It’s no secret that the average dentist is saddled with a lot of student loan debt when they graduate school. Having a strategy to quickly and efficiently pay down your student loans is critical to long-term financial success. These personal finance tips can help you pay down student loans faster, regardless of your specialty or income.
1. Put less than 20 percent down when purchasing a house. Between undergrad, dental school and sometimes residency, most dentists have spent a significant amount of time paying rent and are itching to build up equity in a house. It may sound counterproductive to have a smaller down payment, but think about it: If you had the option to allocate money to paying down student loans or putting money down for a house, the financially savvy thing to do is put money toward the higher interest rate student loans.
2. Refinance your student loan debt for a lower rate. No matter how long you’ve been out of school, you can still try refinancing your student loan debt for a lower rate, which could lead to paying it off much faster and saving you money in the long run.
3. Take advantage of disability insurance discounts while training. Many insurance companies offer discounts such as multi-life or association, which are locked for the life of the policy. Finding an insurance agent who can provide these discounts can help you save a significant amount on the cost of your insurance policy. By purchasing disability insurance before you start practice, you can use the extra cash flow from savings to apply to your student loan payments.
4. Maintain your training lifestyle when you start practice. Exercising financial restraint can be difficult when you start practicing. Typically, your income is increasing five-fold, and after living more economically for several years, the desire to upgrade your standard of living is strong. Keeping a frugal lifestyle in your early years of practice will significantly change the trajectory of your finances in the future. If you can maintain this relative level of spending, you will have some serious savings left at the end of each month that you can put your student loan repayment.
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