Finance: Why I Consider the Loan Forgiveness Program as a Risky Chance

When you graduate with a loan as large as I have ($550,000 in debt!), it is easy to view student loan forgiveness programs as the superheroes of our lives. There are many different loan forgiveness options that you must choose from, but once you’ve chosen one, you are given the choice of paying a sliver of your income every month, with the promise that at the end of your program, the remaining (accruing) balance will be wiped forever from your life! It’s an ultimate quick fix to a problematic giant standing in the way of your financial independence. The small monthly payments are on autopay and the looming terror is out of sight, out of mind, for the next twenty or twenty five years. So why the skepticism?

Twenty five years is an extremely long time. I know, because I have barely passed my twenty five year mark. I also know that because after I add on twenty five years, I’d be over fifty. To be honest with you, I don’t want to keep this lifestyle up until I’m fifty. A lot can happen in twenty five years. The immediate assumption is that no matter what happens in the future, we will be grand-fathered in this loan forgiveness program.  But although it’s an immediate assumption, it doesn’t mean it’s logical or true. Because nowhere in the fine print does it say that. But our brains are wired to make up stuff that will put us at ease. And so, some like to reason that this must be true, and I know I can’t convince them otherwise. Because, what do I know?

Well, here is what I know.

  • I know that there are people out there who chose a ten year loan forgiveness program. Only to be told after their ten years that they do not or no longer qualify. Some haughty know-it-all will likely say, “Well, that’s THEIR fault for not knowing their own program!” But as we all know, they don’t make programs easy to know. The fine print just keeps getting smaller AND longer.
  • I know that my sister took a five year contract with a charter school in a city far away from her family and friends with the promise of getting $40,000 forgiven from her student debt after the five years. However, you cannot apply for the forgiveness until you’ve completed all five years. Last year, the amount forgiven changed. It went down to $17,000. Still a good amount, but not the promised $40,000. Her five years ends in June. So in June, she would have given up five years of her life living in this far away city to only get back less than half of what she thought she was going to get back. Which is depressing to think about, since she turned down multiple amazing opportunities with higher pay for this program.
  • I know that in the ONE year that I have been out of dental school, there has already been talk of the loan forgiveness program being extended to THIRTY years. An additional five years of minimum payments, a continually accruing debt, and a higher percentage of your loan that you have to pay in taxes at the end of it all. More, more, more.

Therefore, you are right in saying that I just don’t know. I don’t know the future one year from now, so I sure as heck don’t know the future twenty five years from now. I don’t know who will be in the government, who will be controlling our laws, how the program will change, if the program will still apply to me, and if the program will even exist. And with a loan this large, I will not leave this up to chance.

What I do know is that I CAN tackle this giant, so I WILL. I will not let him rule over me, stop me in my path, instill any fears or doubts.

Will you tackle him, too?

 

Finance: The First Year of Paying Down $550,000 in Student Loans, An Update

Hi guys! So it has been about a year since our search for a future home turned into a commitment to pay down my massive student debt instead. I figured I would give you an update as to what paying down $550,000 at 6.7% interest looks like.

We arrived at our decision to tackle the loans aggressively in April of 2017 (our decision tree, here). The most important thing to note with a loan this large is that committing to it means REALLY committing to it. It wouldn’t be advantageous to choose to pay down the debt, and then fall back to IBR midway. From a numbers perspective, you would just lose unnecessary money that way. If you choose the loan forgiveness route, then the goal is to pay AS LITTLE MONTHLY PAYMENTS AS POSSIBLE, so that a huge chunk gets written off. If you choose the standard repayment option, then the goal is to pay AS MUCH MONEY AS SOON AS POSSIBLE. So, with a steely grip on the reality that we did not want the debt to dictate and shape our lives for twenty five years, we went head first.

Here are the numbers.

To be completely honest with you, $550,000 is a ballpark estimate. The real number is a principle amount of $538,933.50 and an accrued interest of $35,101. Meaning the total was actually $574,034.50. YIKES!

So what did we do? We decided that we will essentially live off of one income, and use the other income towards loans. We figure, out parents raised us on a single person’s income, so this can’t be that difficult especially since we don’t even have kids yet. The verdict: We were right! It was surprisingly easy. Which makes me wonder, where were we spending all that money before hand?! I don’t even want to know….

With that being said, we have been successful at making our minimum payments of $6500 per month! YAY! We were even able to add a little extra every so often due to diligent saving habits (See The Ever Growing List of Things I’ve Given Up In The Name of Frugality!). But that does not take us as far on the path of financial freedom as we would like. It took us a few months to completely pay off the interest that had accrued, but it must be remembered that the loan is at 6.7% interest. So that means that interest continues to accrue over all this time. So what does that look like? Well, once the accrued interest was paid off, approximately half of the $6,500 was going towards the interest accruing per month. Which means that the loan is only getting paid down at a rate of about $3,000 per month. And that, my friends, is how lovely interest works! Womp, womp.

So, $55,367.22 was paid towards interest. Only $28,632.78 went towards paying down the principle amount. When my husband first looked at the little pie chart graph that I had on the corner of my computer screen summarizing our progress, he said, “Well, THAT’s depressing!” For someone who is only looking at that, it CAN seem pretty depressing. However, I know better. This. Is. Amazing.

The accrued interest is already out of the way, which tells me that next year is going to look a LOT better. I can already see a higher proportion of the monthly payments being applied to our principle. It started out as slightly less than half of our payment being applied to the principle. However, as of early this year, slightly more than half is being applied to principle. I know it’s hard to look at this as any way other than a linear projection, but it really, truly is an exponential one, albeit with a slow start.

The amazing part is that we have survived our first year and our lives have actually been much improved. Choosing this journey has nudged us to be proactive with our life, not only with our financial decisions, but also with our lifestyle choices. We are experiencing less stress than when we felt helpless and unable to address the student loans. We are experiencing more happiness than when we were trying to buy our way to a meaningful life. I work less than I did last year, and love myself more. We are healthier and have better relationships. And it all started with us learning how to get our finances in order and in our efforts to remove money from our life equation.

I am very happy with this decision and I am excited to see what the next year of payments will bring.

PS: I am excited that we will hit the $400,000’s during me and Mike’s birthday months in June/July!

Also, for the curious, I have never, not once, felt regret in funneling extra money towards my student loans. I have felt buyer’s remorse. I’ve regretted going out to eat. I have regretted going to events that required spending money. I have regretted buying gifts that I know will end up in a landfill some day. But I have never regretted letting go of money in exchange for a little slice of freedom. I’m just saying.

Bogobrush: Raising social and environmental awareness, one toothbrush at a time.

This post is sponsored by Bogobrush, a source for ethically made, sustainable toothbrushes, with a one-for-one give-back program towards low-income communities, wherein a toothbrush is considered a commodity for the privileged.

In case I can convince you of the importance of choosing the right toothbrush for you and your loved ones, Bogobrush is offering The Debtist readers a special offer (full details below).

There are many folks out there who believe that a dentist’s main purpose is to sell treatment. Numerous patients have voiced to me some past experience or other with dentists who tried to sell them whiter teeth and nicer smiles for the sake of esthetics. So while this may be true for some, it isn’t how I operate or how I practice my work. I would say I fall heavily towards the more conservative side of practicing dentistry. A majority of my time is spent trying to teach patients how to prevent the need for dental treatment, via proper oral hygiene techniques at home and frequent follow ups and dental visits. I like seeing my patients twice a year, if not only to hear how their children are doing at school or how their holidays went. I prefer to think that they enjoy doing the same with me. In general, I am pretty hesitant on agreeing to cosmetic treatment, especially so with treatments such as veneers. When patient’s come to me wanting such treatment, I kindly voice the truth, which is the fact that nothing will ever be as strong (or beautiful) as your natural dentition. Removing tooth structure will always weaken the tooth. Enamel is the hardest part of your body, stronger even than bone. A veneer will possibly pop-off, since it is only bonded to your tooth on the facial aspect, and preparing the teeth for a veneer could cause sensitivity. If the patient is young, in their twenties or thirties, they must consider the likelihood that they will have to replace these veneers 3-4 times throughout the rest of their life. Quite a costly price for a cosmetic fix. Off course, if the patient insists, then autonomy prevails, and I will succumb to what will make them happy, but only after failing to convince them otherwise. To each their own. Some would consider my method a bad business move (because it is), but I didn’t enter the profession for money, so I don’t really have a motive to promote such options.

A majority of my time is spent trying to achieve a patient’s goal via the most conservative path possible. My favorite word during diagnosis is to “observe”. More often than not, the patient will be happiest to. My focus at work revolves around prevention. I would rather teach prevention of caries and other dental problems so that my patients return every six months needing nothing but a cleaning. Easier for me, easier for them. It saves them money, and saves me time, which could be used teaching even more patients the power of prevention. And so the cycle continues.

When I first entered dentistry, I knew that my model would revolve around teaching. I tutored for ten years prior to dental school, and it has undoubtedly shaped my world view about learning. I paid a lot of money going to dental school to learn about dental health care, so that others wouldn’t have to pay a lot of money to care for their teeth. As I volunteered in multiple third world countries, and farming communities within our own state, I learned that empowering is more important than giving. That equipping with knowledge is more important than aiding. It is the idea that it is better to teach a child at an early age how to brush their teeth properly thus empowering them with a life-long skill to improve their health, rather than aid an adult in extracting all their decayed teeth and replacing them with a denture. This is what it means to have TRUE impact that will change communities, even after you are gone and no longer around. I refuse to be a part of cycle that creates further dependency, but rather, prefer to create groups of people who are self-sufficient and independent.

With all of this in mind, there is one thing I sell on the daily. Toothbrushes. And with this came multiple considerations that I felt did not align with my truest of values. Specifically, toothbrushes are created from plastic (most times), which are carelessly disposed of without a thought in the world.

Did you know that 450 million toothbrushes end up in US landfills every year?

Additionally, toothbrushes are usually packaged in clear plastic, but don’t ask me why. And then there is the issue of having multiple toothbrush companies, claiming that they can outdo all other toothbrushes. There are toothbrushes with hard bristles, medium bristles, soft bristles, even extra-soft bristles. There are toothbrushes with different handles, with grips claiming to improve ergonomics, with handles that are bent, handles that are straight. There are electric toothbrushes that move in circular motions, toothbrushes that vibrate left and right, toothbrushes that light up when you’ve brushed for the appropriate amount of time. Worse, there are advertisements, companies, and, let’s face it, some dentists, who sell these different types. I am here to say that while these toothbrushes could aid some groups of people, particularly those with arthritis, or Parkinson’s disease, or anyone else who has difficulty with holding and maneuvering a regular toothbrush, the efficiency of brushing teeth lies mostly in your technique, rather than the toothbrush itself. Sure, a change in toothbrush can get you closer towards increased plaque removal, but so could improving your brushing habits and methods. What if one increases plaque removal by practicing the proper technique? Then we could focus on buying a toothbrush based on other characteristics. Such as sustainability. Such as responsible and local manufacturing. Such as toothbrushes that give back to low-income communities.

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Enter Bogobrush! A toothbrush that is in harmony with many of my values, and one I would be happy to sell. Bogobrush was created with two things in mind: a product that was good for the planet, and for the people who live on it. The masterminds behind bogobrush are a brother sister duo from a small town in North Dakota, whose father was a dentist. The name BOGObrush comes from the idea of Buy One, Give One, a pillar of what Bogobrush is about. With each toothbrush you buy, another is given to someone in need through their partners. Created was a simple way to protect the planet, buy ethically-made, and give back.

Sustainable:

There are two toothbrush options:

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Recycled Plastic: A toothbrush that can be recycled repeatedly, forever. We are taking plastics destined for the landfill and giving them a second chance at life. The toothbrushes are made from recycled plastic number 5, and can be placed in your recycle bin. To facilitate the process, please remove the non-recyclable bristles with small pliers.

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Biodegradable: A composite material made from biodegradable plants, which can be composted at the end of its life. The current design is made from flax, but a new design is in the works for a plant-based material made from hemp! Recycling options include curbside or backyard. If you have a curbside compost bin, simply discard there. If not, you can toss the handle into your backyard compost pile. As organic matter, it will degrade into carbon monoxide, water, and humus (a soil nutrient). As with anything, it may take a few months or a few years to decompose, since the time of degradation depends on the health of the compost pile and is affected by factors such as humidity, temperature, and biodiversity. The bristles are not compostable so please pull them out using small pliers. However, if bristles do end up in the compost stream, they will break down into little pieces with time. Not the best solution, but a step towards the right direction.

Ethically Made:

Despite the higher cost of producing in the United States, these brushes are manufactured here, a sacrifice worth making. It allows for easier communication with the developers, facilitates site visits, and creates more personal relationships with those who source Bogobrush materials. The focus is to have transparency regarding the supply chain, with the knowledge of the who, what, where, and when of each part of the product, down to the bristles!

Giving back:

More than 80 million Americans lack access to adequate oral care.

This statistic can affect aspects in daily living that we take for granted, including education, work, and overall health. Imagine how much less access there is, to something as simple as a toothbrush, throughout the rest of the world. A toothbrush is a privilege, something I’ve learned throughout my journey volunteering in under-privileged communities. This is something we can change. The hope of creating a more balanced world was so important, that the name itself comes from the idea of buy one, give one.

Currently supporting:

  • Covenant Community Care: Detroit, MI. Serving the people of Metro Detroit through six health clinics across the city. They provide medical, dental, and behavioral health care to everyone regardless of their ability to pay.
  • Apple Tree Dental: Twin Cities, MN. Dedicated to providing complete dental care to people throughout Minnesota through its clinics and innovative mobile dental unites. They give away 20,000 toothbrushes annually.
  • Family Healthcare: Fargo, ND. Providing personal, high quality medical and dental care to anyone in the Fargo region, regardless of ability to pay. They also offer significant tools to aide healthful lifestyles.

Minimalist Design:

Admittedly, part of what initially grabbed my attention was the minimalist design. Here they are selling a toothbrush without the frills. Without the batteries, without the lights. A simple design that can be just as effective is always appreciated, in my book.

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Option to purchase a stand, also in a minimalist form.

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Subscription:

Most of my patients are surprised when I tell them that, ideally, we want the toothbrush to be replaced every 3-4 months. A frayed toothbrush has decreased efficiency with plaque removal, and depending on the method of use, a toothbrush can easily fray within a few months. Some tell me that they’ve had their toothbrush for over a year! With Bogobrush, you could subscribe so that a toothbrush is delivered to you every 2, 3, or 4 months. So you’ll never forget. You can also mediate how many shipments you receive. As incentive, the price of each toothbrush decreases with a subscription, in case all the other incentives above were not enough.

As even further incentive, Bogobrush is offering The Debtist readers their first subscription for free. Cancellation is allowed at any time, if you are not satisfied with the product. A link is placed on the sidebar, in case you are interested in making a change. You must subscribe via my personal link below or in the sidebar in order to receive the promotion. I hope you join me in the movement. If I am to support a product, I want it to be a product that will bring both social and environmental awareness into people’s everyday lives. A toothbrush is a product many of us use every day. And we have a choice.

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Thank you for supporting the brands that harmonize with The Debtist’s internal values and external intentions. And thanks to Bogobrush for inspiring me to be a better dentist and a better teacher. Starting today, there will be a series on my blog regarding all things dental, to promote dental education, without the student loans.