve got a PharmD, yes, you’ve got residency training, yes, you could continue to climb certainly in various clinical roles and there’s the opportunities always there and will be there, but you also have some opportunity for flexibility in those roles and I think sometimes we don’t think creatively enough as pharmacist about how we’re going to use our time each week, and that can change season to season.

I work with other pharmacists who went through a season with young family and others where they pivoted to part-time roles or more flexible schedules and then that changed the game at a later point in time. So I think there’s opportunities to make sure that we are coordinating our work plan with our life plan and with the financial plan as well. Kristen, I’ll start with you and then Nate, if you have other thoughts as well.

I’m someone listening who, maybe I’m a student, and I am like, “Oh my gosh, thanks so much I feel depressed about the journey ahead” or maybe I am in the middle of the debt repayment journey and I just feel like, “When does this going to end?” or I feel like I am spinning my wheels. What advice would you have for pharmacists that are in that debt repayment journey as they’re trying to really navigate that path forward?

[0:27:58.8] KH: Yeah. Not to sound cheesy, but I think a really big player, at least for me, was the YFP planning team. We felt like we had a plan but we weren’t really sure if it was a good plan, and really it was after I had our second child and I was listening to a lot of podcast. I was walking everyday on maternity leave and I was listening to podcast every time I would go for a walk and I was like, “We really need to look at this.”

I feel like we need a more set plan as to what we’re doing, especially since you’re at such an integral point of your life where you want to be able to spend extra time with the kids, but you also may feel like you can’t financially do that, and so I think having that, like I said, that objective third party look at what you two are talking about as a couple can be really, really helpful, and also helped us look at a lot of our other financial plan with the investments.

Like, can we get into more real estate investing, are we contributing enough to our 401(k)? Are we doing things that seem like we should be doing? I think that is really, really been a big impact on us on being able to achieve this.

[0:28:55.0] TU: Nate, any other words of wisdom, advice you’d have to folks that are kind of in the thick of it, if you will?

[0:29:00.6] NH: Yeah, I think for me, again, just for me at least, what were just this mindset shift away from being stuck at, “Okay, I only have—this is my income” right? “If I make a $110,000 a year as a pharmacist, that’s all I’ve got and there is no other opportunities and I have to make it work with that money.” I challenge everybody out there, and there’s a thousand and one different ways to do this, but you should find something where the more effort you put in, the more you get out of it, and it doesn’t have to be money, right?

That can be just time, that can be time with your family, that can be things that you enjoy doing, whatever that is, find something that is going to supplement your life that the more effort you put into it, the more reward you get out of it ,and that is just a really great way to set yourself up for success.

[0:29:40.9] TU: I love that. To reiterate what we talked about a little bit ago, the dollars are one piece of that, but don’t underestimate the momentum that comes from that as well, and that momentum is so important as it relates to the financial plan. You’re related to the debt repayment but I always stick to the other parts of the plan as well. Again guys, congratulations on knocking out this huge chunk of debt.

Really incredible to hear the story and the why behind it and how you’re able to do it, excited for what lies ahead of you guys and thanks for taking time to come on the show.

[0:30:10.5] NH: Thanks Tim, we appreciate it.

[0:30:11.6] KH: Thank you.

[END OF INTERVIEW]

[0:30:12.3] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information of the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog post and podcast is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analysis expressed herein are solely those of your financial pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 321: Navigating Financial Conversations with Aging Parents

Posted on August 17, 2023August 15, 2023 by Tim U

Award-winning journalist and author Cameron Huddleston joins the YFP Podcast to talk about navigating financial conversations with aging parents.

About Today’s Guest

Cameron Huddleston is an author, speaker and award-winning journalist with 20 years of experience writing about personal finance. Her work has appeared in Forbes, Kiplinger’s Personal Finance, Chicago Tribune, MSN, Yahoo and many more print and online publications. She is a mom of three awesome kids and was a caregiver for her own mom, who had Alzheimer’s disease. SHe is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances.

Episode Summary

Money talk isn’t always easy to initiate, but in some cases it’s essential. Today, we are joined by award-winning journalist and author of Mom and Dad, We Need to Talk, Cameron Huddleston, to discuss the often-overlooked topic of navigating financial conversations and decisions with aging parents. Cameron shares key insights into why these discussions are crucial, how to approach them with love and respect, and practical strategies to initiate meaningful dialogues. We discover the importance of estate planning documents, ways to involve siblings harmoniously, and the significance of long-term care planning to ensure a secure future for both parents and their adult children. Tune in to gain valuable advice and actionable steps to foster open, productive conversations that empower families to address financial matters and caregiving needs with confidence and compassion.

Key Points From the Episode

Introducing award-winning journalist and author, Cameron Huddleston.
Insight into her book Mom and Dad, We Need to Talk.
The importance of talking to aging parents about their finances and long-term care planning.
Key fears preventing people from having these conversations.
Strategies to initiate conversations with parents about their finances.
Why it’s important to involve siblings in these discussions.
The basics you need to cover in these conversations.
Cameron offers listeners a free In Case of Emergency (ICE) Organizer.
What to discuss with regard to long-term care planning.
The emotional toll of being an unpaid family caregiver.

Episode Highlights

“The benefit of having these conversations sooner rather than later is that you can avoid some of the emotional reactions that can crop up.” — @CHLebedinsky [0:08:34]

“If you wait until [your aging parents] are no longer mentally able to make decisions on their own, then they’re not going to be able to sign the document and you have to go through the court process of becoming their conservator.” — @CHLebedinsky [0:15:18]

“It’s a good idea, when talking to your siblings, to talk a little bit about what roles each of you is willing to play in your parents’ financial lives as they age.” — @CHLebedinsky [0:21:00]

“More than half of adults 65 and older will need long-term care at some point.” — @CHLebedinsky [0:25:46]

“If you make a plan, you have more options available to you. If you wait until that emergency — you can’t get long-term care insurance once you already need it.” — @CHLebedinsky [0:28:37]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[0:00:00.8] TU: Hey everybody, Tim Ulbrich here, and thank you for listening to The YFP Podcast, where each week, we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, I welcome back onto the show, Cameron Huddleston. Cameron is an experienced award-winning journalist and author of Mom and Dad, We Need to Talk: How to Have Essential Conversations with Your Parents about Their Finances. We talk through why it is important to have these conversations with your parents, how to start the conversations, and what to do if your parents are reluctant to talk.

Before we jump into my interview with Cameron, let’s hear a brief message from YFP team member, Justin Woods.

[YFP MESSAGE]

[0:00:37.5] JW: Hey, Your Financial Pharmacist community, it’s Justin Woods, director of business development at YFP. I’m curious, have you taken a pulse on your financial health lately? It’s so easy to get swept away by the day-to-day of careers, family, and life in general but now is a great time to hit the brakes and check in to see how financially fit you are. Are you heading in the right direction to meet your financial goals?

Is your retirement planning on track? Do you have adequate insurance in place? We created a five-minute financial fitness test so that you can learn about the areas of your financial plan that you may need to work on, maybe where you’re crushing it, and resources that could help you along the way. So head on over to yourfinancialpharmacist.com/fitness, to see how your financial health is tracking.

Again, that’s yourfinancialpharmacist.com/fitness or click the link in the show notes below.

[INTERVIEW]

[0:01:31.3] TU: Cameron, welcome back to the show.

[0:01:33.0] CH: Thanks so much for having me.

[0:01:35.1] TU: I’m so glad to have you back and today, we’re going to be doing a deep dive into a difficult, yet very important topic and that is navigating financial conversations and decisions with aging parents, and Cameron, for our listeners that didn’t previously catch you on the YFP Podcast several years back, tell us why this topic is so important to you, such as it has led to you to speak and write extensively on this topic, including the work that you did in your book, Mom and Dad, We Need to Talk.

[0:02:05.5] CH: You know, it’s funny, I never set out to be an expert on having family money conversations, yet, I have found myself in this position largely because of personal experience. I have been a personal finance journalist for more than 20 years and when I was 35 and my mom was 65, she was diagnosed with Alzheimer’s disease and I found myself having to get involved with her care and get involved with her finances.

But we had never had any detailed conversations about her finances and you know, looking back, I think, “Oh gosh, I should have known better, I was a financial journalist, I should have had these conversations with my mom” but it never crossed my mind that I needed to talk to my mom about her finances and so then, I found myself having to play detective to get the details I needed about her finances as she was forgetting those details herself.

So that experience prompted me to write a book, to help people realize the importance of having these conversations before there’s an emergency. You know also, my dad’s story played a role on this too. He died at 61 without a will and he was in a second marriage and he was an attorney. He should have known better. He should have had estate planning documents and it came as a huge shock to me that he didn’t.

You know a lot of times, we think our parents are on top of things or they might tell us that they are but are they really? And then you start to ask questions and you find out that they’re not as prepared as you think they are and so I just really want people to realize that these conversations are so important because there will come a point when you have to get involved with your parent’s finances, either if they need care or help as they get older or when they pass away and you have to manage what is left behind.

[0:04:04.1] TU: Yeah, Cameron, your story really resonates with me and I suspect that our audience as well. One of the things I shared with you before we hit record is that we’re seeing more and more folks in our community that are challenged, you know, with being stuck in terms of having, obviously, their own financial situation, perhaps young or growing family that is presenting financial needs and now there’s this component with aging and elderly parents that you know, may not only be difficult conversations but also there may be really real financial impact on their own situation as well.

And so I think you know, your story and what you mentioned about you know, your father being an attorney, somebody that knows the importance of these documents and not having them in place really speaks to just how emotional and challenging this topic can be and that’s really where I want to start, right? Because I think that for those that have aging adult parents, very common situation where the fears that surface when we consider talking about money with our parents.

I know it’s something that I have felt myself and so much so that in the book that you wrote, Mom and Dad, We Need to Talk, you referenced a study from a care.com survey, showing that more than half of parents would rather have the sex talk with their kids than talk to their parents about money and aging issues. What are some of the fears that are holding people back from having these crucial conversations, right? After all, we know that they’re essential ones to have.

[0:05:32.1] CH: One of the big ones is that we are afraid if we have these conversations, our parents might think we’re being greedy, especially if you want to ask about those estate planning documents. We’re afraid if I ask Mom and Dad if they have a will or a trust, they’re going to think that I’m just trying to find out what I’m going to get when they die and so it’s a logical fear for sure.

You know, we might be afraid that our parents are thinking we’re being nosey because most people are pretty tight-lipped about their finances. We might be afraid that our parents are going to get angry with us and it’s going to create a rift in our relationship. I think though if you approach these conversations out of love and respect.

[0:06:18.0] TU: Yes.

[0:06:19.7] CH: Then you’re not going to make your parents angry, they might be a little surprised initially that you want to address this topic but if you let them know that you are looking out for their best interest, that you want to know what their wishes are so that you can honor those wishes, they hopefully will recognize the value in having this conversation and they’re not going to think that you’re just trying to figure out how much money you’re going to get when they die, especially as long as you don’t start the conversation that way.

You know, you don’t want to say, “Hey, do you have a will? I want to know what I’m getting.” Of course, they’re going to think you’re being greedy at that point but if you let them know, “Hey, I want to know what your wishes are so I can honor them” then you’re opening the door to having a productive conversation.

[0:07:16.5] TU: Yeah. You know, what really stands out to me there, Cameron, is honor, love, and respect, three words that you use there and I think if that’s the backdrop and the intention of a conversation, it doesn’t mean it’s going to be an easy conversation, right? We still may stumble through it and it’s challenging but I think the outcome of that is likely to be much more fruitful, fit in the spirit of that.

And as I shared with you previously, that is something I have struggled with personally, is that fear and sometimes it’s a story I tell myself but that fear that out of initiating these conversations, there could be a perception of greed, and while I know my heart is not in that place, you know, that is a concern, and I think some of the strategies that you talk about in the book to initiating these conversations.

I think, really, coming at it from a perspective of honoring their wishes as you said, and to be fair, there’s also a personal responsibility that I feel to my family and our financial plan, why I think both of our parents have done a phenomenal job in planning, you know, depending on long-term care, a topic we’ll talk about here in a little bit, and the expenses that may or may not come that could be a financial burden and implication on our family, on our personal finances and so I think there is a responsibility to lean into this conversation from that end as well.

[0:08:32.0] CH: I was going to point out that the benefit of having these conversations sooner rather than later is that you can avoid some of the emotional reactions that can crop up if you wait until an emergency. If you were talking to your parents about their estate planning, their retirement planning, their long-term care planning while they’re still relatively young and healthy, you’re talking about “what if” scenarios.

“What if this were to happen, what do you want?” As supposed to waiting until there has been that diagnosis of dementia or a cancer diagnosis or whatever. At that point, you are in a crisis, and trying to sort out the financial side of things is going to be a lot more difficult because you’re not talking about a “what if” scenario. You’re talking about, “Hey, you probably need my help now we don’t have a plan, I need to get involved” and that makes it a lot more challenging to have constructive conversations at that point.

[0:09:41.1] TU: Yeah, that’s such a great point that you bring up because one of the traps, and you talk about this in the book, is assuming that a conversation can wait, right? And I think that’s another reason where, you know, having the conversation as early as possible before those situations are live and real and you’re in the moment, I think can really help with managing that conversation in a much more effective and productive way.

Cameron, one of the things I was thinking about is I find this cycle very interesting, right? When I think about the generational patterns that you often see with how we handle our money, right? So I talk with many pharmacists that grew up in a household where money is a taboo topic, right? So there is from the parent to the child relationship where maybe they’re not given the financial vocabulary or it’s a common place to have an open conversation about money and then you see this pattern repeat in reverse, child to parent, later in life or maybe they’re not comfortable initiating that conversation.

And so I think for our listeners, I share that as hopefully some encouragement to break some of these cycles, right? That might be running generationally as it relates to how we handle our money but it’s so important. One of the implications we see often when we’re working through the financial plan is, it’s not just the exes and O’s, it’s not just the objectives. So much of this topic is emotional.

So much of this topic comes back to how were we raised, what are the money scripts and stories that we grew up with and what are the implications of that on our financial plan.

[0:11:06.0] CH: I agree 100% and I think it’s a really good idea before you start having these conversations to spend a little time thinking about why your parents might be reluctant to have the conversation if you think that they will be reluctant. If money has been a topic that your family has addressed, you know since you were little, then you have a lot less story about and I don’t mean to say that you have a lot to worry about if it wasn’t a topic of conversation in your family but I do think it’s a good idea to think, “Why might my parents be reluctant?”

“Are they embarrassed about their financial situation, do they simply believe that money is a taboo topic? Do they not like the idea of talking about aging in death?” If you can pinpoint the reason they might be reluctant, then you avoid approaching the conversation from that angle. So let’s say, Mom and Dad don’t like to think about death, they never talk about it. So you don’t start by asking them about what sort of estate planning they’ve done.

You choose a different approach, you know, “How’s retirement going for you or what are your plans for retirement?” Something along those lines so that you don’t start the conversation off on the wrong foot because you don’t want them to shut down immediately.

[0:12:24.2] TU: Yeah, such a good point and that’s one of the things that I love about the book is I feel like you give very tangible, practical strategies such as conversation starters, right? Because I think that in theory, a lot of people hear this topic and they’re like, “Yes, I know I need to have these difficult financial conversations with my parents and I can understand why but how do I actually engage?” right?

“How do I begin some of these conversations?” and you give very tangible examples all throughout the book. So I highly encourage our listeners to check out that resource, if they haven’t already done so. One of the things Cameron, you mentioned in the book, is when talking with reluctant parents, how important it is to start with the basics, the must-haves, and then to work from there and then to build upon that.

What do you mean by the basics? What are you referencing there?

[0:13:14.7] CH: I think it is so important to find out if your parents have estate planning documents and I know some people think, “Oh, an estate plan, that’s something only wealthy people do. My parents don’t have a lot of money, I’m sure they haven’t bothered to draft a will or a trust” but all adults, all adults need estate planning documents. Of course, a will or a trust is important to spell out who gets what when you die because, without one, state law is going to determine who gets what and I don’t think a lot of people realize this.

So many adults think, “Well, my family can just sort it out” and that is the worst, the absolute worst approach you can take because you might think everyone gets along but as soon as money comes into play, the dynamics change so quickly. I mean, I’ve heard this from estate planning attorneys, I’ve learned this from personal experience and so, you need to make sure your parents have a will or a trust that spells out who gets what when they die and you need to know where that document is.

Again, you know, say, “Look, we just need to know what your wishes are so that we can honor them and honestly, so we can avoid any fighting down the road.” I think, more important though than that will is a financial power of attorney. The best type to get is a general durable power of attorney, this lets you name someone to make financial decisions and transactions for you if you can’t. General means you’re giving someone broad powers.

Durable means that that power remains in effect once you are no longer mentally competent and so this allows you to plan for dementia and capacity. If it’s not durable, it’s really not going to do you any good and so your parents need to have named someone as their agent under power of attorney. This has to be in place while they are still mentally competent because if you wait until there is a stroke if you wait until they are no longer mentally able to make decisions on their own, then they’re not going to be able to sign the document and you have to go through the core process of becoming their conservator.

It can be very lengthy, it can be very expensive, you know, and I was lucky with my mother because she had some estate planning documents but when she was showing signs of memory loss, I was like, “Let’s go in and get them updated” and fortunately, she was still competent enough to sign those documents. So don’t assume if your parents are starting to show some signs of memory loss that it’s too late.

Meet with an attorney, don’t, please don’t use those inexpensive or no-cost forms that you can get online. If there’s any document that you meet with an attorney to draft, it is that power of attorney document because if you run into issues down the road, you can always get that attorney on the phone with the financial institution to say, “Yes, this document is legitimate, the person was competent when he or she signed it” and so meet with an attorney or make sure your parents meet with an attorney.

But they also need to have a medical power of attorney to name someone to make medical decisions for them if they can’t and they need an advanced directive. It’s also called a living will to spell out what sort of end-of-life medical care they do or do not want. These documents are so important, parents need to have them and you need to know where they are because it’s not going to do you or your parents any good if you can’t find them. Start there, then get more information.

You know, how do they pay their bills, this is part of the emergency planning. If Mom and Dad end up in the hospital and you want to make sure the bills are getting paid while they were in the hospital, you need to know how they’re paid. Are they set up to be paid automatically or are they writing checks? If they’re writing checks, someone else is going to have to be able to sign those checks for them, at least temporarily while they’re in the hospital.

You know and then keep digging, what are their sources of income? You don’t have to know exactly how much money they have but you need to know, are there retirement savings, are they relying solely on social security benefits, is there a pension, you know, is there debt? Again, you don’t need to know down to the last penny how much debt they owe but are they still paying for a mortgage?

Are they still paying for student loans that they took out for you or for themselves or for the grandkids? Whatever, just you know, a general idea is a good start. Of course, the more information you can gather the better because if you end up in a situation like I did where you have to manage your parents’ finances, then you’re going to have to know everything.

[0:17:57.2] TU: So much there to take away and as you talk about in the book, those more advanced types of things, right? You talked about how you’re paying your bills, sources of income, bank accounts, outstanding debts, you know what I think about as like the day-to-day execution, right? You put yourself in the shoes of your parents and you’re responsible for managing that as you mentioned in your own situation, what are the things that you would need to know.

But the importance of starting with the basics and when they are ready to share and when the time is right to be able to come back to those topics. So I think the progression here is a really important thing to highlight and I would just encourage our listeners, you know, Cameron, as you were talking through the estate planning documents, a reminder not only to our listeners for their aging parents but also for them.

Many in our community have a young family, they may not have taken this important step and I think because there often could be fear and emotions around this as we see with many of our financial planning clients this isn’t the most exciting part of the financial plan to be thinking about but it’s so important to consider and it’s something that we’re also not just going to set once and forget but we need to come back throughout time and make sure that those documents are updated.

We talked about the estate planning part of financial planning in great detail in episode 222, we’ll link to that episode in the show notes. I do want to ask you about the sibling component, right? One of the things you just shared is how money can become challenging when you think about the family dynamics, right? That we often hear those horror stories and so that got me thinking as you’re sharing, “Wow, how can even my brother and I prevent some of that?”

How can we get on the same page? And for us, it’s only him and I and I would expect this becomes more challenging with more siblings, more personalities, you know, more brothers and sisters-in-law and so forth, they’re involved. What advice would you have to our listeners that are trying to think about, “How can I best navigate this relationship with my siblings so we are collectively on the same page in these conversations with our parents?

[0:19:54.2] CH: I’m so glad you brought this up because sometimes the sibling dynamic can be more complicated than having the conversations with your parents and so I encourage people to actually talk to their siblings before talking to mom and dad so that they can get on the same page. If you have siblings and you decided to go to mom and dad and have these conversations and you don’t include them, then that can create resentment.

It can create suspicion, “Oh, you talked to Mom and Dad about their finances, what were you trying to do? Get and go with them so that you get all their money when they die?” You don’t want that to happen and so call a family meeting with your siblings, whether it’s in person, whether it’s on Facetime, you know, better to talk but if you have to send a series of emails back and forth that’s certainly better than nothing.

But you want to let your siblings know that you think it would be a good idea to talk to your parents. You want to figure out who is going to initiate the conversation. Is it one of you, is it all of you, when is going to be the best time to have this conversation? And I also think it’s a good idea when talking to your siblings to talk a little bit about what roles each of you is willing to play in your parents’ financial lives as they age.

Now, at the end of the day, it’s going to be up to your parents to make those decisions who is going to be the executor of their estate or their trustee, who is going to be the financial power of attorney, the medical power of attorney but if you have had these conversations beforehand with your siblings and then you sit down with your parents and they can see that you’re on the same page, it can make it easier for the parents to open up.

Because often times, parents are reluctant to have these conversations because they don’t want their kids to fight. I would caution though, if you have a sibling who is likely to sabotage the conversation for whatever reason, maybe the sibling doesn’t get along with you, doesn’t get along with your parents, there are mental health issues, you know, financial, legal problems, then you might not want to include that sibling in the conversation.

You know, if you have siblings who simply don’t want to participate, it’s okay, don’t force them but I would encourage you to just keep them in the loop because you never know down the road if you do get involved with your parent’s finances, they might want to start getting involved and if you’ve kept them onto the loop all along, then you’re going to run into some issues there and so try to keep an open dialogue as much as possible with your siblings.

[0:22:29.5] TU: Cameron, in the book one of the things you reference is the “in case of emergency” organizer and I think some of what you previously covered probably falls in here as well but tell us more about what is the purpose of this organizer, what should be in this, and how our listeners could get started with this for their own family or with their parents.

[0:22:47.2] CH: So I actually created this downloadable file, you can find it on my website at cameronhuddleston.com, it’s free. You can use that or you can create your own. It’s essentially a way to get organized, to help your parents get organized. You can print it out and give it to them because sometimes parents are more willing to write down information rather than tell you directly. This allows them to maintain control over the information.

So if they don’t want to talk, just say, “Hey look, I get it. This is a sensitive subject. Do me a favor though, here is this “in case of emergency” organizer, fill it out. Fill it out as best as you can, put it in some place safe, and tell me when and how to access it.” I mean, it asks for all sorts of information, social security number, Medicare number, health insurance number, military ID if you served in the military.

All of your financial accounts, your usernames, your passwords, locations of lockbox keys and deeds, and marriage certificates. I mean, I try to cover everything and so it is a great way to get organized. It is a great way to get your parents organized. You know, if you are in a relationship yourself, I mean, this is information that your spouse or partner is going to need if something happens to you.

So you know, like I said, if your parents don’t want to tell you information, you might have some luck getting them to write it down.

[0:24:17.1] TU: Yeah, I really like that strategy and approach and I think also you know, to having a third-party resource can be really helpful. So you know if I, for example, I’m talking to my mom and dad. If I send them a checklist of, “Hey, these are the things I’m asking for, these are the questions that I have” you know, to your point about being intentional and strategic and how we have this conversation in an honoring and loving and respectful way.

I think sometimes the third-party resource expert such as yourself, having that come from them can be certainly a powerful approach and strategy to consider as well. Cameron, I want to wrap up our time by talking about long-term care planning. In a recent version of your newsletter that you sent out, you talk about the financial and emotional toll that can come from being an unpaid family caregiver, something I’ve seen in my own family.

With my parents caring for their parents and I suspect this is a conversation that many avoid but has massive implications. So talk us through why this conversation is so important and the strategies that folks can use to open up the dialogue around long-term care planning.

[0:25:25.0] CH: It is so important to talk to your parents about what sort of long-term care planning they have done because I can tell you most likely they haven’t done any planning. Only 11% of adults have long-term care insurance, which will help pay for the cost of long-term care services but the thing is, more than half of adults, 65 and older will need long-term care at some point, you know?

This is assistance with what are called the activities of daily living, bathing, getting dressed, eating, getting in and out of bed, long-term care can be provided in your home obviously by family members or paid help you bring in. It can be provided in an assisted living facility, adult daycare centers, memory care facilities, and skilled nursing and so it doesn’t necessarily mean a nursing home, which is a lot of people assume, you know?

Their parents might say, “Don’t ever put me in a home, don’t put me in a nursing home” and I encourage people if your parents say that to you to not make that promise, to not say, “I promise.” I think the better strategy is to say, “You know, I understand that the idea of going into a nursing home seems really scary. Let’s talk about what sort of care you would want if you need care. Where do you want to receive care?”

Most likely, they’re going to say in their home because that’s where most people want to receive care and then you say, “Okay, well, if you want to stay in your home, let’s think about whether your home is set up for you to age and place. You know, Mom and Dad, you got a two-story house. Your bedroom is on the second floor. You have a bathtub that you have to step into to take a shower.”

“Maybe it would be a good idea to start thinking about downsizing to a smaller home with a bedroom on the first floor and an accessible shower with a smaller yard or no yard, a house that requires less maintenance. If we can start putting these plans in place now, then you can stay in your home” and you know, “Do you have a way to pay for someone to come in and provide care? I want to be able to help you in any way possible, however, I have a job.”

“I have kids, I might not be able to take time off my job or to quit my job to provide care for you. You know, I’m going to do whatever I can to help you but let’s make sure there’s a way to pay for professional care” and maybe Dad says, “Well, you know mom is going to take care of me.” “Dad, can Mom take care of you if you’re both in your 80s? Can she get you up and down the stairs? Can she get you in and out of bed?”

“Can mom really do this? Does she have the physical and emotional strength to do it?” People don’t think about these things because honestly, it’s depressing. It is but if you make a plan, you have more options available to you. If you wait until that emergency again, you know, you can’t get long-term care insurance once you already need it. That has to be in place, you have to buy long-term care insurance.

You can get it in your 50s, your early 60s as long as you’re still healthy. You know maybe, they don’t like the idea of paying for long-term care insurance because they might never need it. There are now these hybrid life insurance products that include a long-term care benefit, maybe they have whole life insurance that has accrued cash value and so they can tap into that cash value of their life insurance.

Maybe it’s a reverse mortgage, maybe they have enough retirement savings to cover the cost of care but you want to talk to your parents about what sort of resources they have and it is really important to discuss who is going to provide that care and to gently make them aware that they might not be able to rely solely on family to provide that care.

[0:29:44.5] TU: Yeah and as you articulate it so well, I mean, there’s all of these financial considerations but there’s the emotional consideration inside of this as well and I think that’s the piece that often gets overlooked, especially with family caregivers. You know, I’ve seen this right now of my grandmother where certainly, the family’s involved but it’s gotten to a point where she needs daily around-the-clock professional help with the home.

And while that’s been very beneficial and in fact, if it’s very, very expensive and it also provides a different dynamic, you know? In terms of obviously, you got different people coming into a home, it’s not the family that’s taking care of her at certain times, and so there’s just so much to consider here and I think more and more reason to have these open conversations as soon as possible, right?

Before the event comes to be and this becomes even more challenging and more emotional and I think as with many things in life, right? The path to peace of mind and the path to feeling good about the outcome and solution is through the difficult conversations and so I think just huge credit to you Cameron and the work that you’re doing, not only through your book but through your newsletter, your blog, and the impact that you’re having on such an important topic.

I’m so grateful for your time and the contributions that you have made to our community, which I know is going to be inspiring in their own journeys to make sure that they’re taking action on this topic. As we wrap up, Cameron, what is the best place in addition to folks getting a copy of the book, Mom and Dad, We Need to Talk, what’s the best place for our listeners to go to connect with you and to follow your work?

[0:31:13.1] CH: My website is cameronhuddleston.com and so as I mentioned, I’ve got that free downloadable “in case of emergency” organizer. I’ve got a couple of other resources there. Another good place is to follow me on Instagram. If you’re on Instagram, it’s Cameron K. Huddleston. I share a lot of tips on financial caregiving, having these family money conversations.

[0:31:38.5] TU: Great, we will link to both of those in the show notes and thank you again so much for taking time to come on the show.

[0:31:44.9] CH: Of course, thanks for having me.

[DISCLAIMER]

[0:31:46.7] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information on the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog post, and podcast is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of Your Financial Pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward-looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 320: How One Pharmacist Paid Off $345,000 in 5 Years

Posted on August 10, 2023August 9, 2023 by Tim U

Stacie Moltzan Loescher, PharmD paid off $345 000 of student loan debt in just five years and she joins us today to share her incredible journey to becoming debt free!

About Today’s Guest

Dr. Stacie Moltzan Loescher is a Pharmacist currently working in central processing for Albertsons Companies and is currently appointed as the Assistant Grand Vice President for Collegiate Affairs of the Phi Delta Chi Professional Pharmacy Fraternity. She attended Rosalind Franklin University of Medicine and Science where she received her Doctor of Pharmacy degree in 2017. During her career as a pharmacist, she has worked as Staff Pharmacist and Pharmacy Manager at multiple retailers throughout Wisconsin, Indiana, and Illinois. She has also served in multiple regional and national positions at Phi Delta Chi. She enjoys traveling, fishing, and fitness.

Episode Summary

Stacie Moltzan Loescher, PharmD paid off $345 000 of student loan debt in just five years and she joins us today to share her incredible journey to becoming debt-free! Tuning in, you’ll hear about the hard work and clear vision that led Stacie to the financial freedom she enjoys today. We unpack her process to aggressively repaying her loans, from working throughout pharmacy school and undergrad to paying off a car alongside her student debt. Stacie touches on how her childhood experiences impacted her approach to financial management as an adult, and reveals how she could sustain the momentum necessary to pay off the debt, before sharing powerful advice for graduates as they choose how to approach their own student debt. In closing, Stacie offers a glimpse into her future plans which are focused on building a net worth through side hustles and real estate investment.

Key Points From the Episode

An introduction to Stacie Moltzan Loescher and her story of becoming debt-free.
Her introduction to pharmacy growing up with two sisters with intensive medical needs.
Stacie’s career in pharmacy starting at CVS in Wisconsin.
A summary of her process to becoming 100% debt-free.
How Stacie celebrated her achievement by traveling!
Working throughout pharmacy school and undergrad.
What motivated her to choose an aggressive repayment strategy.
The desire for financial freedom behind her efforts to clear all debt.
How Stacie’s childhood experiences impacted her approach to paying off debt as an adult.
The car note she paid off in two years while erasing her student debt.
Sustaining the momentum in the midst of an aggressive payment plan.
Advice for graduates as they choose how to approach their student debt: start planning now!
What’s next for Stacie: building a net worth, considering real estate, investing, and picking up a PRN position to earn extra income.

Episode Highlights

“I’m just not a fan of paying interest. I’d rather be earning interest.” — Stacie Moltzan Loescher [0:11:48]

“I wanted to be able to have financial freedom sooner in my life. I feel like if I was paying off for ten years, I would have been strapped down to those loans for ten years, living paycheck to paycheck to try to pay them off.” — Stacie Moltzan Loescher [0:13:14]

“I didn’t like seeing debt behind my name because it’s not something that I heard growing up or in my family. My parents didn’t have debt.” — Stacie Moltzan Loescher [0:15:49]

“Don’t wait to approach your student debt. Start planning now, if you haven’t already.” — Stacie Moltzan Loescher [0:23:06]

“Start looking at what’s going to be the best loan repayment strategy for you, because there are different options that are better for different people.” — Stacie Moltzan Loescher [0:23:12]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[0:00:00] TU: Hey everybody, Tim Ulbrich here. Thank you for listening to the YFP Podcast where each week, we strive to inspire and encourage you on your path towards achieving financial freedom. This week I welcome Stacie Moltzan Loescher onto the show to talk about her debt-free journey, both how and why she paid off $345,000 of student loans in just five years. We discussed her motivations behind aggressively paying off the student loans, how she was able to do it, strategies she employed to keep her momentum and motivation and lessons that she learned along the way. Before we jump into this inspiring interview, let’s hear a brief message from YFP team member Justin Woods.

[MESSAGE]

[0:00:38] JW: Hey, Your Financial Pharmacist community. This is Justin Woods here, Director of Business Development at YFP. You may be one of the 13,000 pharmacists that have already signed up for YFP Money Matters, which is our weekly newsletter. But if you’re not, what are you waiting for? I want to invite you to subscribe. We send financial tips, recommendations, the latest podcast episode, and money resources, all specifically for pharmacists. It all comes straight to your inbox every Friday morning, so visit yourfinancialpharmacist.com/newsletter or click the link in the show notes to subscribe today. Again, that’s yourfinancialpharmacist.com/newsletter. See you there.

[EPISODE]

[0:01:23] TU: Stacie, welcome to the show.

[0:01:26] SML: Thanks for having me.

[0:01:28] TU: Before we jump into your incredible debt-free story and your journey, let’s start with your career journey into the professional pharmacy. Where did you go to school? What led you into the profession, and tell us about the work that you’re doing right now?

[0:01:41] SML: Sure, so I’ll start with what led me into the profession. I grew up with two disabled sisters, one older, one younger. They were both born with cleft palates. My older sister growing up, she couldn’t swallow pills. She still can’t swallow them to this day. That meant that we would often find ourselves at the pharmacy. They would have capsules ready and she couldn’t take them. We had to work with the pharmacist to get it changed to like a liquid form or sometimes the pharmacist might say like, “Oh, it can be open, and put into apple sauce.” Or what have you. But we often found ourselves working closely with the pharmacist to get it resolved.

Sometimes there would be insurance issues with that, because they don’t like to cover suspensions for 14-year-olds. We’ve had to work together with the pharmacist to get that resolved, whether it was a PA changing it, or taking it and crushing it up. Then putting it in liquid or apple sauce. Then my little sister, she was born when I was eight years old and she was born with what you call an esophageal atresia, which for those that don’t know what that is, that is where your stomach and esophagus isn’t fully connected.

After she was born, she was life-lighted to children’s hospitals. We had to undergo a surgery and that meant that she would be fed through a G-tube for the next 10 to 12 years of her life. She had to have everything liquid form and a lot of times with like amoxicillin, that’s like a different viscosity than a PediaSure is. We would have to dilute that before we could give it to her through the tube or else it would, the amoxicillin would like get stuck and clogged in the tubing.

If we gave her too much volume, she would like get sick, have side effects. We often found ourselves crushing medicine, too. Then suspending it in water to give it through the tube. Then she also had asthma. We were doing nebulizer treatments several times a day. Those experiences growing up really sparked my interest in pharmacy. Then I went to North Dakota State to study pre-pharmacy after I graduated high school. Then from there, I found myself in North Chicago, Illinois, at Rosalind Franklin University and after I graduated pharmacy school, I took a job at CVS as a pharmacist in Wisconsin.

[0:04:32] TU: Okay.

[0:04:33] SML: From there, I worked at different retailers, grocery chain retailers, big box retailers throughout Illinois, Indiana, Wisconsin. Up until recently, I took a job with a grocery chain pharmacy as a central processing pharmacist. I’ve been there about four months now. In that role, we check prescriptions for their grocery stores in about 30 different states.

[0:05:02] TU: Oh, wow.

[0:05:03] SML: That’s where I’m at today.

[0:05:04] TU: Awesome. Well, thank you for sharing your career journey and the motivation behind getting into the profession. I’m going to read to kick off you sharing your debt-free story and for us to dive into this a layer deeper. I’m going to read a post that you shared on LinkedIn that really caught my attention and let me to reach out to you where you said.

“Last month, I made my last student loan payment, and my loan balance hit zero. After five years of working as many hours as my body would allow and living like a resident, I paid off $345,000, $235,000 of that was principal. My goal was aggressive as a first-generation and a single-income household to have it paid off in five years. I paid it off in five years, three months. I could have paid it off by the end of 2022 to meet my goal, but it actually made more sense to just pay the minimum payment over the past year since high yield savings account was currently earning more interest than I was paying an interest on my student loans. Cheers to being 100% debt-free now.”

Wow, just incredible Stacie. When I think about that dollar amount, we’ll talk here in a moment about some of the motivation and the why behind this journey. My first question for you is, what have you done to celebrate this accomplishment? Have you done anything yet to celebrate this accomplishment?

[0:06:20] SML: Not really. I believe I was like went out with like friends, Friday night. They were just like, “Congrats.” But I did a lot of travel over the last year since I wasn’t as aggressive as paying off in my last year. I did a lot of travel that last year, so I was celebrating that the end was near.

[0:06:43] TU: Yeah. Yeah. I asked that Stacie, because I think for myself included many pharmacists, we can be so focused on getting to the goal that really taking the time to celebrate. I’m glad to hear you did that with friends and also through some travel. It’s such an important part of the financial journey, right? This is a huge accomplishment, but you are just getting warmed up, right, with achieving many financial goals throughout your career. I think especially if you’re a goal-oriented, achievement-focused person, really taking time to slow down and treasure these moments along the way is really, really important.

My first question for you, Stacie. If we look at the median debt load today of pharmacy graduates, it’s hovering around 160 to $170,000. 345 is a big number, right? 235 in principle, so we can see the balance there that’s an interest, but even that 235 is substantially above the median debt load of a graduate. Why the higher balance? What do you attribute to that?

[0:07:40] SML: Yeah. Before I went to school, I was always looking into going to schools with lower tuition, and almost all that is from grad school. I only took out 5,500 in undergrad. I didn’t even need that, that was just because it was subsidized.

[0:07:58] TU: Yeah.

[0:07:58] SML: So, I wasn’t going to get any interest while I was in school. It’s a very low interest rate, so I took that undergrad loan, just off the advice that my aunt had given me that, “You need to take that, because it’s going to be the lowest interest rate you will ever get in your life.” She’s like, “Just put it in a savings account.” That’s what I did. That’s part of my emergency fund today, actually.

Then, so I didn’t get into those – my like preferred school with the lower tuition rates. What I ended up getting into was a school that I was very interested in, and that’s why I had applied, but it was a private school, Rosalind Franklin University. They do have a little bit higher tuition expense since they’re private, but pharmacy was my dream. I always knew that’s what I wanted to do. I went with it. I figured that I will figure out the student loans and pay them off as quickly as I can when I’m done.

[0:08:59] TU: Was the 235 all federal or was some of that private?

[0:09:03] SML: Everything was federal. I took out like the max amount that they would let you do, which was like $35,000 for tuition and then plus like another $20,000 on top of that for living expense, which really isn’t a whole lot to live off of. I did work like throughout all of pharmacy school and undergrad. Then, so that was all federal that was like just about the maximum amount they would let you take out. I did return some while I was in school, because they would let you borrow and then if I didn’t use it, if I worked and I made the money, I would actually return it. I could have borrowed. I think about 20,000 more would have been the max. Then that all capitalized, of course, after I graduated. I believe that capitalized to be $267,000.

[0:09:53] TU: Here. Here. New grads. Yes. Yes, super important to understand that. Yeah. When I look at that number, Stacie, 345, rough math. You paid off 345 over five years. It’s just shy of $70,000 a year. I think of a typical pharmacist income after taxes, maybe taking home 7-ish thousand dollars per month. Obviously, depends on tax situation. A whole host of other factors in terms of where their paycheck may be going.

Nonetheless, that is a massive percentage of ones take on pay, right? $70,000 a year on average. So, my question is I certainly have talked with a handful of pharmacists that have gone through an aggressive repayment period. Many others may look at this and say, “Hey, I want to take this over a longer time period, less restrictive on the monthly budget.” Allowing additional funds to achieve other goals, other financial goals or other life goals, right, that people have. You mentioned travel as one example. Why did you decide on an aggressive repayment strategy versus a longer, slower payoff that perhaps would have been less restrictive? What was the motivation for you?

[0:11:04] SML: I did not want to have those loans sit there for that long. If the longer you have them, the more you’re paying an interest, which I saw that like right away with my first student loan payment. My first student loan payment was almost entirely interest with no principal amount taken off, except for maybe $70 a principal. When I saw that, I was like, “This is going to take me forever. I need to put money towards the principal.” Any extra money I can to bring that principal balance down. I’m paying less interest, because the longer it takes to pay it off, the more interest you’re going to pay. I’m just not a fan of paying interest. I’d rather be earning interest.

[0:11:54] TU: Let me dig a layer deeper there. That’s what I’m getting to. Right? No right or wrong answer here. I always, I talk to pharmacist about student loans. One of the questions I like to ask them is, “Hey, where are you at on the student loan debt pain scale?” Right? Ten is the house is on fire. I want these gone yesterday. I would say you’re probably closer to that end of the spectrum, based on what I know thus far. Zero is like, ah, they are what they are. They’ll, they’ll take care of themselves eventually. That’s what I’m really trying to understand. No right or wrong answer, but when you say I hate interest, I want what money working for me. Take us a layer deeper, like what is behind that? Is it simply the stress and the weight of that over your shoulders and having the mental clarity to see forward without it? Tell us more.

[0:12:38] SML: I just, I like for my money to do stuff in the most, like the way where I save the most money, like I don’t want to spend an extra $20,000 towards interest, because I have to do an extra five years of payoff. I’d rather be done early, have that $20,000 and then be able to invest that or travel with that or do what I want with that. I wanted to be able to have financial freedom sooner in my life. I feel like if I was paying off for 10 years, I would have been strapped down to those loans for 10 years, living paycheck to paycheck to try to pay them off. Whereas if I figured if I worked really hard and I paid this off soon, then that 3000 plus a month that I’m putting towards student loans that I can then use that money how I want. If I want to invest it, if I want to travel.

[0:13:41] TU: Yeah.

[0:13:41] SML: I don’t have – I don’t need to be paying student loans. I can just use it how I want.

[0:13:47] TU: Yeah. That makes sense. I see the passion coming out there for you as you share that as well. One of the things I’m curious about Stacie, so often when we look at the financial decisions we make as adults, we can see trends that tie back to childhood experiences. It may not be that we are raised in the same way that motivates a decision to make today. It could in fact be the opposite or we’re trying to move in a different direction. Sometimes it’s affirming the decisions that were made for us or the household that we grew up in around money.

As you think about this strategy of, hey, I want to get to financial freedom. I want to pay down this debt aggressively. I want this money working for me, right? I don’t want to have to worry about interests, and so in the future. I can enjoy that on other things. Is there anything you attribute looking back from how you were raised, money approach in the household that impacts here, the approach that you took with your student loans?

[0:14:41] SML: Yeah, definitely. I grew up, my parents divorced at a young age, but my mom very low income, and that’s what I lived with. I lived with my mom. She was really, really good at like budgeting. I saw that like growing up, because she had a small income to live off of and raised three kids off of, so she budgeted very well with buying groceries to making sure she was getting the right coupons, so we could have food on the table and still live and have money for everything that we needed.

My dad was very frugal with his money. He bought a house when he was like 30 years old for $16,000 cash. Never had a mortgage, bought a fixer-upper. Still lives in that house to this day. It’s like a 125-year-old home, I think now. I think him never having any debt. He never had a credit card. He never had debt. He always paid everything cash. Bought his car’s cash. Bought his home cash. I think that’s why I didn’t like seeing debt behind my name, because it’s not something that I heard growing up or in my family. My parents didn’t have debt. It was like a newer thing for me to hear that and have so much. I just wanted to get rid of it. Throughout this process, I did pay off a car note to a $20,000 car note in two years, because I just didn’t want it gone.

[0:16:13] TU: Yeah. I can certainly see the threads, as you described to those experiences back to childhood. I think that’s something I’m always encouraging my own financial plan. I encourage others to look back as well, so much. Again, as I mentioned of how we approach our financial decisions. Good, bad or indifferent, right? Often ties back to some of the childhood experiences that we had.

Stacie, I’m curious. One of the challenges with an aggressive debt repayment plan, right? Five years, averaging about $70,000 a year, is being able to sustain the momentum and the motivation, right? We can start with good intents. Hey, I want to go aggressive repayment. That’s something I hear from many pharmacy graduates, but actually being able to sustain that momentum can be very challenging. What kept you motivated? What kept you going throughout that five-year period?

[0:17:01] SML: Yeah. I guess like my career itself kept me going. With that, it helped me earn more income. I spent three years, the last three years, like as a manager. I was picking up extra shifts, working extra hours and anything that I earned over my base salary, this over the course of my repayment, I always put the extra money towards my loans. When I floated, I was actually when I like started with my last company. I was brought on as a 48-hour pharmacist. That was like a lower salary, like 72,000 a year.

Anything, and I made my budget based off of that $72,000 which included a, I put 3,000 of that toward my student loan itself, which I was required to pay 2,300. I always did put 3000 towards it. That’s what my budget was based off of. Then anything I worked over that, 48 hours in a two-week pay period, I put towards a student loan. A lot of times I was working a hundred or 120 hours a pay period. All of that, I put to the student loan.

One of the jobs I had, I was getting reimbursed for gas and for tolls. All that gas reimbursement, toll reimbursement. I put all that to student loans. As I was just picking up extra hours and helping people, which is my passion. It’s just the money was coming in where I was able to just keep putting that towards my loans. Then as a manager, I was really, really driven to meet our store goals and such. I was at a store that was challenging, that needed a lot of work. I was able to just use that as my driving force to bring my store, to help my store achieve. Then with that, I was just working extra hours and that would help with my financial.

[0:19:11] TU: Yeah. What I hear there, Stacie, is you had a very clear goal and vision for your financial plan that really fueled the hard work. The hard work, which produced the payments and the additional income was directly going towards your loans, which that momentum would then build upon itself. You said something really important there that I want to make sure we don’t overlook, which was, that’s what my budget could afford, right?

You made extra payments, but you mentioned with the $3,000, that’s a really key, important piece for those that are getting started with their student loan repayment journey, when you have so many different options to consider, especially for those that might work in a nonprofit sector, or have a loan forgiveness option, or choose an aggressive repayment and are looking at these two ends of the spectrum. How much your budget can afford is a critical number to understand to determine which loan repayment option may be best for your situation. Great wisdom there, Stacie, that you shared. I want to make sure we didn’t overlook that.

One of the most common questions I get when I present to new graduates or I talk about student loans is, should I pay down my debt or should I in invest? How do I balance these two? My stock answer is, it depends, right? It depends on a lot of factors. How do you feel about the debt? What’s your repayment plan? What is your budget afford? What’s your timeline towards retirement? How conservative or aggressive are you? There’s just so many components. I’m curious to hear from you, no right or wrong answer again. How did you reconcile this decision towards more debt payment and perhaps delaying that investing for a period of time?

[0:20:45] SML: Yeah. I was fortunate that when I did start my debt repayment, I already had an emergency fund built up when I started working when I was 14. When I was 14, I was putting half of every paycheck away into a savings account to save for college. I never, actually, used that money for any expense. It is my emergency fund today. I already had that set-in stone. Then I did actually work on the other goals while paying this off. I was always taking the employer match from my 401k.

I was always like I always have done a high deductible health insurance plan. I always put the 3,500 is like what it is today, towards my HAS. Then investing within that after I had a thousand dollars in there. I’ve also done just my own investments, just a smaller amount each month. I’ve done Acorns, like Robinhood, but I don’t do as much, because there’s more risk. At one of the jobs that I had actually, I was not eligible for an employer match until one year in. I only worked there for five months, but –

[0:22:03] TU: Okay.

[0:22:04] SML: That job, I actually did not contribute to a 401k, because I was not going to get a match. I decided to put that money towards the student loans at that time, which my plan was to do that until I hit one year with the company and then I was going to start taking the match. So that job, I didn’t contribute to a 401k, anything that would have went to a 401k went to student loans instead.

[0:22:28] TU: It makes sense, especially without having the match component there. Stacie, I’m curious to hear your advice for new grads, right? We have now three graduating classes that have yet to pay on or required to pay on their federal student loans, because of the pause dating back to the beginning of the pandemic. I’m sensing as those repayments are going to start back up, many graduates from last few years are feeling overwhelmed, they’re stressed or discouraged. There’s a lot of uncertainty. What advice would you have for graduates coming out as they look to approach their student loan debt?

[0:23:04] SML: My advice would be, don’t wait. Start planning now. If you haven’t already.

[0:23:09] TU: Amen.

[0:23:12] SML: Start looking at what’s going to be the best loan repayment strategy for you, because there is different options that are better for different people. For some people, it’s going to be doing the public service loan forgiveness. Some people that might have a house and kids and have like those extra payments that they need to make, they might have to do more of an income based, but start having that strategy and that plan now and make a budget if you don’t have one already. Have a budget, so that way you can and start like using that budget now. So that way when those student loans, you have to start repaying them, it’s not a shock and you’re like, “What am I going to do?” So, start planning now.

[0:23:55] TU: That’s great. Great advice. I think that that’s a message I’ve been trying to get out, but because we’ve had several extensions of the pause. I think there’s been – some of this feeling of, hey, when exactly are these going to come back online or will they, might there be another extension. Now that we have some clarity of when these will start back up, to your point, this is the time period, right? This is the time period to make sure that we’re understanding our options.

We’ve got clarity on the best repayment plan for one situation. To your point we begin to weave that and work that into the budget, right? Even if we’re just putting that in a savings account for now, we’re building those reps and those behaviors, so when that turns back on, we’ve accounted for it and we can move forward with the confidence knowing that we’ve already planned for that. Whether we like it or not. There’s a lot of repayment options, and strategies, and nuances.

Fortunately, the system is maybe more complicated than it needs to be, but that’s the hand that we’ve been dealt in. Really, it’s upon the shoulders of the borrower to make sure that they’re understanding those options. We’ve got lots of resources on the YFP website. If you need some help navigating that forward. Stacie, what’s next for you? Right? This is an important milestone, but you’re just at the beginning of your journey. What does success look like for you going forward?

[0:25:12] SML: At this point, I’m looking at like building a net worth, how that looks. I have like several different things in mind. I am interested in real estate. I thought about maybe like a duplex or something, living in one half, like renting out the other, investing, just different things I’ve thought about. I also am potentially looking at picking up a PRN position to earn some extra income, because the central processing job did come with a little bit of a pay cut. I’m looking to see if there’s a way, I can bring more income in different side hustles.

I definitely, want to do a side hustle, because I have a better work-life balance now, where I have the time to do more, because I can’t pick up extra shifts like I was able to do before. This is just a straight 40-hours a week. I really want to use my time to see how I can earn more income. Then decide how we’re going to use it.

[0:26:22] TU: Yeah. This is I often give the analogy of a marathon when my wife and I went through the journey of paying off our student loan debt, which wasn’t quite as large, but it was a big amount. I often had in my mind this visual where, “Hey, once we get to the end of the student loans.” Like, we’ve arrived, right? We’re at the finish line. I often say, it’s like running a marathon where when you get to the point of in this situation, an important milestone of student loan debt paid off or running a marathon. We might be at mile marker three, right? We’ve started the race. We’ve got a long way to go.

I love the vision you’re articulating, whether it’s around real estate, whether it’s around other side hustles. I can sense an intentionality that as you start to evolve other parts of your financial plan, you’ve got clarity on why you’re going to be doing that and where those funds are going to be going towards. Stacie, I greatly appreciate you taking the time to come onto the show to welcome our community into your story and your willingness to share it. I’m really looking forward to following your journey ahead.

[0:27:20] SML: My pleasure. Thanks for having me.

[OUTRO]

[0:27:23] TU: As we conclude this week’s podcast, an important reminder that the content on this show has provided you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding material should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archive, newsletters, blog posts and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of your financial pharmacists and less otherwise noted and constitute judgments as of the dates published. Such information may contain forward-looking statements which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer. Thank you again for your support of the Your Financial Pharmacist podcast. Have a great rest of your week.

[END]

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The Ultimate Guide to Pay Back Pharmacy School Loans

Posted on December 9, 2018April 19, 2023 by yfpadmin

The Current Reality

*Update – For student loan considerations during COVID-19, check out this post. “I wasn’t prepared to pay back pharmacy school loans, I didn’t understand all of my options, or I don’t know how to balance student loans with other financial goals.” That’s what I hear from many pharmacists and exactly how I felt when I graduated from pharmacy school. I once bought into the illusion that my “awesome pharmacist salary” would enable me to pay back pharmacy school loans very quickly and put me in the fast lane to building wealth. Unfortunately, it didn’t exactly work out like that and I made a couple of critical mistakes that cost me hundreds of thousands of dollars! Because I didn’t know all of the payoff strategies available, I failed to identify the best option and ended up paying way more than I should have. A pharmacist paying off student loans in 2018 is a lot different than one who graduated a decade ago. Since 2009, the median pharmacy debt reported has increased about $60,000 with those attending private institutions reporting a median amount borrowed of $200,000. However, these numbers may even be underestimating the issue. Since these amounts are self-reported, they may not include undergraduate debt or capitalized interest. In addition, the rising debt loads are only part of the problem. Salaries are not keeping pace with rising debt levels and since 2012 there has been a trend with graduates facing an increasing debt to income ratio year after year. Furthermore, many companies are cutting pharmacist hours forcing many to work full-time with less pay.

Therefore, now more than ever you as a pharmacist have to have a solid game plan to pay back pharmacy school loans. Pharmacy schools are not currently required to teach personal finance. Some offer electives and some provide education for their graduating class, but in general, the onus is on you to become informed. Sure, everyone is required to do the mandatory federal loan “exit” counseling but that’s really insufficient and doesn’t typically provide clarity in choosing the best payoff strategy. With the multitude of student loan types, repayment plans, forgiveness programs, and refinancing and consolidation, it can be overwhelming trying to come with a plan. This post is a comprehensive guide to help you take down your loans with clarity and confidence and choose the best strategy that saves you the most money and aligns with your goals. Even if you have been paying on your loans for years, this will help confirm you’re on the right path. We will go through 5 key steps in detail but if you want the short version, you can download the quick start guide.

Step 1: Inventory Your Loans

Before jumping into the payoff strategies it’s important to know exactly how much you owe and who you owe. Unless you used a private lender or already refinanced your loans to a private lender after pharmacy school, you likely have federal loans through the Department of Education. You can access all your federal loan information through the National Student Loan Data System (NSLDS). This is the national record of all of your loans and grants during their complete life cycle and contains information on your outstanding balance, interest outstanding, interest rate, and associated servicer. This can be accessed a number of ways but the most user-friendly path is the Federal Student Loan Repayment Estimator. Logging in with your Federal Student Aid (FSA) ID will pull up all of your loan information and quickly show you your total federal loan balance and weighted interest rate. Check out the video below for a step-by-step approach to access the information.

If you have already started making payments on your federal loans, it’s a good idea to match up the information with your current servicer(s) and the NSLDS. The specific type of federal loans and the respective interest rate is really important to know as it has implications for how interest is accruing, eligibility for forgiveness programs, and deciding which loans to consolidate or refinance. The figure below summarizes the major types of federal student loans and the key points about them.

To confirm the balance on any private loans, go to www.annualcreditreport.com. Through this site, you are able to access a free report once per year from the three reporting agencies: Equifax, TransUnion, and Experian. Also, when doing an inventory of all your loans, don’t forget to include any balances owed to family members or friends.

Step 2: Determine Your Options

As I mentioned, one of the biggest mistakes I made with my student loans was not analyzing all of the options available. I was pretty much focused on figuring out how to pay them off as fast as possible without even considering the alternatives. Let’s review these strategies in detail.

Three Strategies to Pay Back Pharmacy School Loans

People often get student loan repayment options and payoff strategies confused. A repayment plan dictates your minimum payments over a designated term whereas a payoff strategy is your game plan for the most effective way to tackle your loans to save the most money which can be executed using a number of repayment plans. While there are many plans with federal and private lenders, tuition reimbursement, forgiveness, and non-forgiveness will be the major ways how to pay off pharmacy school loans.

Tuition Reimbursement Programs

While not abundantly available, tuition repayment programs essentially provide “free” money typically from your employer or institution in exchange for working a certain period of time. Pretty awesome right? Others will require you to pay an amount toward your loans and they will match or reimburse you. The ones that tend to provide the most generous reimbursement are those offered by the federal government through the military, Veteran Health Administration, and the Department of Health. However, there are many state programs that offer assistance as well. Because the programs vary in amounts and how payments are structured, it’s important to know all the details so you determine how much to pay out of pocket in order to maximize the total benefit offered to you. Also, since many of these programs will not cover your entire student loan bill, you may have to combine one of the other payoff strategies to completely take down your loans. The following are programs currently available: Federal Veterans Health Administration – Education Debt Reduction Program Eligibility Pharmacists at facilities that have available funding and critical staffing needs. Benefit Up to $120,000 over a 5 year period Army Pharmacist Health Professions Loan Repayment Program Eligibility Pharmacists who commit to a period of service when funding is available Benefit Up to $120,000 ($40,000 per year over 3 years) Navy Health Professions Loan Repayment Program Eligibility Must be qualified for, or hold an appointment as a commissioned officer in one of the health professions and sign a written agreement to serve on active duty for a prescribed time period Benefit Offers have many variables Indian Health Service Loan Repayment Program Eligibility Two-year service commitment to practice in health facilities serving American Indian and Alaska Native communities. Opportunities are based on Indian health program facilities with the greatest staffing needs Benefit $40,000 but can extend contract annually until student loans are paid off. National Institute of Mental Health (NIH) Loan Repayment Program Eligibility Two year commitment of qualified research funded by a domestic nonprofit organization. Benefit $35,000 per year with renewal potential National Institute of Health (NIH) Loan Repayment Program Eligibility Two year commitment to conduct biomedical or behavioral research funded by a nonprofit or government institution. Benefit Up to $50,000 per year NHSC Substance Use Disorder Workforce Loan Repayment Program Eligibility Three commitment to provide substance use disorder treatment services at NHSC-approved sites. Benefit $37,500 for part-time and $75,000 for full-time State Specific Alaska – SHARP Program Eligibility Pharmacists working in underserved communities. In order to qualify, pharmacists must work full-time or half-time and commit to serving for at least three years. After that, eligible candidates may qualify for an additional three years of loan repayment assistance. Benefit Up to $35,000 per year. In some cases, if the position is hard to fill, pharmacists may be eligible for up to $47,000 per year. Arkansas – Faculty Loan Repayment Program Eligibility This program is for Health Professions Faculty from disadvantaged backgrounds who serve on the faculty of an accredited health professions college or university for 2 years. Benefit Up to $40,000 towards repayment. The government pays up to $40,000 of the participant’s student loans and provides funds to offset the tax burden. Participants should also receive matching funds from their employing educational institution. Arizona – State Loan Repayment Program Eligibility Pharmacists serving at an eligible nonprofit or designated HPSA. Funding varies depending on a variety of factors, such as HPSA score, years of service, and more. Benefit Up to $50,000 in loan repayment assistance for a two-year contract and can receive additional funding by committing to additional years of service. California – State Loan Repayment Program Eligibility Pharmacists who commit to working in a designated Health Professional Shortage Area (HPSA). It’s important to note that pharmacists working in a retail setting are not eligible for the program. In order to qualify, pharmacists must work in an approved site, such as an outpatient or ambulatory setting. Benefit Up to $50,000 for a two-year service agreement — $25,000 from the program and a $25,000 match from the provider site. Full-time pharmacists may be eligible for one-year extensions for a total of four years, which could result in an additional $60,000 maximum in loan repayment assistance. Half-time applicants are also eligible for awards. Colorado – Health Service Corps Program Eligibility Full-time clinical pharmacists working in a designated shortage area. Pharmacists must commit to three years of service and work either part-time or full-time. Benefit Up to $50,000 for full-time while part-time pharmacists are eligible for up to $25,000. Idaho – State Loan Repayment Program Eligibility Full-time pharmacists working in designated HPSAs and nonprofits. This is a matching program, so for every dollar provided by the program, the work site must also match the contribution. Benefit From $20,00 to $50,000 for serving a two-year commitment. It is possible to extend the contract for an additional two years as well. Iowa – PRIMECARRE Loan Repayment Program Eligibility Two years full-time service at a public or nonprofit private entity that serves a federally designated HPSA or four years or part-time work Benefit Up to $50,000 Kentucky – State Loan Repayment Program Eligibility Qualified candidates that work at a designated HPSA and work full-time. This is a matching program, but with a twist. For every federal dollar spent, an employer, family member, friend, or state foundation can match the contribution. Benefit Up to $80,000 and must serve a two-year commitment. Massachusetts – Loan Repayment Program Eligibility Full time pharmacists working in a public or non-profit position, located in a high need area, participate in MassHealth, and serve all patients regardless of ability to pay or source of payment. The program is a two year full-time requirement. Benefit Up to $50,000 over two years. Minnesota – Rural Pharmacist Loan Forgiveness Program Eligibility Eligible candidates are those that work in a designated rural area. Candidates must work at least 30 hours per week, for 45 weeks or more per year and commit to three years of service. Benefit Up to $26,000 per year, for a maximum of four years, totaling $96,000. Montana – State Loan Repayment Program Eligibility Must work at a National Health Service Corp (NHSC) approved site. Benefit Up to $30,000 total over a two year period. Nebraska NHSC State Loan Repayment Program Eligibility Pharmacists that work in designated HPSAs. In order to qualify, candidates must commit to at least two years of service. Benefit Between $25,000 to $50,000 per year. Nebraska Loan Repayment Program for Rural Health Professionals Eligibility Pharmacists that serve in rural communities in a designated shortage area. This is a matching program and a local entity must match the dollars you receive. There are opportunities for full-time workers and half-time workers, though benefits are reduced if working half-time. Benefit Up to $30,000 per year and must commit to three years of service. New Mexico – Health Professional Loan Repayment Program Eligibility Health professionals that serve in a designated shortage area. In order to qualify, candidates must work full-time for two years at an eligible site. Pharmacists may be eligible for the program, but funding priority is given to other healthcare professionals. Benefit The maximum award eligible candidates can receive is $25,000 each year, however, the award amount depends on a number of factors, including your student loan debt balance and the program’s available funding. North Dakota – Loan Repayment Program Eligibility In conjunction with the Department of Health, offers loan repayment assistance to registered pharmacists who work in designated shortage areas. This is a matching program where work sites must match the dollars provided. In order to qualify, candidates must commit to two years of service. Benefit up to $50,000 a year. Oregon – Partnership State Loan Repayment Program Eligibility Pharmacists who work in designated shortage areas. The program requires a two-year commitment, with the possibility of two additional one-year extensions. Benefit Full time providers may receive up to a total of 50% of their qualifying educational debt, up at a maximum of $35,000 per obligation year, for an initial two year obligation. Part time providers may receive up to a total of 50% of their qualifying educational debt, up to a maximum of $17,500 per obligation year, for an initial four year obligation. The award maximum is $100,000. The pharmacist’s practice site needs to provide 1:1 matching award funds in addition to a 10% administrative fee. Rhode Island – Health Professional Loan Repayment Program Eligibility Pharmacists who work at a qualified site in a designated shortage area. There are award options for full-time and half-time employment. Candidates must commit to two years of service, or four years of service if they are working part-time. Benefit No specific amount or maximum listed. Virginia – State Loan Repayment Program Eligibility Pharmacists who serve in a designated HPSA at a qualified site in Virginia. The program requires a dollar match from the community work site. In order to qualify, eligible candidates must commit to two years of service. Benefit Maximum award of $140,000 for a four-year commitment. Texas – Rural Communities Healthcare Investment Program Eligibility Pharmacists licensed within the past 24 months or be a licensed health professional practicing in a county with more than 500,000 people and move to practice in a qualifying community in the field. Must also provide services to clients that receive at least one form of indigent care in a qualifying community and practice there for at least 12 months. Benefit Up to $10,000 in student loan reimbursement or stipend. Washington – Health Professional Loan Repayment Program Eligibility Pharmacists who work at an eligible site. This program does require pharmacists to work at a designated HPSA. Minimum three-year service obligation. Benefit Up to $75,000 in exchange for three years of service. West Virginia – Health Sciences Service Program Eligibility Students in their final year of pharmacy school. Must commit to two years of full-time or four years of half-time practice at an eligible practice site located in West Virginia. Benefit One-time $15,000 award.

Forgiveness

If tuition reimbursement is not available, the first strategy to assess is forgiveness. You might be thinking this strategy isn’t for if you don’t work for the government or a non-profit, but what most borrowers don’t know is that you have the opportunity to have your loans forgiven regardless of who your employer is. Pique your interest? First, let me explain the Public Service Loan Forgiveness (PSLF) option and then forgiveness outside of PSLF.

Public Service Loan Forgiveness (PSLF)

This is typically the loan forgiveness strategy that gets all the press, usually for all the wrong reasons, which we’ll outline in the coming paragraphs. Let’s first take a trip down memory lane to explain how this program came to be *flashback wavy transition* The Public Service Loan Forgiveness program was created under the George W. Bush administration via the College Cost Reduction and Access Act of 2007 (CCRAA). Since the program’s inception, its faced political opposition from both administrations since Bush. President Obama proposed a cap of $57,500 for all new borrowers in his 2015 budget proposal to Congress. In 2016, the PSLF program was threatened this time by the Republican party with a Congressional budget resolution that saw PSLF on the chopping block for the first time for all new borrowers. PLSF has remained an endangered species since, as both President Trump’s budget and the Republican-backed PROSPER Act proposes the elimination of the program for borrowers after July 1, 2019. Despite its rocky past and uncertain future, the PSLF program is one of the best payoff strategies available for pharmacists paying off student loans. Without question, it is often the most beneficial to the borrower in terms of the monthly payment (it’s the lowest) or the total amount paid over the course of the program (it’s the lowest). These two factors are widely why the program is so attractive despite its poor and frustrating administration. Let’s look at an example of how impressive the math is for a pharmacist who plans on pursuing PSLF. We will make the following assumptions: single, lives within the contiguous U.S., has a student loan balance of $200,000 in Direct Unsubsidized loans with an average interest rate of 7%, and an adjusted gross income of $120,000, and 5% income growth per year (standard per repayment calculator).

Compared to the 10-year Standard Repayment plan, pursuing forgiveness through REPAYE, PAYE, or IBR-New would result in only $130,657 paid, a difference of almost $150,000! Plus, the total amount paid could be even lower if the pharmacist were to maximize traditional 401(k) contributions and other options to lower adjusted gross income. Oh and that $209,343 loan balance remaining after 10 years? Forgedda bout it! It’s eliminated and no taxes to pay on that money. If you think you can stomach this gauntlet to take down your loans, there are a number of requirements to meet. Typically the cadence of the programs goes like this: you need to work for the right type of employer (typically a 501(c)(3) non-profit), with the right kind of loans, in the right repayment plan (one of the four income drive plans to be outlined soon), you need to make the right amount of payments (120 on-time payment which equates to 10 years, but does not have to be consecutive), you need to prove it (via the employment certification form) and then apply and receive tax-free forgiveness. *catch breath* Let’s break the requirements down into a little more detail.

Qualified Employment Verifying that your employer is a government organization or a 501(c)(3) non-profit organization is the first key to the whole process. You don’t want to make payments for 10 years only to find out the hospital you work for is actually for-profit. This is really important. Even though FedLoan Servicing determines your initial eligibility, the Department of Education has overturned some of these decisions after 10 years which has resulted in lawsuits by borrowers who thought they were on track to receive forgiveness. Shady right? These cases involved people who worked for a non-profit organization that was not tax exempt but was considered public service. This is really the grey area for what exactly qualifies as “public service” and you could be rolling the dice if that’s your situation. Besides having the right employer, you have to be working full-time based on how your employer defines that or 30 hours/week, whichever is greater. If you are working part-time for more than one qualifying employer, you can still meet the full-time requirement if you are working at least 30 hours per week. Qualified Loans Only federal Direct Loans are eligible for PSLF and this would be you if you’re a new borrower after July 1, 2010. If you borrowed before that time, you may have FFEL Loans. These, including Perkins loans, are technically ineligible but you can consolidate them through the federal Direct Consolidation Loan. This will unlock the eligible income-driven repayment plans and all payments moving forward would qualify. Take caution with this step, however! If you’ve been making standard 10 year or income-driven payments on any Direct Loan while working for a qualifying employer and you decide to consolidate, you’re essentially hitting the reset button on your PSLF timeline and starting your 10-year period anew. Therefore, you may have to designate specific loans to be consolidated vs. all of them. After you verify your loans are eligible or finalize the consolidation process, you want to complete the employment certification form that you and your employer will complete. Once you submit and your application is accepted, all of your loans will be combined and transferred to FedLoan Servicing, the exclusive servicer for PSLF. Some people wait to do this step after they have been in repayment for several years and technically you can do that. However, since only FedLoan Servicing will “count” your qualified payments, from an administrative and organizational perspective it makes sense to do this as soon as you can. Qualifying Monthly Payments You have to make 120 qualified payments prior to receiving forgiveness and you can’t make the process go any faster than 10 years. One key point though is that these payments do not have to be consecutive. So if you have to switch jobs from one qualifying employer to another and there is gap in employment, you can pick back up where you left off when you start working again. Qualifying payments have to be for the full amount on your bill and cannot be made more than 15 days past the due date. In addition, only payments under a qualifying repayment plan count. These include income-based repayment (IBR), income-contingent repayment (ICR), Paye-as-you-earn (PAYE), Revised-pay-as-you-earn (REPAYE), and payments under the 10 year Standard Repayment Plan. Even though the 10 year Standard Repayment plan is an option, it really does not make sense to use this option since your goal with PSLF is to pay the least amount of money over 10 years. So get moving and switch that ASAP if that is you! The plans that will result in the lowest monthly payments are REPAYE, PAYE, and IBR-New (which functions essentially the same as PAYE) since they are calculated as 10% of your discretionary income. Discretionary income is specifically your adjusted gross income minus 150% of the poverty guidelines for these plans. The repayment estimator will calculate this for you but if you want a detailed look at how to calculate discretionary income check out this post. At the time of applying for an income-driven repayment plan, you will need to document your current income. Usually, this is based on the previous year’s tax return, but if your income has changed “significantly”, you may have to provide your most up to date paystub that documents your adjusted gross income and other sources of income you are receiving (dated within past 90 days). This would obviously be beneficial if you experienced a pay cut since your last filing. But what about an increase in pay? Previously the income driven repayment form asked the question “has your income significantly increased or decreased since you filed your last federal income tax return?”. However, this has actually changed and now only asks if your pay has significantly decreased since last filing.

This is a big deal especially if you are a resident or fellow transitioning from student life or from resident to first-year practitioner. Previously, you would have had to disclose if your income increased which would be true going from having zero to minimal earnings as a student to 1/3 of a typical pharmacist salary or from resident to new practitioner. However, with this change, you are going to pay substantially less during your transition years since your income is going to be based on the previous year’s earnings. Of course, you want to be truthful and accurate when filling out the form but if you are not required to disclose increases in your income then you shouldn’t. Why not take full advantage of the system in place? Incorporating spousal income into this calculation will depend on the income-driven plan and how you file your taxes. For REPAYE, spousal income will count toward AGI regardless of how you file. If you file separate income tax returns, then only your income will be counted under PAYE (and IBR-New). Initially, to qualify for PAYE you cannot have any outstanding loan balance on a Direct or FFEL Program loan when you received a Direct Loan or FFEL Program loan on or after October, 1, 2007, and you must have received a disbursement of Direct Loan on or after 10/1/11. Confusing right? If you can need more clarity on this check out this article. Besides that, for PAYE (and IBR-New), your calculated payment based on your income has to be less than what you would pay for the 10 year Standard Plan. During the 10 years you are making payments you have recertify your income annually. If your income happens to increase either because of your own efforts or spouse to the point where payments would match or exceed the 10 year Standard Plan, it is possible that you would no longer technically qualify for these plans and could be told or persuaded to change to REPAYE. The problem with this is that under REPAYE, you can actually pay MORE than the standard 10 year payment. Again, you want to pay the least amount of money as possible over 10 years so if you ever get in that situation, insist to FedLoan Servicing to remain in PAYE or IBR-New and cap your payments at whatever the 10 year standard payments would be. In other words no matter how much money you earn, you cannot be disqualified from the program or be forced into REPAYE.

The best practice to confirm your qualifying payments is to submit the employment certification annually, so there are no surprises at the end of the 10-year repayment period. FedLoan will respond to your annual submissions via letter detailing the number of qualifying payments you’ve made thus far. Make sure you call them out if there are any inaccuracies. Unfortunately, this has been reported often so you want to ensure you get credit for ALL your qualifying payments. Once you have made all of your qualifying payments, you complete the Public Service Loan Forgiveness Application for Forgiveness form, cross your fingers/hold your breath as it is reviewed and receive tax-free forgiveness. Other PSLF Considerations I’ve outlined the history and the steps to get into the PSLF program and the benefits of the program, so what gives? How come borrowers aren’t flocking to and lining up to get their loans forgiven. Unfortunately, there’s been a lot of uneasiness about the program that’s completely justified. In March 2018, the Department of Education announced a new program, the Temporary Expanded Public Service Loan Forgiveness, to aid those borrowers who thought they were on the path to forgiveness but were ultimately denied when they applied after their 10 years of repayment. The reconsideration fund allocated by Congress and totaling $350M should provide relief for those borrowers who thought they took the necessary steps to achieve, but fell short for one reason or another. That demographic of people is quite large as Forbes reported that only 96 borrowers have had their loans forgiven as of June 30, 2018, equating to 1% of total applicants seeking loan forgiveness. Yikes. Aside for the mishaps of the past with this program, borrowers also have to look to the future with a measure of concern too. Usually, when we talk risk related to financial matters, it involves the risk you take with your investments, whether it be market risk or interest rate risk. However, borrowers who enroll and put their proverbial eggs in the PSLF basket take on legislative risk, which is the risk that a change in the laws could lead to a loss or adverse effects in the jurisdiction affected (i.e. ‘Merica). This program is at the whim of the President and Congress, which may not allow you to sleep easy at night. However, it is likely that any change in the program will merely affect future borrowers and not those already enrolled in the PSLF program. This is based on the fact that Congress has allocated that sizeable sum of money for those “oops” situations and the fact that the language suggesting that student loan forgiveness should go by the way of the dinosaur seems to suggest future borrowers. Lastly, many borrowers who seek this strategy often see their loans grow over their PSLF timeline although they are making qualifying payments. For that hypothetical borrower who is halfway through their PSLF timeline but has seen the balance balloon because of reduced income driven payments, would the government actually issue a legislative “sike…just kidding” for the loan forgiveness program and not grandfather that borrower in? It’s not out of the realm of possibility, but the political fallout that would ensue from many of those in public service would be a steep price to pay.

Non-PSLF Forgiveness

Many borrowers are under the impression that they have to work for a government or a non-profit in order to be granted student loan amnesty. Not so fast! Relief is out there, albeit with not as attractive terms, but forgiveness can still happen. The cadence for this program is similar to PSLF with a few differences: it doesn’t matter who you work for, you still need to have the right kind of loans, be in the right repayment plan (one of the four income drive plans to be outlined soon), make the right amount of payments (typically over 20 or 25 years depending on the type of loan), and then you can apply to receive taxable forgiveness. *catch breath x2* That doesn’t sound so different than the PSLF program aside from the term (20 or 25 years versus 10 years), but the taxable forgiveness versus the tax-free forgiveness is actually a big deal. Let me explain why. In the PSLF program if you pay for 10 years and have a balance of $100,000 when you apply for forgiveness, hakuna matata! It means no worries for that balance is forgiven! In the non-PSLF program, if you have a $100,000 balance forgiven at the end of 25 years, that $100,000 is viewed as taxable income. That means that if you’re in a 25% tax bracket, you’ll owe an additional $25,000 in taxes in the year following when you received forgiveness. Often referred to as a “tax bomb”, it’s something that non-PSLF forgiveness borrowers need to account for, typically by saving or investing concurrently to paying off your loans. Although the length of repayment and tax bomb can make this strategy unattractive to some, there are some situations where it can make a lot of sense. Typically, this strategy is best suited for those who are not employed by a non-profit and have a high debt-to-income ratio such as 2:1 or greater. What does this mean? If your total loan balance is $275,000 and your making $120,000, your debt-income ratio is 2.3:1. Depending on your cost of living, liabilities, and other and financial responsibilities, it could be very difficult to make non-income driven payments through the standard plan or even the others. Let’s look at how this plays out using the DoE Repayment Estimator. To make things easy we will assume the pharmacist is single, all loans are unsubsidized and qualify for PAYE and IBR-New, and the average interest rate is 7%.

You can see that if this person were to extend payments out 25 years using the extended fixed plan, there would be a $1,944 payment and a total amount paid of $583,093. However, considering non-PSLF forgiveness using PAYE or IBR-New, payments would start $848 and increase to $2,289 (using a 5% increase in income/year per calculator assumption) and the total paid would only be $350,821. However, there would be $309,179 forgiven that is treated as taxable income. If we continue with the assumption of a 25% tax bracket, there would a tax bill of around $77,000. So even with the tax bomb, there are definitely some advantages here: 1. The total amount paid over 25 years will be much less even with considering the additional tax bill (by over $100,000). 2. For many of the years during repayment, the monthly payments will be significantly lower which allows more disposable income for retirement contributions and other financial goals. 3. The tax bill of $77,000 is in future value which is much less than it is today Therefore, this pharmacist should at least consider non-PSLF forgiveness as a viable strategy. The debate for using this strategy can also get interesting if refinancing is on the table. Depending on how low you can get your rate, you would also want to consider this vs. non-PSLF forgiveness.

Non-forgiveness

Outside of tuition reimbursement and forgiveness programs, what’s left is basically paying off pharmacy student loans all on your own. There’s no set timeline or years you have to wait. You determine the time to pay off. You could pay off the balance today if you have the cash or extend payments as long as possible (generally up to 30 years). You make it happen when it’s best for you. Although your monthly payments will be dictated based on the repayment plan you’re in, you are not bound to this and can always accelerate and pay more if you want to. If you want to see how extra payments or a lump sum payment affect your savings or time to payoff you check out our early payoff calculator. Through this strategy, you can either pay off your loans through the federal loan program using one of the many repayment plans (if you still have federal loans) or refinance student loans to a private lender.

Federal Loan Program

If you’re like most pharmacists, you probably took out federal student loans to fund pharmacy school. If your grace period is up for you or you have already started making payments, then you will have one or more of the federal servicers handling your account. These include Nelnet, Great Lakes Education Loan Services Inc, Navient, FedLoan Servicing, MOHELA, HESC/EdFinancial, Cornerstone, GraniteState, and OSLA. Since it is possible to have multiple servicers, you may actually be making multiple monthly payments to different servicers each month. If you’re in this situation, you could use a Direct Consolidation Loan to combine all of these loans into one and then make one monthly payment to one lender. This will take the weighted interest rate of all of your loans but not lower the overall interest rate as refinancing could. It really just makes things more convenient. Repayment Plans The default loan repayment plan is the standard 10 year plan where you make the same monthly payments over ten years. It’s the most aggressive of all the repayment plans and you will pay less total interest than other plans. Depending on your loan balance, household income, and other financial priorities, this could be tough to make it work. There are several other repayment plans available with some having eligibility based on the type of loan you have and income. The monthly payments under the income-driven plans are determined based on your previous year’s discretionary income as mentioned above.

Advantages of the Federal Loan System Keeping your loans in the federal system will give you some protection and safeguards that are not always available through private lenders. If you die or become permanently disabled, your loans will be discharged without any tax bill on that amount. In addition, if you’re facing a financial hardship, want to go back to school, or have circumstances where it could be tough to make payments, you can request deferment or forbearance which would result in a temporary stop in making payments. The other advantage is the ability to make income-driven payments if needed which generally is not available through private lenders. Lastly, all federal loans have fixed interest rates so your monthly payments will not change unless you are in an income-driven plan or one of the graduated plans.

Refinance Student Loans

Advantages of Refinancing *Disclaimer – Due to recent changes to federally held student loans secondary to the COVID-19 crisis, we are recommending those with Direct Federal Loans eligible for the temporary waiver of payments and interest through December 31, 2022, carefully review their situation prior to refinancing as these benefits are not available through private lenders. The main downside to keeping your loans in the federal system is that you will often pay more in interest given most unsubsidized graduate/professional loans are 6-8%. When you refinance student loans, you essentially reorganize or change the terms of an existing loan(s). These changes include the term over which you pay back, the interest rate, type of interest rate, or a combination of those. Even though interest rates, in general, are rising, you can often get more competitive interest rates through private lenders. Consider a pharmacist with $200,000 in student loans with a 6.8% overall interest rate. Under the standard 10-year plan, the total amount paid would be $276,192. If the interest rate was chopped to 4%, the total paid would be $242,988, a savings of over $33,000. The total savings will vary based on the loan balance, how fast it’s paid off, and the change in interest rate. If you want to see your potential savings, check out our refinance calculator. You may be thinking “Wow, I could be saving a ton if refinance student loans.” But what’s the catch?” Refinancing is not without some drawbacks and it’s very important to know what you’re giving up if you make the move. First, once you refinance, you automatically become ineligible for any of the forgiveness programs. In addition, most private lenders do not offer income-driven plans, so you will lose the flexibility to change your monthly payments and could face a problem if you experience a sudden change in your income. Furthermore, the option to put your loans in deferment or forbearance may not be available either. Also, not all lenders will forgive your loans if you die or become permanently disabled. So if you do decide to go this route you will want to know what their policy is on this. Regardless, most of the time you should have adequate life and disability insurance policies in place if these events were to occur.

Goals of Refinancing Your main goal of refinancing should be to get a lower interest rate so that you save more money over time. You can pick and choose which loans you want to refinance and if you have some that are already low, you would obviously want to leave those alone. Beyond that, it is important that you find a reputable lender. Unfortunately, there are many scams and frauds out there and you want to have your guard up. Nerd Wallet has a watchlist of businesses that have been reported for criminal activity or who have filed bankruptcy or have tax issues. You can also check out the Better Business Bureau to review ratings and reviews of prospective lenders. Besides choosing a reputable lender to refinance with, you want to be sure there is no origination fee for the service. Remember, companies are eager for your business and are willing to pay you. Also, there should be no prepayment penalty. If you decide you want to pay off your loan faster than the term, there should be no additional fees. Another potential goal of refinancing could be to lower your monthly payment. Since your total balance will not change, if you keep the same term (e.g. 10 years) but lower the interest rate, your payments will go down since a greater percentage of the payment will go toward the principal and less to interest. However, if you’re really trying to accelerate your payoff, your minimum payments could actually be higher than what they are currently. This would occur if you are reducing the term such as 10 to 5 years. Although you may argue that you could have a longer repayment term and make extra payments, some like being forced to make higher payments as a way to prevent overspending and stay disciplined. Besides lowering your interest rate and finding a reputable lender, another goal for you should be to get some cash. Because many companies are eager for your business, they are offering a welcome bonus for being a new customer. Now, of course, they will be making money as you pay off your loans in the form of interest but why not take advantage of this perk. Here’s the best part as well. There is really no limit to how many times you refinance. You can refinance your loans multiple times and get cash bonuses from more than one company. My wife and I actually made $2,500 in a year doing this and were able to get a lower rate each time. If you do this very frequently, you may see a reduction in your credit score since every time a full application is submitted, there is a hard pull. YFP has partnered with multiple student loan refinance companies in order to get you a nice bonus of up to $850 and sometimes more if there is a special promotion running. Yes, we get a referral fee when you refinance through our link, but we have shifted the majority of the payout to you.

Current Student Loan Refinance Offers

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[wptb id="15454" not found ] Types of Interest Rates As mentioned above, all federal loans have fixed interest rates. That is not the case for refinanced loans. Generally, like home mortgages, they come in two flavors: fixed and variable. Fixed interest rates stay the same throughout the term and result in the same minimum monthly payment until it’s paid off. Variable interest rates tend to start out low, many times lower than fixed but can change depending on the Federal Reserve and LIBOR. There is usually a max or capped interest rate and specific frequency in which it could change. Although variable rates can be very attractive, depending on the fluctuation, it could cost you thousands in interest. So if you decide to go this route, you have to be comfortable with the risk of rates climbing and increasing your monthly payment. Besides fixed and variable, you may also encounter hybrid interest rates. In general, these are rates that stay fixed for a certain number of years and then changes to variable. Typical Requirements to Refinance Private lenders will not refinance student loans for anyone. You will be required to have a minimum credit score (usually at least 650), lending amount, proof of a certain level of income, and potentially a certain debt to income ratio. This will vary from lender to lender and not only will these items determine your eligibility, but it will also impact your quoted rate. Getting Multiple Quotes You probably have received mail or emails from companies encouraging you to refinance with them. Even though you may be familiar with some brands or heard of good experiences about a particular one from friends and family, be sure you get multiple quotes to find the best deal. When you are shopping around to find the best rate, companies will run a soft check of your credit to give you an accurate quote. This will not affect your credit score but if you proceed to a full application, then you could see a very minor drop. When you receive quotes, this will usually be reported as fixed or variable along with the respective payment terms. Most companies have terms of 5,7,10,15, and 20 years and typically, the shorter the term, the better the rate.

Step 3: Do the Math

Even if you think there’s a clear winner for the payoff strategy that’s best for you it’s important to get crystal clear on the numbers. Knowing the projected total amount paid (including interest) for all of the strategies available will help you get clarity on which option will save you the most money. The Repayment Estimator at studentaid.gov will help you determine the cost for the federal repayment plans. To determine your savings and new projected payments from refinancing check out our refinance calculator. Besides knowing your options and the total amount paid, you have to analyze how the monthly payments would fit into your budget. If you are too aggressive it may put you in a tough position and may limit your ability to contribute to your other financial goals.

Step 4: Evaluate Factors Beyond the Math

It can be easy to simply look at the numbers, find the strategy and repayment plan that costs you the least over time, and call it day. Although that can work and the math itself will likely hold the most weight, there are some things to consider beyond the numbers. Your emotions and attitude toward your loans can have a big impact on your payoff strategy. If you are someone who is really anxious and has difficulty sleeping knowing you’re still in debt, you may feel inclined to pay it off as fast as you can rather than waiting the time for a forgiveness program. Mathematically, it may not even make sense to do this but it does give you more control and could make you feel a lot better about your situation. Now if the potential savings with a forgiveness program is overwhelming then you may just need a coach or a financial planner to help you along the way. When you choose and stick with a payoff strategy there will always be trade-offs or an opportunity cost. For example, if you choose a payoff strategy that results in a very high monthly payment, you will not able to put as much money toward investing, home buying, entertainment, etc. Depending on your projected time to payoff and years left working, you may not be willing to deeply sacrifice some of your other financial goals. With tuition reimbursement programs in addition to the Public Service Loan Forgiveness program, your career options will be more limited to fully reap the benefits of these programs. Since tuition reimbursement is mostly based on years of service for a particular company or organization, you have to be willing to stay employed there for the required time to realize the maximum benefit. Similarly, with PSLF you are essentially locked into working for a government or nonprofit organization for 10 years. If you have other career aspirations or plans on the table during this decade, you will have to weigh that against tax-free forgiven loan balance.

Step 5: Determine Your Payoff Strategy and Optimize

Ok, if you have read everything up to this point, first off congratulations. That was a ton of material! By now you should have considered the options available to you, figured out the math, and weighed in the other considerations putting you in a position to choose your payoff strategy for the first time or reorganize one you have already had in place. Because everyone has a unique situation with different loan balances, goals, and attitudes, there’s no way to say that one strategy is the best for all. However, I do think there are some truths that are going to stand strong the majority of the time. First, if you have access to a tuition reimbursement/repayment program, take it! This is free money! Most of these programs are 2-5 years and depending on the specific one, it could knock out all or a huge chunk of your debt. If you’re not fortunate enough to get into one of these programs or you have maxed out that benefit, most pharmacists should either choose PSLF or the non-forgiveness route via refinancing. However, if you have a high debt:income ratio and are not eligible for PSLF, you should also strongly consider non-PSLF forgiveness. Below is a flowchart summary of how to navigate the different strategies.

pharmacists student loan forgiveness guide

If you have the typical pharmacist student loan balance, it’s really hard to argue against PSLF. The math is not even close. You will pay thousands less than any other strategy. But not only that, you have the opportunity to optimize this strategy and be on the fast lane to building some serious wealth. Since your monthly payments through the program are dependent on your discretionary income and therefore adjusted gross income, there are ways you can lower payments while simultaneously investing aggressively. The key ways to do this will be maxing out traditional 401(k) contributions and HSA (if available to you). It’s possible to also count traditional IRA contributions. However, because the phase-out for this is a MAGI of $74,000 for single, and $123,000 for married filing jointly if you are covered by an employer-sponsored plan, most pharmacists will not be eligible to get the deduction. For more information on how to maximize forgiveness, check out this podcast episode. Now if PSLF is off the table, either because you don’t meet the qualifications or you don’t want to wait 10 years and rely on the government, refinancing is a strong option. Refinancing student loans after pharmacy school should be done as you can if it makes sense so you don’t pay any unnecessary interest.

Considerations During Pharmacy Residency or Fellowship

Doing a pharmacy residency is a great way to further your skills and knowledge and can unlock some great job opportunities. However, for 1-2 years, depending on your path, it can be difficult just trying to pay bills and survive let alone fight through student loans with only 1/3 of a typical pharmacist salary. Since the grace period for student loans will usually end midway through your PGY1 experience, you will have to make some decisions at that point. If you do nothing, you will be put in the 10-year standard repayment plan and unless you have significant side income or a working significant other, that payment is not going to be feasible if you have a typical loan balance. One of the biggest mistakes that I see residents make is putting their loans in deferment or forbearance. On the surface, this doesn’t seem like that big of an issue and will allow you to stop making payments during your pharmacy residency. However, interest will continue to accrue and there are much better options! First, you definitely want to keep PSLF in mind and if your residency program is a qualifying employer and you plan on continuing to work there or another qualifying employer, you want to make sure you start the process ASAP. One of the huge benefits of doing a pharmacy residency and pursuing PSLF is that for 1-2 years you could be making very minimal student loan payments. Think about it. If you made little to no money during your last year of pharmacy school, you could be making $0 qualifying payments or very little during your first year of residency based on your current salary. If you do a second year of residency, your payments will again likely be very low since it’s based on that salary. As I mentioned earlier, IBR, ICR, REPAYE, and PAYE are all qualifying repayment plans for PSLF but what is the best one for pharmacy residency? While most of these are based on 10% of your discretionary income except ICR, REPAYE has some unique features. For all Direct Unsubsidized loans, the government will pay 50% of the interest that accrues every month if your loan payment is less than the amount of the monthly interest. So let’s assume you have $160,000 in student loans at 7% interest. $933 in interest will accrue every month as soon as the grace period ends. If your payment is $0 which very well could be if you had little to no income in your last year of pharmacy school, the amount of interest that would accrue would only be $466. Plus, that $0 payment would still count as a qualifying payment toward PSLF.

Even if you don’t continue working for a qualifying employer post-residency and won’t be pursuing PSLF, REPAYE would help reduce the accumulated interest during your years of training. Because the different repayment plans have different rules regarding how spousal income is incorporated you definitely want to also keep that in mind when choosing the best repayment plan during residency. Refinancing is not likely going to be an option during residency unless you have substantial side income since your debt to income ratio would be too high to get approved and it could be difficult making the monthly payments even if the term is extended to 15 or 20 years. Even if you are enrolled in an income-driven plan during residency, you could technically make “extra” payments if you wanted. However, this would not make sense if there is a possibility of going for PSLF since your goal is to pay the least amount of money possible. If you are pursuing PSLF and find you have a little disposable income each month, instead of paying extra on loans consider contributing to your 401(k) if available, IRA, or HSA.

Conclusion

The average student loan debt to income ratio for new pharmacists has increased significantly in the past decade. This has resulted in pharmacists being in debt longer and can significantly impact the ability to save and invest and put delay other financial goals and life events. There are a number of ways to tackle pharmacy student loans and choosing the wrong strategy could cost you thousands. It’s important to calculate the total amount paid and determine the monthly payments to get a clear picture of your options. Also, you should consider the factors in play beyond the math so that you can choose a plan that most closely aligns with your goals. If you still have questions or are unsure about what to do with your loans, you can always reach out to us and schedule a 1-on-1 consult. We will develop a customized plan that considers multiple scenarios and helps you determine how to save the most money. It will also include any tax implications that may be in play with forgiveness programs.

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Episode Transcript

The Current Reality

Step 1: Inventory Your Loans

Step 2: Determine Your Options

Three Strategies to Pay Back Pharmacy School Loans

Tuition Reimbursement Programs

Forgiveness

Public Service Loan Forgiveness (PSLF)

Non-PSLF Forgiveness

Non-forgiveness

Federal Loan Program

Refinance Student Loans

Step 3: Do the Math

Step 4: Evaluate Factors Beyond the Math

Step 5: Determine Your Payoff Strategy and Optimize

Considerations During Pharmacy Residency or Fellowship

Conclusion

Compliance/Legal

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