dealbusterium said:Hey guys

I've been perusing the boards for about a year and it seems like the FW community has been nothing short of being a huge help to its members. It seems like you guys would be best adept to answer my question. I am currently 23 years old and in school. I plan to graduate next year with about 73k in student debt (Im in a 6 year pharmacy program, hence the reason for the huge debt). Through working insane hours and investing, I would have about 75-80k saved by the time I graduate next year in May. My question to you FW members is that what should I do with my savings? Should I just throw all my savings into a down payment for a condo or co-op? (I live in NYC so 80k isnt quite enough for a downpayment for a single family home). OR should I wipe out my savings to totally clear my student debt? Most of my debt is in the form of subsidized loans so I'll only owe principal when I graduate. 20k of it is at 5% interest, and another 40k or so is at 6.8% interest. The rest of the loan interest im not too sure of. I plan to make about 120k/year if I sell my soul and work in a retail establishment or about 90k a year if I work in a hospital. Any input would be great guys!

P.S. The home would most likely be partially rented out to help cover the mortgage

1) Investing? In what? If this includes marketable securities/bonds, I'd hesitate to make any assumptions on the value of your assets in 8 months.
2) Buy a home in NYC? Are you 80%+ sure you will be living and working there for the next 5-10+ years? Most college grads don't have this assurance. I wouldn't buy anything until you have a long term job path & family & etc. Who knows where you are going to need to move to in 3 years for a job or anything else.
3) Interest rates are important on the loans. Remember though that they are tax deductible (not sure what income limits are though). So 5% may really only be ~3.5% and 6.8% may only be 5% effectively. If you are happy taking guranteed returns at these rates, pay them off. Here, it sounds like paying down the 6.8% and leaving the 5% would maybe be ideal. It depends on your own preferences though.
4) 120k/yr income is your PLAN...no where near guaranteed.

At the end of the day, I would pay off the 6.8% loans and anything higher rate loans, rent a place that's affordable and modest, convert 12 months of expenses to cash/CDs as an emergency fund from your "investments", then invest the balance of cash/investments you have in a portfolio of 75-85% stocks/15-25% bonds.

kwest said:
4) 120k/yr income is your PLAN...no where near guaranteed.
I agree. IMO, I don't think it's easy to make 120k out of college unless he tries to put extra hours.

I heard that some retailers don't even pay overtime rate. I know a couple people who tried to make extra money by working additional hours right after their graduation but, after a couple years, they don't want those extra hours any more.

Swivelguy said:In your situation, I would:

- Pay off whatever student loans were above the 6.8% (~13k?)
- Hang onto the rest, it's a very solid emergency fund
- Sell whatever it's "invested" in. This sounds like stocks to me, and stocks aren't where you want your emergency fund
- Rent the nastiest, tiny, cheap apartment I could find
- Save up for the 20% downpayment to where you really want to live without touching the aforementioned emergency fund
- Save up MORE emergency fund because your expenses will be higher (and less predictable) once you do buy property

Also, you can never "plan" to make $x/year. you can only hope to make a given salary.

Actually I dont think any of the loan interest will peak over 6.8%. I just meant that I couldnt recall what the interest rate was on the rest of my loans. I do remember 6.8% as the highest I've seen from my statements. Yes I do have the investments in stocks. I understand its a risky move, but I figured that since this is money that I saved as a student I can be risky with it. I will move towards safer investments once I start putting into my future 401k... The thing with health care salaries is that it is pretty stable and you dont find the drastic income differences as you find with fields such as engineering. From the offers being thrown around now, I can see 120k/year as the base salary for retail pharmacy. (Unless medicine goes socialized which I am all for, but that opens a whole different can of worms).

dude! Hail from a fellow pharmacy student. I'm very similar to you financially, with about $70K in Roth IRA, and will be graduating with about $80K in student loan debt. You have a big leg up since you are almost 10 years younger than me.

I just want to throw in a few of my own thoughts:

(1) why stay in NYC? Pharmacy pay does not adjust much to cost of living. Retail pays the same $110-$120K and hospital $90-$100K here in the midwest. If you are willing to move away from the coasts, it's like making 30-40% more.

(2) everyone needs an emergency fund. Keep at least $20-$30K on hand in things like money market. I'm using my RothIRA as kind of like an emergency fund, since the principle could be withdrawn at anytime without penalty.

(3) Consider residency. A clinical specialist in hospitals make about $110K here. Doing a residency does takes time but since my fiancee, who will graduate with me, is going into retail, so it makes sense for me to pursue a higher learning and a different career path. You are very young, you can afford the time too. While residency pays peanuts, you can still pick up retail shift one day a week, $60K/year is plenty to live on in the midwest.

yeah go to europe. i heard the hooker n blow are having a hard time in this economy

I'd move to a state with no income taxes, high growth, low home prices and warm weather. $120,000 is not a lot in NYC.

carbonwallet said:First thing I would do is check out loanconsolidation.ed.gov and find out if you qualify to consolidate your student debt at a lower interest rate than you are currently paying. It is tough to say without more information on your student loans, but there is a calculator on the site that should tell you all you need to know. Since you say your loans are subsidized, I am guessing you are eligible. If you can get a good enough rate, you might want to invest your savings rather than paying down your student debt all at once. You may also be able to deduct your loan interest from your taxes, so having loans isn't so bad. However, at 120k/year salary, you could be making too much to take the deduction.

Assuming you do decide not to pay off your loans, I think whether you buy a home depends more on your personal preferences, the alternate cost of renting, and how long you plan to stay in NYC. If you are thinking of moving in the next couple of years, you might want to stick to renting. If, however, the cost of renting a place is higher than the cost of owning a comparably-sized home, then you should consider buying.

Personally, I would go with renting and invest my savings, but I am not in your situation and do not know the NYC real estate market.

Good luck with your decision.

I have checked on the IRS's website. Educational loan interest is only deductible if your income is below around 70k, so that is out of the question. I was raised with the mindset that owning a place is always better because it builds equity (great how that turned out this year right?), however the NYC real estate market is still pretty stable with prices dropping maybe only 10% at most in my area. Since it seems the recession has reached its peak, I would like to buy something in a down market so I can sell it in an up market. I would finally be able to move out and build equity at the same time. Additionally rent is super expensive in NYC, even if I do choose to live in a suburb of the city (Queens, Bklyn). It just seems more cost-beneficial if I choose a co-op or condo instead. If I bought a place, I would keep it for at least two years to avoid the tax penalties. Even using it as a rental property would be nice as well. Any advice on where to invest my savings if I dont choose the paying off loans or real estate route?

If I were you I would pay any Unsubsidized loans off NOW and then make the final decision on paying your subsidized loans when you start having to pay the interest.

dealbusterium said:The offers I have heard the upperclassmen get is about 120k base salary for retail pharmacies. 120k/year is actually a pretty conservative estimate.
Yeah, and have you heard about the upperclassmen that didn't get jobs at all?

Roughly 20% of the PharmDs graduating from my wife's alma mater this year did so without a job offer in hand. The advantage of "selling your soul" and working retail is that at least you have a chance of a job offer at graduation. With a hospital job, you may not be able to get a pharmacy director to commit, especially in these times. If you wind up unemployed, having to swallow your pride and work as a tech, or as some agency guy, you may wish that you hadn't kept your emergency fund in stocks.

youngchemist2003 said:(3) Consider residency. A clinical specialist in hospitals make about $110K here. Doing a residency does takes time but since my fiancee, who will graduate with me, is going into retail, so it makes sense for me to pursue a higher learning and a different career path.
Just realize that those clinical specialist jobs are few and far between. There are some opportunities for pediatric and geriatric specialists, but general clinical jobs are few and far between. When you do find them, they're often a big lie - the doctors are gods, and don't want to listen to, let alone round with, a pharmacist. Talk to some of these clinical guys and listen to how they're either marginalized into meaningless roles, or really staff pharmacists with a title for show.

Also, you'll run into several pharmacy directors that discriminate against people who have done residencies. The directors know that those people have been led into thinking they'll get to spend their days doing consultations, MTM, etc., and would rather not deal with it. And you might want to talk to some current residents about how much they're enjoying their residency, and how they're treated by the hospital.

In any case, you can sit for a board certification in pharmacotherapy after three years of work even if you haven't done a residency. If you decide to apply for a clinical job, having BCPS after your name will count more than a residency anyway. And, most places, you'll learn more in a year of working than a year of residency. (Sad but true!)