There’s a pretty good chance that if you have student loans (and even if you don’t), you have received a flyer or some type of marketing piece describing how much interest you would save if you “refinanced” your student loans. There has been tremendous growth in the private student loan market and with that growth has come lots of marketing that has left recent grads confused and unsure about their debt. This post will discuss various aspects of refinancing your loans with a private lender and some of the potential negative consequences.
Wondering what you can do with your money even while you don’t have any? Here are some ideas of what you can do while in dental school to set yourself up for financial success.
How long do you plan on practicing dentistry? Although we haven’t officially started our careers as licensed dentists yet, it is never too early to plan ahead for retirement. Saving your hard-earned money as a dentist after graduation doesn’t seem as glamorous as treating yourself, but saving and investing will allow you to have more control and freedom later in life. The futures of Social Security, tax rates, inflation, and the economy are uncertain, but the one thing you can control is your savings.
A lack of understanding regarding these two facets of student loans can have a significant impact on your wealth. Let’s start with interest capitalization. When you borrow money, you have to pay for the use of that money. It’s called interest. Interest is usually charged as a percentage of your outstanding principal.
Second is taxable forgiveness. When you get to year 20 (under the PAYE plan), any outstanding debt gets forgiven. Throw a party because that’s really great. But… there’s a catch. All of that debt forgiveness is considered taxable income.
You’ve probably heard that you need to start early when it comes to saving for retirement. I often get asked by dental residents (some of which have $450k of outstanding debt) if they should save for retirement while in residency. For your average resident and recent grad, there are some very good reasons NOT to put money into a retirement account. Here are a few…
A question that I often hear from new dentists is: Do I need a financial advisor in addition to an accountant/CPA? The answer depends on a lot of factors (including one’s personal financial wealth going into dental school), but the vast majority of starting dentists may not need a true financial advisor until they accumulate some substantial wealth. With that said, if you need particular help with personal investments or personal budgeting as you start to work, there are certain things that you should be prepared to ask any potential financial advisor upon an initial meeting. These questions are also great to keep in mind if you are meeting with a professional service provider for the first time, such as your accountant or attorney:
When I meet with dental students and residents at several different schools and programs, one of the things I hear most is that finance and tax are things that “they don’t teach us in dental school.” Today, I thought we would look at some of the things that they don’t teach you in dental school, but will be just as important as your degree once you finish…