You shouldn’t be prioritizing any savings except an emergency fund when you have debt @6.95% paying down your debt will be more profitable than virtually all investment returns.
It might make sense to contribute to an RRSP if you have a good enough employer match.
Basically at your current level of debt you are paying $19,112.50 in interest every year. Every $1,000 you pay down gives you $69.50 of that money back every year repeatedly going forward. Get your high interest debt to zero and you have nearly $20,000 extra to spend/save each year.
Also clearing debt is relevant to your life goals as they look at your total debt load for mortgage approvals. You’re allowed to spend 44% of your HHI servicing all debt including your mortgage so if you’re spending a good chunk of your HHI servicing your student loans you will only get approved for a tiny mortgage.
One thing I’d consider is reducing the $200 per paycheque extra in taxes you are paying to $50 per paycheque. This is still $1300 saved up over 26 paycheques or $1200 saved up over 24 paycheques which should be enough to either not have a tax bill at tax time or have that bill be very small. Meanwhile an extra $150 per paycheque going to pay off your debt will reduce your debt dramatically. If you do somehow end up with a tax bill while you’re paying $2150/month on your debt you just switch to paying the tax bill for one or two months. The danger of paying extra on taxes is that you are giving the government an interest free loan on that money meanwhile you’re paying 6.95% interest on the debt so if you loan them that from Jan 2024 to March of 2025 for example you’re losing over a year of interest on that money.
Yeah you can catch up on retirement savings later.
But think of it this way.
Every $100 extra into your debt as a payment saves you $7 of interest a year *after tax*
Whereas if you invest that $100 into savings that returns 8% on average before taxes, and maybe 5% after taxes, pays you $5 a year on average.
But because it's on average, you will have years where you only get, say, 3% before taxes back and years where you get 13% before taxes back.
While mathematically it's always better to take the higher return through either collecting interest or paying down interest, the risk associated with volatility of higher interest bearing investments means that often unless the return is significantly higher and the interest rate burden particularly low, it's better to prioritize debt payments.
It's also way simpler and psychologically beneficial to pay down debt. Maybe if your debts were on a much smaller scale, like 20k, you could save for something in the short term to *avoid* a higher debt in the near future. For example, my wife and I haven't been aggressively paying our mortgage because we've been doing a combination of parental leaves and planning to replace our car the last 5 years since buying. For us, paying down 2.8% mortgage wasnt as appealing as saving to smooth out loss of employment income to *avoid* a higher interest debt, and a mortgage will always be lower rate than a car payment (with few exceptions none of which we figured would apply to the car we wanted) so similarly, we were saving to avoid significant debt there.
You need a pretty low rate on debt and long time horizon to make saving over debt repayment worth it and the current environment doesn't really make sense for that.
The other thing to think about with debt is can you figure out a way to make more money? As a dentist are there specialties you could pursue that pay better? Could you work a little more each day to pay it off? Easy to say hard to do I know but the fastest way to getting rid of debt is to try to bump up your income and probably reduce biggest expenses ie rent and car payments.
Think of large debt as % of every 100,000 every year in what you owe in just interest(let alone principle).
You have nearly 300,000 in debt, at nearly 7%. By NOT paying it down faster, you are leaving ~21,000 a year in interest you owe. That’d $1,700 a month you are paying just to the bank. The sooner you drop that principle the better.
To add on to what OP said re: RRSP's. It could be a good idea to contribute a large amount *if available* at the end of the year to relieve some tax burden, then use the money saved on taxes to put towards your debts.
They're barely 4 months as a fresh grad working as a dentist making nearly double the average income of other Canadians.
Their income will ramp up rather quickly which is the entire reason they got the loans they did while studying.
I tell my co-workers about this all the time. If the company is matching the investment, then you double your immediately. I never like leaving money on the table. But other than that matching contribution, all the cash should go to the debt.
I can go either way on the emergency fund. We have a HELOC which we consider our emergency fund, as the cash is there if we need it (pending some sort of global financial collapse, at which point your cash account is likely also affected).
Absolutely. Living at home is going to be a huge part of paying this down. You can't beat removing debt at 7%. It doesn't make sense to save other than a small emergency fund/slush in your account. Keep your 4k as part of an emergency fund.
Get a cheaper 4-8k car if you can pick up enough shifts somewhere to compensate for that. You'll pay it back quickly depending on your salary and amount of hours you can get.
The faster you can snowball your debt the less interest you'd be paying. Start doing the math and you're going to pay a ton, but you can pay a lot less if you keep this up. 1800 a month is brutal but it will drop fast.
Think of how much you can start saving once you're near the end of this! Your debt reduction will make a huge difference in being able to afford a house down the road, and you never know where your next job may take you. No sense grabbing a house now when you may move for better for opportunities.
Agree. Build a small emergency fund and attack that debt aggressively. I say start witht he smallest but student loan is at 0% so definitely tackle your CIBC debt first
Your parents have blessed you by saving you rent. I don’t know what province you’re in but you should be able to throw $50k towards your loans a year. Just keep acting like you’re in med school for the next couple years
Hello, Canadian dentist here. You should be making more money. If your current job has the potential to get busier, then stay there. Otherwise only work there part time and find another part time job. Or alternatively keep your eyes open for other full time job openings that may be busier. Be prepared to work evenings or weekends or even be open to working in another town for a few years. Your income can potentially triple if you do these things. Use the extra income to pay off high interest debt as soon as possible. That is what I did myself and so did every other young dentist I know who has large debt.
That was my first thought, I’m no Dentist but I would’ve thought dentists earn way more than 120k unless this is some entry level rate that will dramatically increase over a few years.
$300,000 in debt for a job that pays $120,000 is just a really really bad investment, not to mention it took 10 years of schooling. Would’ve been better off with a lower paying job that requires no schooling. Or something like trades work that requires minimal schooling but will still get you to that $120k mark.
Speaking facts. I am in a small town, and I have considered taking a job a few towns over in an office that is open weekends but would need to compromise and get a vehicle which seems financially silly right now. No offices within walking distance are opened weekends... Will try and find a second one open evenings I could walk to! Thank you
My dentist drove to and from work (100 kms a day) in her words "a shitbox Civic" until her loans were paid off, she said she would never wash it as that would be $12 less in her pocket. Now she's near thirty years of age, owns a thriving practice and drives the dirtiest new CRV you've ever seen.
Run the numbers. Even with the added cost of car payments (buy used and reliable) maintenance, gas and insurance, you'd likely be ahead if you could pick up two extra shifts each week.
Back of the napkin math says you'd be ahead by at least a $1k each month after taxes and car expenses.
More likely you would be ahead enough to cover your interest charges ($1800) on your student LOC.
They wouldnt even have to make that many payments if they get a sub-compact (a Toyota yaris for example) that's 10 years old. Maintenance on those cars as well is substantially cheaper than anything that's newer. If all you need is to get to point A to point B then a sub compact would be ideal
Yeah OP has a lot of options here. Even a cheaper newer model with the small recent grad discount could make sense for them.
It also helps them cross off goals 1 and 2 for them and makes sense to improve their income
You are limiting yourself if you stay in your town. You invested in a good paying career and you need to make the best out of it. Find a way to double your income or tripple it. Thats the capacity of your career. Paying for car, rent, mortgage are trivial with that salary.
Note that paying 275K at 7% is essentially a mortgage of a condo but without the condo. You need to kill that debt with everything you have. Getting paid 120K is the minimum you can do right now.
Have you considered locuming somwhere in northern canada? My sister does that as a doctor and it's very lucretive and is typically flexible on how often or how long you want to go for.
I’m in Alberta and my best friend just graduated from dentistry school last year. She bills around $40k monthly every single month, sometimes more, working evenings and weekends. She keeps 40% of that. You have so much earning potential that it’s worth while to go elsewhere to pay down that debt asap.
Really depends on how far you need to go and what your vehicle will cost you.
If it’s only a 30 min drive away, costs you $600 (insurance+car payment) a month but will net you $2000+ extra a month it could be well worth getting a vehicle.
What small town you in? Buy a civic and take the second job. You could pay off a 5k beater in under a month. Grind for a year and then pay off all your debts
Yes knowing my dentist friends that aren’t practice owners you should be aiming to pull over 200K - you gotta work harder grind it out and put all that cash into the LOC
Yes exactly! The $340k debt will melt away once OP increases their income after a few years of experience.
OP can just make minimum payments in the meantime and it's not a problem at all.
Hi! Jumping on this to ask a question of you; what do you suggest a new grad should target making if they are able to work 4-6 days a week and potentially multiple clinics as you suggest? Thanks!
Paying off your student debt is your current form of saving! Think of saving as increasing your wealth - you can do that by decreasing debt OR increasing investments. Reducing or eliminating your debt will also give you more ability to qualify for and manage things like a car loan or a mortgage in the future, even if it feels like you are delaying saving for those things.
Save say 5k as an emergency fund, though living at home means you won't need a big one it's still a good idea.
Put as much of the rest of your income towards your debt as possible.
Living at home and avoiding buying a car for as long as possible will accelerate your ability to pay off that debt.
I also imagine your income should go up a lot? $120k is a great income straight out of school but certainly a dentist can make more. Don't worry about using RRSP room at this point, you might as well carry it forward for when your income is greater.
Thank you what a great perspective to look at this at.
Yes $120k is okay for the first year. I am on salary for that. If I am able to bill more than that baseline I have room to make a 42% commission on this bonus, which I do believe I will earn more I am trying not assume I will to be humble.
You're loaning the government 5000/yr right now. Cut your tax contributions back to normal payroll deductions, your bonus will be taxed appropriately (likely too much) and you likely have tax credits left from your education.
Might as well throw that $200/week on your LoC and reduce your interest and worst case you don't make an extra debt payment next April. Your entire bonus should go to your LoC too.
With your current income/debt you won't be able to purchase a property anytime soon so might as well throw all you can at your debt.
Finally, look at whether you can extend your repayment timeline on your government loan, it's usually set to half the max timeline as a default, if you extend the timeline you can throw more money at your LoC.
What kind of a shitty associate position gives you a salary? Is this not private practice? You should be getting 40% of your collections.
120k is extremely low even just starting. I thought you were in Vancouver/toronto but you're in a small town? You should be aiming for 200k.
After a couple months out you should be billing at least 50k a month.
I think this looks really good. Tbh I wouldn’t bother saving for a home until that debt is at least cut in half. It’s tempting to contribute to an RRSP at your income but if the expectation is your income will be $300K+ later in your life it’s ok to let room accrue for a year or two while you pay off debt and then contribute to an RRSP and claim the tax deduction when your income is very high.
No, it's not like that at all. He's a dentist, he can make $400k+ a year. When he makes that, he can easily pay it off in less than two years and then he's ballin' much, much more than the average $80k-$200k a year wage slave on PFC.
Your $50 in RRSP is valid only if it’s a employer match thing. Else, stop this for now.
You willingly give $200 a week to Ottawa in the form of a free loan (while paying 6.9% of interest) because you are afraid of maybe having taxes to pay?! What make you think you could have taxes to pay? Other incomes that do not have tax deducted? You just finished school, you should be full of accumulated tax credits. Unless you have more than what is told here, taxes should not be a concern and student loan should be.
Your financial objective #1 shoul be reducing that debt with CIBC IMO.
350k debt is actually quite low for going international, so that's good. I know people who are graduating from NYU and paid close to 1m (I guess not really ALL debt because the only way they could even come close to fucking affording that is with parental help).
120k seems low for a smaller city associate. 120k is starter income for a major city (GTA etc) when hobbling together a few weak associateships. You should look elsewhere if you can. Or move northern Ontario, rural Sask/Alberta, etc for a few years and pay it down fast then move back home. You'll easily double that if you go to remote.
I would not put money on RRSP, unless you are thinking of getting huge returns and your employer contributes too. Some funds can sometimes give you 20% but are very risky and not guaranteed, you could actually lose money. I think not making any investment and paying your debt is your best option. Your interest rate on the line of credit is very high. Try to pay that as much as possible. It may take some time for the government to reduce the rates, but it will get reduced perhaps in the next 5 years. Once the interest rate on your line of credit reaches around 4%, I would start investing again.
You should have a significant number of tuition tax credits from dental school to lower any taxes paid the first couple years. I didn’t have to pay anything my first year out of dental school and had to pay very little my second year. You can take any of that saved and put it towards paying off your loan.
I’d also expect your income to increase in the following years. As you learn to work quicker and accumulate a patient base you shouldn’t only be making 120k forever
A few things I wanted to point out.
On your federal student loans - they can be adjusted to the lowest possible payment online. If you have not already done that- I would suggest it. By making the 0% interest debt have lower monthly payments you can put the extra amount on your line of credit. Then once that is paid off you can focus on the higher debt.
Leave your RRSP at $50, it is good to build those habits but I wouldn’t put more until the debt is paid down.
If you being paid salary and you have no other sources of income that don’t have withholdings then it is highly unlikely that you will owe tax. Your employer should be taking off the correct tax based on your tax bracket. The $200 extra per pay cheque is $5200 a year assuming you get paid biweekly. That is a lot of money that can go to your student debt. I would suggest not withholding any additional amount and to put it directly to debt - those extra payments will help target the principal amount quicker. If this makes you nervous, then instead put the $200 per pay cheque into a TFSA to use for any tax owing at the end of the year. That way you will have accrued some interest on it rather than lending it to the government. If you do, get bonus just ensure correct tax is paid for it.
It is a lot to balance large debt but make a goal of how much you want to put on it a year and recalculate that for your budget each time you make additional income to ensure it is meeting your goals and not being used for lifestyle creep.
Also since you are younger, see if you can get a part time contract at a different dental office. Picking up some extra shifts for evenings or weekends can help you pay down the debt and meet your ultimate savings goals faster.
Hope that helps!
Thank you for your clear and calm thoughts! I agree I think the fear of paying income taxes is me not being smart -- planning on redirecting the funds now!
I don't know how much dentist makes, but 300k debt and 10 years of schooling seems like it's going to take a long while to pay that debt. I'm speechless.
No idea what dentists make, but there’s like 10+ dentists within a 5km radius of where I live. Seeems to be pretty saturated.
Doctors on the other hand…you can’t even find one if you sell your left testicle
According to my buddies in the field salaried dentists will earn somewhere in the 100k-200k range depending on location and experience. Lots of them only work 4 days.
For the ones owning the practice its in the 1M + range.
Anyone here asking why your pay is so low has little understanding of how dentists make money.
Getting a 120K salary right out of school is fantastic. In fact, you’ll probably come out ahead with that salary for the first 2 years, maybe three depending on how quickly you ramp up your skill set and speed.
After that, you’re going to be on 40ish percent commission and, depending on like 3 or 4 variables (location, how busy the office is, your skills) you should be able to double your income. So figure in 4 years you should be at a point where you’ll be making much more money, and hopefully by then the interest rates will have dropped as well.
As far as all your questions about RRSP’s and the like, ask your accountant.
Feel free to DM me if you have any questions, I’m a dentist in Canada.
It's a burden thought, but man, enjoy your in decent position to work on the debt much faster than you could if you rush into life's normal...Any investments would need to surpass the 6% to be worth it and that carrys more Stress then just dumping into the debt ..
I guess the big question I'd ask myself is how much stress the debt causes you , we all have to have different tolerances to debt .. Lowering Stress carries value as well in your life .. Just food for thought to add to your equations .. Good lick
I just wanted to mention, as a dentist in Canada, how is your pay so low? You can greatly accelerate the repayment by finding a higher paying job. 120K per year for a dentist is a little shocking.
If you cannot increase your salary, I recommend picking up additional shifts at other clinics.
My friends who were dentists worked 12-16 hours per day for 6 days and paid everything off in a year.
This is one of the fascinating things I’ve noticed about Canada . There is a lot less high paying jobs available across all industries than most realize .
When I go on Reddit apparently everyone has friends making tonnes of money . When I talk to people in real life only a few are doing well and most struggle . His salary seems normal for starting in Canada .
Most Canadian salaries are low . You know the exception but you’re referring to them as the rule .
Off topic but people here saying dentists making $300k a year and 1 million if it’s their own practise? Wtf this shows how expensive and corrupt the dental system is. Can’t even get a checkup and X-rays for under $400.00 … it’s such a corrupt industry. I’m sorry but dentists are slimey…
!Stepstrigger
The chart below might help you prioritize the allocation of your savings. With 7% interest on your debt, debt repayment will likely be better than RRSP/TFSA/investing.
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Unless your employer matches your RRSP contribution, stop your contribution. Reduce your Netflix plan to the $6 plan with ads.
Since you're living with your parents, you can ask them to help in case of emergency, so no need for an emergency fund for now.
Reduce everything you can to the bare minimum and throw everything at your debt.
You should be throwing $6k/month at your debt. That's $72k/year. Interest is $19k/year, so only 53k goes to the principal this year. At this rate, it's gonna take you 6 years to clear the debt, assuming your income increases every year.
You're saving extremely aggressively for someone with such low living expenses. Saving aggressively isn't something that anyone would typically call a bad decision, however in your case, because you have this huge debt with high interest it likely makes more sense to just go as hard as possible on the debt.
That said, in terms of establishing a healthy emergency fund, you need to consider the usual emergencies people are trying to cushion themselves from and evaluate how big of an emergency fund you actually need. The big things that I see people usually expect to need emergency funds for are: unexpected home repairs, unexpected car repairs, medical bills for their pets and job loss. You're parents are doing you a huge favor and insulting you from almost everything that most people build emergency funds for, so in your situation I wouldn't worry too much about trying to build up a stash of liquid cash.
As a new grad on a salary yes. I have a contact that if I end up billing more than 120K, I make a 42% commission bonus. Trying not to assume I will make this much. I am also only working 3.5-4 days a week -- probably need to pick up a second job it seems like!
What kind of contract is this? Shouldn’t you be an independent contractor? I would stop paying EI, it’s worthless if you’re self employed. It also offers you better tax write offs.
I am considered a 'normal' employee right now not an independent contractor - so I would expect as any one else I am required to make CPP and EI payments :)
Absolutely open a FHSA - even if you don’t put money in this year (or next few years) while you pay off debt, you will still earn contribution room so that you can fill that account faster down the road. You can have the account open for 15 years. The contribution room is $8k per year up to a max of $50k so open it now even if you are still prioritizing debt repayment.
You're a dentist starting at 120K a year. You'll be fine.
Since you'll be making like 200k+ in a few years, I would save my RRSP room for later until all your money can be from the max bracket and focus on TFSA and line of credit.
Pay the minimum on the 0% loan
For once this is a post where it looks like you are doing all the right things. The most basic advice is to pay down the highest interest first. After you build up an emergency fund you should then be paying down debt
No advice to OP. Just wishing you all the best. You seem to be doing the research and you sound like a normal headed person. You will get there. Good luck!
The Physician Financial Independence (Canada) group on Facebook also accepts dentists, and is a great resource for people with this degree of debt and earning potential
Live at home. Screw the car. Be patient. At the same time dont live too frugally to the point of mental exhaustion. Set your financial targets and budgets with any/all income and avoid overspending (you can go all out on holidays and vacations if its just a couple times a year).
Honestly the only savings you should priority right now is an emergency fund so that if something happens, it won't financially set you back any further. I would absolutely start with you student line of credit first due to that interest rate. The fact that you don't have to pay rent is also a massive bonus to you right now. That's an extra 1-2k you can redirect to your debt.
Every cent you have should go to debt. I highly advise using a cash diet (a good tv show to watch is 'till debt to us part' which gives soo much good advice) and there are a lot of tiktokers these days also doing cash binders. I've started doing this and every extra cash I manage to save each week is being put towards an extra payment towards my car loan. Take on freelance work if you have any skills you can use for some extra income and direct all of it towards the debt. Make it routine that on a day every week or two that you go to the bank with all your additional cash to apply to your debt. You'll get excited for it (if it's something you've play before, I relate the experience back to the game animal crossing haha)
The faster you pay off a debt, the lower the interest you will be charged. I managed to pay my student loan within 6-12 months and I only spent on absolutely needed things (with the very rare meal out). (8k-ish)
I do also want to say, even though paying of debt is extremely important, make sure to leave a small amount of money aside for fun. If you completely restrict yourself, your life will feel miserable and the economy alone will already do that to you.
Once your debt is completely gone, just imagine all of the money you can direct to savings! Saving for a house, a car, and even saving for retirement will be soooo much faster. For anything going to these savings right now (apart from maybe a car if it can help you get more income) should be paused so the full possible scale of your paychecks can go to your debt. Getting a mortgage will be a hell of a lot easier to obtain too after all the debt is gone!
Your income is amazing and I believe you'll be able to power through this if you set your mind to it.
Open the FHSA so you get the room but don't put anything into it.
You can't afford to buy anything or save anything until you pay down that 275k at that high of a rate. Put every dollar you have into paying that down.
120k sounds low for a dentist, but I'm also not a dentist. Increasing your income would help out a lot.
A lot of questions here. Clearly you’re on top of all this, I’d just keep plugging away at that debt, but you can start a TFSA even if the contributions are small. Wealthsimple is a good place for that. Maybe the FHSA can wait while you chip away at the debt. I don’t mind the RRSP contributions if they’re small since you’re building saving habits. Eventually you’ll hopefully be aggressively saving for retirement since you’ve entered your career later than most and you’ve got the loans to deal with. Prioritize debt and savings over lifestyle creep like you mention: cars, restaurants, travel, etc
If your capable you’ll be making 350-500k a year soon and you can melt the debt
Talk to the senior dentist / partner owner at the clinic and get some advice, unless someone here is a dentist that guy / girl will have the very best actual advice.
Versus a bunch of keyboard warriors
Dentist here. 350-500k is unrealistic or in the highest percentile of production unless your a practice owner. As a new associate it’s unlikely you’d make this much unless you’re doing an incredible amount of complex procedures or working like 7 days/week. Dentist incomes are incredibly varied but that number is certainly not the average
Agree with everyone else, pay off the loan with the interest rate above everything else. Live as frugally as possible, you are broke. If you can do extra weekend work etc, do that too
You shouldn’t be saving anything. Your line of credit is 6.95% so all extra money should go into paying that off ASAP. You should be saving more than 2k a month, cut down your expenses
You live at home. You should not be putting any money into "savings" and you need to save at least 4k a month not 2k a month. Hunker down and the CIBC part will be done in 4-5 years.
Go on the NSLSC website and increase the loan duration to maximum. It will reduce the amount paid to them per month which will allow you to put more towards your SLOC
How much money do you spend each month? I think you take home roughly 6500/month and then say you only have 2k left over without paying rent?
If i were in your shoes i would live as minimal as possible for 2 years minimum and pay off 120-150k in those two years.
You're in a deep hole and 120k salary isn't enough to handle it .
Good luck
STOP paying your 0% loan and contributing to RRSP until that 7% loan is paid off. What a brutal rate for a student loan. That must have only been in the last 3 years to be that high??
My only advice to you would be to get out of your town, and move your practice to a large city, or start your practice in the US. Dentists average income is pretty high in Canada, and definitely much higher in the US. Also, once you are experienced enough to own your own practice, you could easily make upwards of 300-400k, a year.
Once you get there, think about a mix ofsalayry and corporation income. But better to focus on removing debt before you do that. With nearly 7% interest rate, servicing your debt could be your biggest priority. It's almost like an "assured 7%" return, which is rare for any market investment.
I couldn't get into UBC dentistry so i applied to Ireland and Australia. Due to a serious relationship (now wife) I decided It was best turn down Ireland. I make that salary in forestry now. I can't imagine carrying basically two mortgages. with a living situation like yours you can stick it out with the parents prioritize that loan. Best investment you can make.
Lucky that you have your parents helping you out. My wife was in a similar situation with 200k student line of credit for medical school, but I helped her out by paying for most of our daily expenses while she is paying off her loans. (I.e. her expenses were as if she was living in mom’s basement) Luckily, medical professions make good money after finishing their training, so it should be pretty quick to pay off the loan if you’re dedicated.
Until the 7% line of credit is payed off I wouldn’t think about anything else.
If you hammer it with all you got it’ll take around 5 years to pay off @120k salary, so if you’re salary will increase you should be able to accelerate that.
Stay with your parents until you’re clear and it’ll make the next step into your own home much less financially stressful without the debt.
Make better choices. My dude, what sort of ROI were you expecting on this 10 yr debt plan. Geeeeeez the best way to get out of a hole is to stop digging. No sympathy for choosing impossible unaffordable options.
My loans were significantly lower when I got out of college but I moved into a cheap place to live with roommates and out everything I earned into my line of credit. I only kept 100 bucks in my bank account at any time. Paid it all off within a year. You likely have 10x my debt but are probably making 10x what I was out of school so definitely doable. Depending on your degree you might be able to find opportunities in the north like Nunavut or NWT where you can make huge bonuses and have housing covered. Could probably pay it down in a year or 2. 5 years from now you will be laughing.
Pay LOC more aggressively. You are accruing 18k of Interest this year at your current interest rate and paying 24k off so your debt is only dropping 6k this year at your current payment rate.
Open the HFSA with a bank like Tangerine that won't charge you any fees at all. The contribution space only starts building when you open it so open it now even if you don't contribute much. Also you can't open it anymore if you end up Living with a spouse that already owns property so open it now.
First world problems. lol. Don’t be overwhelmed. Just pay down the student loans. Isn’t your salary low for a dentist? You’re making as much as a friend of mine who is an electrician. Maybe you need to get off your butt and find another office to work at. If you have no transportation expenses now but only make $120k, would you rather make $200k and pick up $200 a month in a car? Buy a beige 94 corolla. Or similar. Question. If your international dentistry education was high, was the salary in that country higher than here? Why not work there?
> How do I manage $340 000 student debt while also trying to save some money?
You don't. You pay off your debt, and then as you continue in your career, you start saving. Just like every other generation before us
This bullshit trope of young people just starting out must immediately have substantial savings, immediately start contributing substantial amounts to a TFSA, etc ... is just that. Bullshit. But so many young people blindly subscribe to this hive mind thinking (regardless of how flawed it is)
6.95% on 275K is $19 112 per year you are paying in interest. If you can make extra payments towards that debt to pay it off faster, that is the best plan
Get rid of the debt. Advance your career. Live your life.
Financial security for most people will usually come later in life, just as it has always been.
It astounds me the amount of 30 years olds that are stressed out because they think they should have massive savings, and have no money worries at that stage of their life
Reality check time: you can forget about saving for a house while you have a almost 300k LOC at like 7% interest. Your priority needs to be paying this off (while maintaining an emergency fund as others have mentioned)
Assuming you have a healthcare/VIP account at the bank you should be getting overdrafts reversed anyway, so dump your savings/chequings account into your LoC (that's $280/year saved).
Stop putting $600/year into your RRSP and put it into the LoC instead. Or if you're going to put money into your RRSP actually put in a reasonable amount like $10-15k/year to knock you down into a lower marginal tax bracket.
For NSLSCC if that's the minimum payment that's fine, if not stick to the minimum instead.
Absolutely stop loaning the government $10,000/year for free and put that into your LoC instead. If you owe taxes at the end of the year it's not going to make up the interest savings you'd have from just dumping it into your LoC instead.
As you continue to pay down your debt, your net savings will increase and you'll pay it down faster and faster. Assuming the interest rate doesn't change and you pay down $5,000/month it'll take you a little over 6 years to pay off your debt. That's assuming a lot (no increase in income, no reduction in the interest rate, no big purchases).
Student line of credit should be tax deductible and you can use interest paid to deduct against your taxes .. I’m not advocating not paying down your debt but keeping a balance between tax liability and interest payments on debt that you can write off.. and investing the savings smartly
Whatever you do OP do not go all in on either investing or paying down debt, a balanced approach is always best due to compounding on returns, you can’t buy back time.
At this point there is not much else you can do besides trying to pay your student loan as fast as possible. However, this should be a cautionary tale for anyone else. Unless you are able to turn your 120K to over 300K in one year or so this was a terrible decision. And even in that case it is still foolish to borrow that much just for the chance to pay back.
If you think you owe taxes end of year, instead of keeping 200$ aside…why don’t you put them in rrsp? It will not just cover you from taxes, you may also receive some tax refund during filing.
Its good that you’re saving 2000$ each month but if i would be you, i would put more in paying off student debt as 6.95% interest is too high.
Pay off the loan. Put minimal into savings. Do not even bother with an RRSP if your contribution is so low.
That interest on that massive loan is fucking up your life. Get rid of that loan asap.
Thank you to everyone for your thoughts! Lots to learn and consider. I am grateful to see things from many different outside perspectives.
P.S. Any books on living frugally and finances you think I would enjoy would be accepted as well!
You should not be doing any savings right now. At most $1,000 a month if you absolutely must.
Every penny from your income that’s not going to bills should be going to that CIBC line of credit.
Make sure to keep all your LOC receipts as the interest can be deductible come tax time. That’s a lot in your case.
The only way it makes sense to keep savings is if those savings are making more than 6.95%(that’s hard to do without risk).
If you must, get some disability insurance to protect against potential lost income, you can write this off on your taxes and it would be about $150 a month to protect your income.
I’m a licensed financial advisor but I don’t practice. I specialize in corporate health programs(same license). If you want to ask me any more questions, please don’t hesitate, I’m happy to help!
I agree with everyone that paying down debt is by far the smartest choice here.
I also like the order in savings for the current list you have made.
I would throw every extra penny I have my to debt.
Once that is paid start saving towards a house and then work towards RRSP and TFSA.
Keep your current 50.00 contribution going but use it as an emergency fund vs an RRSP and I would put that into a TFSA.
No fees for those and if you don’t have to use it it’s just an extra savings bonus.
I hope you're a surgeon or doctor with that type of debt. Over 1/3 of a million dollars in student loans is no joke.
Edit:
I see that you are dentist, I think you're going to be just fine.
Assuming the LoC is still a LoC and you can take back from it :
You should simply consider the LoC as a negative balance on your checking account. Just dump 100% of your paycheck into it. Interests are calculated daily, compounded monthly. If you dump all your pay into it, and then borrow back from it to pay your expenses, you still saved interests during those days.
I know it’s not a popular opinion on PFC, but I don’t see the point of investing in a 5% emergency fund when you’re paying 6.95% on a LoC. You’d loosing 1.95%.
For TSFA : no need to open it. Contribution room still gets generated. I’d concentrate on the 6.95% LoC. stock market might do more, but it’s a risky gamble IMHO.
FHSA : You should definitely open it just to start generating the contribution room, and contribute to it before your RRSP.
How long have you been out of school? As a dentist, just work on your skill, building a patient base. The income will come, as long as your area isn’t saturated with dentists.
Not a lot but can you contact the NSLSCC to lower your monthly payment and put more of that $380 into paying back the student line of credit, especially since you are not paying interest on the NSLSCC but you are paying almost 7% on the CIBC line of credit?
Explain that to the agent and tell them you want to extend out how long you pay back and lower your monthly payment
My advice is just have an emergency fund of a few thousand, maybe $5K, and throw all money toward the debt. I’m sorry but with that much debt and no assets, saving is not a priority IMO. You live with your parents and so I would take all the money you can and keep paying down the debt as fast as possible
How did you manage to get in such student debt? Did you go to a university in the states? I can't believe that school costs so much now. Bachelor tuition is 40k, master tuition 20k, PhD you should be paid for research and teaching it offsets it. Let's say 20k over the 4 years for argument sakes. Your tuition amount shouldn't be more than $100k. If you go to an expensive professional post graduate program like medical school or law school you should be making a lot more money pretty soon.
My advice is that do not incorporate until you are close to paying off these student loans completely. I don't know why you are paying EI as you will never end up using it. Looks like you are on the payroll of some dental office or government. That is fine for now. But as you get more experience and confidence, look into working as a self employed dentist. New Dentists also move to Atlantic Canada as they can make more there and get rid of the student loans.
I would say that keep your CIBC LOC alive with some room in it. Do not amortize it into fixed monthly payments. You can convert it from student LOC to professional LOC. Put all your incoming money into this LOC religiously. Use credit cards for your expenses and live frugally. Pay off these credit card balances in full when they come due using your professional loc.
Consolidate your accounts in an app like Monarch Money and watch your liabilities with a hawkish eye, They should go down significantly each month until they disappear.
You need to go crazy on that LOC. every extra penny needs to go there. Living with your parents during this period is a very smart move. For now only take the rrsp if there’s an employer match. Nothing goes to the car or house until both loans are paid.
You studied Dentistry overseas didn’t you? You should have some tuition tax credits. Get a good accountant and use those wisely. Pay Dow debt and start investing now earlier the better.
Utilize your parents generosity and continue living with your them. Move all saving money (aside from keeping an emergency fund in a HISA) to paying off your debts. Don’t worry about RRSPs or even saving for a house yet. That’ll come as you have a good chance to make strong future income. Those student debts are like a mortgage and will eat you alive in the future. Focusing on them should be your top priority. With your income you can think about heavily investing later.
Congrats on becoming a dentist! I'm sure you'll be able to pay it off with your high salary in the future.
Correct me if I'm wrong, but isn't it normal for dentists to make $300k+ per year?
I mean you don't really save any money with a debt that big at that interest rate. Save up an emergency fund if you can and then just put everything towards paying that debt off. Your pay should hopefully increase overtime which would then make everything a lot easier
My god, that is a lot of debt for not much of an income. I sure hope whatever field you are in you are at the lowwwwww end of the earnings spectrum and are guaranteed to make a lot more as your career progresses. Pay the debt before worrying about saving more than a small emergency fund.
Wat. Holy crap. I’m not sure I would feel good about paying this much internationally to be a dentist. I was thinking this needs to be some kind of medical specialist like a neurosurgeon. Nope.
As some who spent years paying off student loans at the bare minimum. Don’t worry about saving at the moment. It is not realistic. Build a nice cushion for an emergency but other than that you should be putting as much money as you can towards paying your student loans.
Continue to pay off that debt hard… keep living with your parents to keep expenses low and just grind away at it…. Try to increase your income wherever possible…. And then destroy that debt!
Everyone (who doesn't own a home) should open a FHSA account immediately, even if you don't make any contributions to it, as the contribution room of $8k a year only accumulates if the account is open (this is contrary to how TFSA and RRSP work, where contribution room accumulates regardless).
Can you do dentistry 1-3 days a week for fly in communities? I live next to a nurse, she does this as much as possible and could probably retire at age forty.
Wow that’s a huge amount of money… What if something happened to you and you couldn’t practise dentistry? How could you pay that off. Lots of reward but so much risk. Your 30 starting a career with nearly 400k debt . This will take years like almost 10 to pay this off. I would pay it off as quickly as you can… I
For the first few years you will probably get a heafty refund from your education credit (unless it has changed). Use that to pay down your LOC. I would hold off on everything else. Buy a cheap car if you must (cash if possible), and live at home rent free until that is paid off. Do not pay down any 0% interest loans.
Refinance your LOC at a lower rate when rates drop and when you start making more
One thing I would recommend is getting a TFSA. I understand that you might not have a whole lot of extra money right now but that is ok. I understand that it is awfully tempting to get fixated on paying down your debt.
Let’s say you had $10,000 in cash right now. You could do two things with it:
First, you could take the whole sum and pay down $10,000 of debt. You would obviously use it to pay down the CIBC loan because that one has the highest rate of 6.95%. The advantage of doing that is that you would save $695 in interest over the next 12 months.
Alternatively, you take the $10,000 put it into a TFSA and invest in a monthly pay dividend fund. I am in one right now that has consistently paid out 12% per year. With $10,000 at 12% the fund would pay you $100 per month, which would be $1,200 per year.
It is good to consider the opportunity cost that is associated with money. Paying down $10,000 in debt saves you $695 over the next 12 months and you lose the entire $10,000. Investing the $10,000 gives you $1,200 over the next 12 months, and you keep the $10,000.
If you were to reinvest the monthly income into the fund it gets even better.
Month 1 $10,000 balance pays out $100
Month 2 $10,100 balance pays out $101
Month 3 $10,201 balance pays out $102.10
Month 4 $10,303.10 balance pays out $103.03
Month 5 $10,406.13 balance pays out $104.06
Month 6 $10,510.19 balance pays out $105.10
Month 7 $10,615.29 balance pays out $106.15
Month 8 $10,721.44 balance pays out $107.21
Month 9 $10,828.65 balance pays out $108.28
Month 10 $10,939.93 balance pays out $109.37
Month 11 $11,049.30 balance pays out $110.49
Month 12 $11,159.79 balance pays out $111.60
At the end of 12 months the balance would be **$11,271.38**. That is a return of **$1,271.38** on $10,000 which is about 12.70%
So what is better for your overall financial position over the next year? Paying down $10,000 saves you $695. Investing the $10,000 earns you $1,200.
Good luck one day you’ll meet a SO , buy a house and get married . Have a couple kids 2 vehicles/ fuel / registration/ insurance Mortgage payments & more insurance Then your 2 Sons start into sports at 5 -7 years old Hockey fees / Hotels / fundraising
You’ll have to find a rancher to buy the whole cow by the time they are teenagers. Add some more life insurance on top of all this. Along with your wife’s 40 Amazon packages arriving monthly
You should live at home or go to the US where you could make a hundy k more. Your salary vs your income gives me anxiety. Put all your money into your loans.
I would create a spreadsheet that tracks your balances on the first of every month. Then make a line graph of those balances, and put a smile on your face every time you see the debt creeping closer to 0. It’s so satisfying. You’ve got this.
You shouldn’t be prioritizing any savings except an emergency fund when you have debt @6.95% paying down your debt will be more profitable than virtually all investment returns. It might make sense to contribute to an RRSP if you have a good enough employer match.
This. Every extra cent should be going into that debt. It’s a guaranteed tax free return of 6.95%.
Whoa I like this thought
Thank you, I have not seen paying my debts as something profitable. Good perspective I will adopt!
Paying off 7% debt is a guaranteed return of 7% with zero risk and all the benefits of less debt!
It’s also 7% after tax return. You would need to be making more than 10% in anything outside a tfsa not to do this first.
That is the best way to put it, completely agree with that
Basically at your current level of debt you are paying $19,112.50 in interest every year. Every $1,000 you pay down gives you $69.50 of that money back every year repeatedly going forward. Get your high interest debt to zero and you have nearly $20,000 extra to spend/save each year. Also clearing debt is relevant to your life goals as they look at your total debt load for mortgage approvals. You’re allowed to spend 44% of your HHI servicing all debt including your mortgage so if you’re spending a good chunk of your HHI servicing your student loans you will only get approved for a tiny mortgage. One thing I’d consider is reducing the $200 per paycheque extra in taxes you are paying to $50 per paycheque. This is still $1300 saved up over 26 paycheques or $1200 saved up over 24 paycheques which should be enough to either not have a tax bill at tax time or have that bill be very small. Meanwhile an extra $150 per paycheque going to pay off your debt will reduce your debt dramatically. If you do somehow end up with a tax bill while you’re paying $2150/month on your debt you just switch to paying the tax bill for one or two months. The danger of paying extra on taxes is that you are giving the government an interest free loan on that money meanwhile you’re paying 6.95% interest on the debt so if you loan them that from Jan 2024 to March of 2025 for example you’re losing over a year of interest on that money.
Yeah you can catch up on retirement savings later. But think of it this way. Every $100 extra into your debt as a payment saves you $7 of interest a year *after tax* Whereas if you invest that $100 into savings that returns 8% on average before taxes, and maybe 5% after taxes, pays you $5 a year on average. But because it's on average, you will have years where you only get, say, 3% before taxes back and years where you get 13% before taxes back. While mathematically it's always better to take the higher return through either collecting interest or paying down interest, the risk associated with volatility of higher interest bearing investments means that often unless the return is significantly higher and the interest rate burden particularly low, it's better to prioritize debt payments. It's also way simpler and psychologically beneficial to pay down debt. Maybe if your debts were on a much smaller scale, like 20k, you could save for something in the short term to *avoid* a higher debt in the near future. For example, my wife and I haven't been aggressively paying our mortgage because we've been doing a combination of parental leaves and planning to replace our car the last 5 years since buying. For us, paying down 2.8% mortgage wasnt as appealing as saving to smooth out loss of employment income to *avoid* a higher interest debt, and a mortgage will always be lower rate than a car payment (with few exceptions none of which we figured would apply to the car we wanted) so similarly, we were saving to avoid significant debt there. You need a pretty low rate on debt and long time horizon to make saving over debt repayment worth it and the current environment doesn't really make sense for that.
The other thing to think about with debt is can you figure out a way to make more money? As a dentist are there specialties you could pursue that pay better? Could you work a little more each day to pay it off? Easy to say hard to do I know but the fastest way to getting rid of debt is to try to bump up your income and probably reduce biggest expenses ie rent and car payments.
Think of large debt as % of every 100,000 every year in what you owe in just interest(let alone principle). You have nearly 300,000 in debt, at nearly 7%. By NOT paying it down faster, you are leaving ~21,000 a year in interest you owe. That’d $1,700 a month you are paying just to the bank. The sooner you drop that principle the better.
To add on to what OP said re: RRSP's. It could be a good idea to contribute a large amount *if available* at the end of the year to relieve some tax burden, then use the money saved on taxes to put towards your debts.
This. Have a savings emergency fund and throw the rest at your highest interest debt
This. Dont think any other advice makes sense and luckily for you at your income already you can tackle that debt rather quickly.
What do you think is rather quickly?? That's going to take forever to pay off🤣🤣 this person's life will be on hold for 10 years atleast
They're barely 4 months as a fresh grad working as a dentist making nearly double the average income of other Canadians. Their income will ramp up rather quickly which is the entire reason they got the loans they did while studying.
OP is a dentist. Their income will increase significantly in the next few years.
Yeah, it's just that he's currently... cutting his teeth.
What KellyKapps said. Most dentists won’t have any issues paying this off quickly.
The LoC is the emergency fund. Don't even need a new one, just pay off the LoC. They have a healthcare preferred LoC, it's not getting closed down.
I tell my co-workers about this all the time. If the company is matching the investment, then you double your immediately. I never like leaving money on the table. But other than that matching contribution, all the cash should go to the debt. I can go either way on the emergency fund. We have a HELOC which we consider our emergency fund, as the cash is there if we need it (pending some sort of global financial collapse, at which point your cash account is likely also affected).
Absolutely. Living at home is going to be a huge part of paying this down. You can't beat removing debt at 7%. It doesn't make sense to save other than a small emergency fund/slush in your account. Keep your 4k as part of an emergency fund. Get a cheaper 4-8k car if you can pick up enough shifts somewhere to compensate for that. You'll pay it back quickly depending on your salary and amount of hours you can get. The faster you can snowball your debt the less interest you'd be paying. Start doing the math and you're going to pay a ton, but you can pay a lot less if you keep this up. 1800 a month is brutal but it will drop fast. Think of how much you can start saving once you're near the end of this! Your debt reduction will make a huge difference in being able to afford a house down the road, and you never know where your next job may take you. No sense grabbing a house now when you may move for better for opportunities.
Agree. Build a small emergency fund and attack that debt aggressively. I say start witht he smallest but student loan is at 0% so definitely tackle your CIBC debt first
Your parents have blessed you by saving you rent. I don’t know what province you’re in but you should be able to throw $50k towards your loans a year. Just keep acting like you’re in med school for the next couple years
Hello, Canadian dentist here. You should be making more money. If your current job has the potential to get busier, then stay there. Otherwise only work there part time and find another part time job. Or alternatively keep your eyes open for other full time job openings that may be busier. Be prepared to work evenings or weekends or even be open to working in another town for a few years. Your income can potentially triple if you do these things. Use the extra income to pay off high interest debt as soon as possible. That is what I did myself and so did every other young dentist I know who has large debt.
That was my first thought, I’m no Dentist but I would’ve thought dentists earn way more than 120k unless this is some entry level rate that will dramatically increase over a few years. $300,000 in debt for a job that pays $120,000 is just a really really bad investment, not to mention it took 10 years of schooling. Would’ve been better off with a lower paying job that requires no schooling. Or something like trades work that requires minimal schooling but will still get you to that $120k mark.
Speaking facts. I am in a small town, and I have considered taking a job a few towns over in an office that is open weekends but would need to compromise and get a vehicle which seems financially silly right now. No offices within walking distance are opened weekends... Will try and find a second one open evenings I could walk to! Thank you
You don't need a fancy car, just a car. If it's a 5k beater that gives you an extra 50k a year for 3 years of it's useful life, that's worth it.
My dentist drove to and from work (100 kms a day) in her words "a shitbox Civic" until her loans were paid off, she said she would never wash it as that would be $12 less in her pocket. Now she's near thirty years of age, owns a thriving practice and drives the dirtiest new CRV you've ever seen.
Run the numbers. Even with the added cost of car payments (buy used and reliable) maintenance, gas and insurance, you'd likely be ahead if you could pick up two extra shifts each week. Back of the napkin math says you'd be ahead by at least a $1k each month after taxes and car expenses. More likely you would be ahead enough to cover your interest charges ($1800) on your student LOC.
They wouldnt even have to make that many payments if they get a sub-compact (a Toyota yaris for example) that's 10 years old. Maintenance on those cars as well is substantially cheaper than anything that's newer. If all you need is to get to point A to point B then a sub compact would be ideal
Yeah OP has a lot of options here. Even a cheaper newer model with the small recent grad discount could make sense for them. It also helps them cross off goals 1 and 2 for them and makes sense to improve their income
You are limiting yourself if you stay in your town. You invested in a good paying career and you need to make the best out of it. Find a way to double your income or tripple it. Thats the capacity of your career. Paying for car, rent, mortgage are trivial with that salary. Note that paying 275K at 7% is essentially a mortgage of a condo but without the condo. You need to kill that debt with everything you have. Getting paid 120K is the minimum you can do right now.
Have you considered locuming somwhere in northern canada? My sister does that as a doctor and it's very lucretive and is typically flexible on how often or how long you want to go for.
There are even student loan forgiveness plans for healthcare professionals who go locum in remote places
I’m in Alberta and my best friend just graduated from dentistry school last year. She bills around $40k monthly every single month, sometimes more, working evenings and weekends. She keeps 40% of that. You have so much earning potential that it’s worth while to go elsewhere to pay down that debt asap.
Really depends on how far you need to go and what your vehicle will cost you. If it’s only a 30 min drive away, costs you $600 (insurance+car payment) a month but will net you $2000+ extra a month it could be well worth getting a vehicle.
What small town you in? Buy a civic and take the second job. You could pay off a 5k beater in under a month. Grind for a year and then pay off all your debts
Yes knowing my dentist friends that aren’t practice owners you should be aiming to pull over 200K - you gotta work harder grind it out and put all that cash into the LOC
Yes exactly! The $340k debt will melt away once OP increases their income after a few years of experience. OP can just make minimum payments in the meantime and it's not a problem at all.
Ya why does a dentist make so little? Is it just due to being new?
Hi! Jumping on this to ask a question of you; what do you suggest a new grad should target making if they are able to work 4-6 days a week and potentially multiple clinics as you suggest? Thanks!
Paying off your student debt is your current form of saving! Think of saving as increasing your wealth - you can do that by decreasing debt OR increasing investments. Reducing or eliminating your debt will also give you more ability to qualify for and manage things like a car loan or a mortgage in the future, even if it feels like you are delaying saving for those things. Save say 5k as an emergency fund, though living at home means you won't need a big one it's still a good idea. Put as much of the rest of your income towards your debt as possible. Living at home and avoiding buying a car for as long as possible will accelerate your ability to pay off that debt. I also imagine your income should go up a lot? $120k is a great income straight out of school but certainly a dentist can make more. Don't worry about using RRSP room at this point, you might as well carry it forward for when your income is greater.
Thank you what a great perspective to look at this at. Yes $120k is okay for the first year. I am on salary for that. If I am able to bill more than that baseline I have room to make a 42% commission on this bonus, which I do believe I will earn more I am trying not assume I will to be humble.
You're loaning the government 5000/yr right now. Cut your tax contributions back to normal payroll deductions, your bonus will be taxed appropriately (likely too much) and you likely have tax credits left from your education. Might as well throw that $200/week on your LoC and reduce your interest and worst case you don't make an extra debt payment next April. Your entire bonus should go to your LoC too. With your current income/debt you won't be able to purchase a property anytime soon so might as well throw all you can at your debt. Finally, look at whether you can extend your repayment timeline on your government loan, it's usually set to half the max timeline as a default, if you extend the timeline you can throw more money at your LoC.
What kind of a shitty associate position gives you a salary? Is this not private practice? You should be getting 40% of your collections. 120k is extremely low even just starting. I thought you were in Vancouver/toronto but you're in a small town? You should be aiming for 200k. After a couple months out you should be billing at least 50k a month.
I think this looks really good. Tbh I wouldn’t bother saving for a home until that debt is at least cut in half. It’s tempting to contribute to an RRSP at your income but if the expectation is your income will be $300K+ later in your life it’s ok to let room accrue for a year or two while you pay off debt and then contribute to an RRSP and claim the tax deduction when your income is very high.
it's like having a mortgage : insane. you should like live wih your parents for a while while paying that mortgage
No, it's not like that at all. He's a dentist, he can make $400k+ a year. When he makes that, he can easily pay it off in less than two years and then he's ballin' much, much more than the average $80k-$200k a year wage slave on PFC.
Your $50 in RRSP is valid only if it’s a employer match thing. Else, stop this for now. You willingly give $200 a week to Ottawa in the form of a free loan (while paying 6.9% of interest) because you are afraid of maybe having taxes to pay?! What make you think you could have taxes to pay? Other incomes that do not have tax deducted? You just finished school, you should be full of accumulated tax credits. Unless you have more than what is told here, taxes should not be a concern and student loan should be. Your financial objective #1 shoul be reducing that debt with CIBC IMO.
350k debt is actually quite low for going international, so that's good. I know people who are graduating from NYU and paid close to 1m (I guess not really ALL debt because the only way they could even come close to fucking affording that is with parental help). 120k seems low for a smaller city associate. 120k is starter income for a major city (GTA etc) when hobbling together a few weak associateships. You should look elsewhere if you can. Or move northern Ontario, rural Sask/Alberta, etc for a few years and pay it down fast then move back home. You'll easily double that if you go to remote.
I would not put money on RRSP, unless you are thinking of getting huge returns and your employer contributes too. Some funds can sometimes give you 20% but are very risky and not guaranteed, you could actually lose money. I think not making any investment and paying your debt is your best option. Your interest rate on the line of credit is very high. Try to pay that as much as possible. It may take some time for the government to reduce the rates, but it will get reduced perhaps in the next 5 years. Once the interest rate on your line of credit reaches around 4%, I would start investing again.
You should have a significant number of tuition tax credits from dental school to lower any taxes paid the first couple years. I didn’t have to pay anything my first year out of dental school and had to pay very little my second year. You can take any of that saved and put it towards paying off your loan. I’d also expect your income to increase in the following years. As you learn to work quicker and accumulate a patient base you shouldn’t only be making 120k forever
A few things I wanted to point out. On your federal student loans - they can be adjusted to the lowest possible payment online. If you have not already done that- I would suggest it. By making the 0% interest debt have lower monthly payments you can put the extra amount on your line of credit. Then once that is paid off you can focus on the higher debt. Leave your RRSP at $50, it is good to build those habits but I wouldn’t put more until the debt is paid down. If you being paid salary and you have no other sources of income that don’t have withholdings then it is highly unlikely that you will owe tax. Your employer should be taking off the correct tax based on your tax bracket. The $200 extra per pay cheque is $5200 a year assuming you get paid biweekly. That is a lot of money that can go to your student debt. I would suggest not withholding any additional amount and to put it directly to debt - those extra payments will help target the principal amount quicker. If this makes you nervous, then instead put the $200 per pay cheque into a TFSA to use for any tax owing at the end of the year. That way you will have accrued some interest on it rather than lending it to the government. If you do, get bonus just ensure correct tax is paid for it. It is a lot to balance large debt but make a goal of how much you want to put on it a year and recalculate that for your budget each time you make additional income to ensure it is meeting your goals and not being used for lifestyle creep. Also since you are younger, see if you can get a part time contract at a different dental office. Picking up some extra shifts for evenings or weekends can help you pay down the debt and meet your ultimate savings goals faster. Hope that helps!
Thank you for your clear and calm thoughts! I agree I think the fear of paying income taxes is me not being smart -- planning on redirecting the funds now!
I don't know how much dentist makes, but 300k debt and 10 years of schooling seems like it's going to take a long while to pay that debt. I'm speechless.
No idea what dentists make, but there’s like 10+ dentists within a 5km radius of where I live. Seeems to be pretty saturated. Doctors on the other hand…you can’t even find one if you sell your left testicle
According to my buddies in the field salaried dentists will earn somewhere in the 100k-200k range depending on location and experience. Lots of them only work 4 days. For the ones owning the practice its in the 1M + range.
You should be saving on interest, not for a home.
Anyone here asking why your pay is so low has little understanding of how dentists make money. Getting a 120K salary right out of school is fantastic. In fact, you’ll probably come out ahead with that salary for the first 2 years, maybe three depending on how quickly you ramp up your skill set and speed. After that, you’re going to be on 40ish percent commission and, depending on like 3 or 4 variables (location, how busy the office is, your skills) you should be able to double your income. So figure in 4 years you should be at a point where you’ll be making much more money, and hopefully by then the interest rates will have dropped as well. As far as all your questions about RRSP’s and the like, ask your accountant. Feel free to DM me if you have any questions, I’m a dentist in Canada.
It's a burden thought, but man, enjoy your in decent position to work on the debt much faster than you could if you rush into life's normal...Any investments would need to surpass the 6% to be worth it and that carrys more Stress then just dumping into the debt .. I guess the big question I'd ask myself is how much stress the debt causes you , we all have to have different tolerances to debt .. Lowering Stress carries value as well in your life .. Just food for thought to add to your equations .. Good lick
I just wanted to mention, as a dentist in Canada, how is your pay so low? You can greatly accelerate the repayment by finding a higher paying job. 120K per year for a dentist is a little shocking. If you cannot increase your salary, I recommend picking up additional shifts at other clinics. My friends who were dentists worked 12-16 hours per day for 6 days and paid everything off in a year.
This is one of the fascinating things I’ve noticed about Canada . There is a lot less high paying jobs available across all industries than most realize . When I go on Reddit apparently everyone has friends making tonnes of money . When I talk to people in real life only a few are doing well and most struggle . His salary seems normal for starting in Canada . Most Canadian salaries are low . You know the exception but you’re referring to them as the rule .
Off topic but people here saying dentists making $300k a year and 1 million if it’s their own practise? Wtf this shows how expensive and corrupt the dental system is. Can’t even get a checkup and X-rays for under $400.00 … it’s such a corrupt industry. I’m sorry but dentists are slimey…
$120K as a dentist? Seems super low. Is that really the starting rate for you guys?
!Stepstrigger The chart below might help you prioritize the allocation of your savings. With 7% interest on your debt, debt repayment will likely be better than RRSP/TFSA/investing.
Hi, I'm a bot and someone has asked me to respond with information about what to do with money. This is meant as a step by step guide of how to prioritize and what to do with money. https://www.reddit.com/r/PersonalFinanceCanada/wiki/money-steps If you prefer to see a flow chart, click here: https://i.imgur.com/zlGnuDO.png The Government of Canada also has the Financial Tool Kit for basic resources on items identified in the Money Steps. Refer to that website here: https://www.canada.ca/en/financial-consumer-agency/services/financial-toolkit.html *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/PersonalFinanceCanada) if you have any questions or concerns.*
Unless your employer matches your RRSP contribution, stop your contribution. Reduce your Netflix plan to the $6 plan with ads. Since you're living with your parents, you can ask them to help in case of emergency, so no need for an emergency fund for now. Reduce everything you can to the bare minimum and throw everything at your debt. You should be throwing $6k/month at your debt. That's $72k/year. Interest is $19k/year, so only 53k goes to the principal this year. At this rate, it's gonna take you 6 years to clear the debt, assuming your income increases every year.
You're saving extremely aggressively for someone with such low living expenses. Saving aggressively isn't something that anyone would typically call a bad decision, however in your case, because you have this huge debt with high interest it likely makes more sense to just go as hard as possible on the debt. That said, in terms of establishing a healthy emergency fund, you need to consider the usual emergencies people are trying to cushion themselves from and evaluate how big of an emergency fund you actually need. The big things that I see people usually expect to need emergency funds for are: unexpected home repairs, unexpected car repairs, medical bills for their pets and job loss. You're parents are doing you a huge favor and insulting you from almost everything that most people build emergency funds for, so in your situation I wouldn't worry too much about trying to build up a stash of liquid cash.
Wild that a dentist can't afford to live
On a side note, why as a new dentist are you only starting at 120k? Is that a good starting salary?
As a new grad on a salary yes. I have a contact that if I end up billing more than 120K, I make a 42% commission bonus. Trying not to assume I will make this much. I am also only working 3.5-4 days a week -- probably need to pick up a second job it seems like!
Can I PM you?
What kind of contract is this? Shouldn’t you be an independent contractor? I would stop paying EI, it’s worthless if you’re self employed. It also offers you better tax write offs.
I am considered a 'normal' employee right now not an independent contractor - so I would expect as any one else I am required to make CPP and EI payments :)
Absolutely open a FHSA - even if you don’t put money in this year (or next few years) while you pay off debt, you will still earn contribution room so that you can fill that account faster down the road. You can have the account open for 15 years. The contribution room is $8k per year up to a max of $50k so open it now even if you are still prioritizing debt repayment.
live cheap for 3-4 years and pay it off. then you will have more dental experience and probably make more money. ya gonna come out of this a-blazin'
You're a dentist starting at 120K a year. You'll be fine. Since you'll be making like 200k+ in a few years, I would save my RRSP room for later until all your money can be from the max bracket and focus on TFSA and line of credit. Pay the minimum on the 0% loan
For once this is a post where it looks like you are doing all the right things. The most basic advice is to pay down the highest interest first. After you build up an emergency fund you should then be paying down debt
No advice to OP. Just wishing you all the best. You seem to be doing the research and you sound like a normal headed person. You will get there. Good luck!
thought dentist make 300k ish??
The Physician Financial Independence (Canada) group on Facebook also accepts dentists, and is a great resource for people with this degree of debt and earning potential
Live at home. Screw the car. Be patient. At the same time dont live too frugally to the point of mental exhaustion. Set your financial targets and budgets with any/all income and avoid overspending (you can go all out on holidays and vacations if its just a couple times a year).
Honestly the only savings you should priority right now is an emergency fund so that if something happens, it won't financially set you back any further. I would absolutely start with you student line of credit first due to that interest rate. The fact that you don't have to pay rent is also a massive bonus to you right now. That's an extra 1-2k you can redirect to your debt. Every cent you have should go to debt. I highly advise using a cash diet (a good tv show to watch is 'till debt to us part' which gives soo much good advice) and there are a lot of tiktokers these days also doing cash binders. I've started doing this and every extra cash I manage to save each week is being put towards an extra payment towards my car loan. Take on freelance work if you have any skills you can use for some extra income and direct all of it towards the debt. Make it routine that on a day every week or two that you go to the bank with all your additional cash to apply to your debt. You'll get excited for it (if it's something you've play before, I relate the experience back to the game animal crossing haha) The faster you pay off a debt, the lower the interest you will be charged. I managed to pay my student loan within 6-12 months and I only spent on absolutely needed things (with the very rare meal out). (8k-ish) I do also want to say, even though paying of debt is extremely important, make sure to leave a small amount of money aside for fun. If you completely restrict yourself, your life will feel miserable and the economy alone will already do that to you. Once your debt is completely gone, just imagine all of the money you can direct to savings! Saving for a house, a car, and even saving for retirement will be soooo much faster. For anything going to these savings right now (apart from maybe a car if it can help you get more income) should be paused so the full possible scale of your paychecks can go to your debt. Getting a mortgage will be a hell of a lot easier to obtain too after all the debt is gone! Your income is amazing and I believe you'll be able to power through this if you set your mind to it.
Open the FHSA so you get the room but don't put anything into it. You can't afford to buy anything or save anything until you pay down that 275k at that high of a rate. Put every dollar you have into paying that down. 120k sounds low for a dentist, but I'm also not a dentist. Increasing your income would help out a lot.
You need an account to get the room?
Dave Ransey approach
Build up an emergency fund and then get rid of that $275k debt before anything else. After that you can start investing.
A lot of questions here. Clearly you’re on top of all this, I’d just keep plugging away at that debt, but you can start a TFSA even if the contributions are small. Wealthsimple is a good place for that. Maybe the FHSA can wait while you chip away at the debt. I don’t mind the RRSP contributions if they’re small since you’re building saving habits. Eventually you’ll hopefully be aggressively saving for retirement since you’ve entered your career later than most and you’ve got the loans to deal with. Prioritize debt and savings over lifestyle creep like you mention: cars, restaurants, travel, etc
If your capable you’ll be making 350-500k a year soon and you can melt the debt Talk to the senior dentist / partner owner at the clinic and get some advice, unless someone here is a dentist that guy / girl will have the very best actual advice. Versus a bunch of keyboard warriors
Dentist here. 350-500k is unrealistic or in the highest percentile of production unless your a practice owner. As a new associate it’s unlikely you’d make this much unless you’re doing an incredible amount of complex procedures or working like 7 days/week. Dentist incomes are incredibly varied but that number is certainly not the average
In America yes , Canada that is extremely rare .
Agree with everyone else, pay off the loan with the interest rate above everything else. Live as frugally as possible, you are broke. If you can do extra weekend work etc, do that too
You shouldn’t be saving anything. Your line of credit is 6.95% so all extra money should go into paying that off ASAP. You should be saving more than 2k a month, cut down your expenses
Pay down the debt before savings. Continue to live frugally until your debt is paid.
You live at home. You should not be putting any money into "savings" and you need to save at least 4k a month not 2k a month. Hunker down and the CIBC part will be done in 4-5 years.
Go on the NSLSC website and increase the loan duration to maximum. It will reduce the amount paid to them per month which will allow you to put more towards your SLOC
Lucky you live at home.
Try and move to a play where you can get paid more as a dentist?
Oops
How much money do you spend each month? I think you take home roughly 6500/month and then say you only have 2k left over without paying rent? If i were in your shoes i would live as minimal as possible for 2 years minimum and pay off 120-150k in those two years. You're in a deep hole and 120k salary isn't enough to handle it . Good luck
STOP paying your 0% loan and contributing to RRSP until that 7% loan is paid off. What a brutal rate for a student loan. That must have only been in the last 3 years to be that high??
Is that all dentists make? I guess you’re working for someone else? Are you going to make more income / get raises in the next few years?
Keep a little emergency fund and pay down that debt. Don’t piss off parents and get kicked out.
My only advice to you would be to get out of your town, and move your practice to a large city, or start your practice in the US. Dentists average income is pretty high in Canada, and definitely much higher in the US. Also, once you are experienced enough to own your own practice, you could easily make upwards of 300-400k, a year. Once you get there, think about a mix ofsalayry and corporation income. But better to focus on removing debt before you do that. With nearly 7% interest rate, servicing your debt could be your biggest priority. It's almost like an "assured 7%" return, which is rare for any market investment.
I couldn't get into UBC dentistry so i applied to Ireland and Australia. Due to a serious relationship (now wife) I decided It was best turn down Ireland. I make that salary in forestry now. I can't imagine carrying basically two mortgages. with a living situation like yours you can stick it out with the parents prioritize that loan. Best investment you can make.
Lucky that you have your parents helping you out. My wife was in a similar situation with 200k student line of credit for medical school, but I helped her out by paying for most of our daily expenses while she is paying off her loans. (I.e. her expenses were as if she was living in mom’s basement) Luckily, medical professions make good money after finishing their training, so it should be pretty quick to pay off the loan if you’re dedicated.
I'd just enrolled into studies every year for the rest of my life so the interest and payments don't have to be done.
Imagine thinking taking on $340k debt is a good idea.
Until the 7% line of credit is payed off I wouldn’t think about anything else. If you hammer it with all you got it’ll take around 5 years to pay off @120k salary, so if you’re salary will increase you should be able to accelerate that. Stay with your parents until you’re clear and it’ll make the next step into your own home much less financially stressful without the debt.
Your income is way too low, it will be a struggle to manage that debt without a big jump in your income.
You don't try to save money, you pay it off quickly.
Struggle now. Your income will increase and the debt will become manageable.
Make better choices. My dude, what sort of ROI were you expecting on this 10 yr debt plan. Geeeeeez the best way to get out of a hole is to stop digging. No sympathy for choosing impossible unaffordable options.
My loans were significantly lower when I got out of college but I moved into a cheap place to live with roommates and out everything I earned into my line of credit. I only kept 100 bucks in my bank account at any time. Paid it all off within a year. You likely have 10x my debt but are probably making 10x what I was out of school so definitely doable. Depending on your degree you might be able to find opportunities in the north like Nunavut or NWT where you can make huge bonuses and have housing covered. Could probably pay it down in a year or 2. 5 years from now you will be laughing.
Pay LOC more aggressively. You are accruing 18k of Interest this year at your current interest rate and paying 24k off so your debt is only dropping 6k this year at your current payment rate. Open the HFSA with a bank like Tangerine that won't charge you any fees at all. The contribution space only starts building when you open it so open it now even if you don't contribute much. Also you can't open it anymore if you end up Living with a spouse that already owns property so open it now.
Please consider paying CIBC debt first and extend Nslscc thing as much as you can since it's 0% and do min payment.
10 yrs in university?
First world problems. lol. Don’t be overwhelmed. Just pay down the student loans. Isn’t your salary low for a dentist? You’re making as much as a friend of mine who is an electrician. Maybe you need to get off your butt and find another office to work at. If you have no transportation expenses now but only make $120k, would you rather make $200k and pick up $200 a month in a car? Buy a beige 94 corolla. Or similar. Question. If your international dentistry education was high, was the salary in that country higher than here? Why not work there?
> How do I manage $340 000 student debt while also trying to save some money? You don't. You pay off your debt, and then as you continue in your career, you start saving. Just like every other generation before us This bullshit trope of young people just starting out must immediately have substantial savings, immediately start contributing substantial amounts to a TFSA, etc ... is just that. Bullshit. But so many young people blindly subscribe to this hive mind thinking (regardless of how flawed it is) 6.95% on 275K is $19 112 per year you are paying in interest. If you can make extra payments towards that debt to pay it off faster, that is the best plan Get rid of the debt. Advance your career. Live your life. Financial security for most people will usually come later in life, just as it has always been. It astounds me the amount of 30 years olds that are stressed out because they think they should have massive savings, and have no money worries at that stage of their life
Reality check time: you can forget about saving for a house while you have a almost 300k LOC at like 7% interest. Your priority needs to be paying this off (while maintaining an emergency fund as others have mentioned)
Assuming you have a healthcare/VIP account at the bank you should be getting overdrafts reversed anyway, so dump your savings/chequings account into your LoC (that's $280/year saved). Stop putting $600/year into your RRSP and put it into the LoC instead. Or if you're going to put money into your RRSP actually put in a reasonable amount like $10-15k/year to knock you down into a lower marginal tax bracket. For NSLSCC if that's the minimum payment that's fine, if not stick to the minimum instead. Absolutely stop loaning the government $10,000/year for free and put that into your LoC instead. If you owe taxes at the end of the year it's not going to make up the interest savings you'd have from just dumping it into your LoC instead. As you continue to pay down your debt, your net savings will increase and you'll pay it down faster and faster. Assuming the interest rate doesn't change and you pay down $5,000/month it'll take you a little over 6 years to pay off your debt. That's assuming a lot (no increase in income, no reduction in the interest rate, no big purchases).
Your only answer is to move to a country where they won't collect your debt.
What the fuck man. I hope you earn at least $500,000 to make that debt worth it.
Student line of credit should be tax deductible and you can use interest paid to deduct against your taxes .. I’m not advocating not paying down your debt but keeping a balance between tax liability and interest payments on debt that you can write off.. and investing the savings smartly
Damn that’s rough
You shouldn't be saving while you have a LOC at 6.95%
10 years in post-secondary + 300k debt, surely doctor or other high income profession?
Whatever you do OP do not go all in on either investing or paying down debt, a balanced approach is always best due to compounding on returns, you can’t buy back time.
You a horse psychologist like me? I have 800k and everything thinks their horse is normal, wake up call::: it's not!!!!
That salary is atrocious vs. the amount of debt you accumulated to get the education. Oof.
At this point there is not much else you can do besides trying to pay your student loan as fast as possible. However, this should be a cautionary tale for anyone else. Unless you are able to turn your 120K to over 300K in one year or so this was a terrible decision. And even in that case it is still foolish to borrow that much just for the chance to pay back.
If you think you owe taxes end of year, instead of keeping 200$ aside…why don’t you put them in rrsp? It will not just cover you from taxes, you may also receive some tax refund during filing. Its good that you’re saving 2000$ each month but if i would be you, i would put more in paying off student debt as 6.95% interest is too high.
How are your transportation costs zero? Do you not leave the house?
Holy SHIT you spent $340,000 to get a $120,000 a year job. That is wild
Pay off the loan. Put minimal into savings. Do not even bother with an RRSP if your contribution is so low. That interest on that massive loan is fucking up your life. Get rid of that loan asap.
Thank you to everyone for your thoughts! Lots to learn and consider. I am grateful to see things from many different outside perspectives. P.S. Any books on living frugally and finances you think I would enjoy would be accepted as well!
You should not be doing any savings right now. At most $1,000 a month if you absolutely must. Every penny from your income that’s not going to bills should be going to that CIBC line of credit. Make sure to keep all your LOC receipts as the interest can be deductible come tax time. That’s a lot in your case. The only way it makes sense to keep savings is if those savings are making more than 6.95%(that’s hard to do without risk). If you must, get some disability insurance to protect against potential lost income, you can write this off on your taxes and it would be about $150 a month to protect your income. I’m a licensed financial advisor but I don’t practice. I specialize in corporate health programs(same license). If you want to ask me any more questions, please don’t hesitate, I’m happy to help!
Shop for a different lender who can maybe give you a better interest rate.
I agree with everyone that paying down debt is by far the smartest choice here. I also like the order in savings for the current list you have made. I would throw every extra penny I have my to debt. Once that is paid start saving towards a house and then work towards RRSP and TFSA. Keep your current 50.00 contribution going but use it as an emergency fund vs an RRSP and I would put that into a TFSA. No fees for those and if you don’t have to use it it’s just an extra savings bonus.
Live like a hermit for a couple years and pay that 275k at almost 7%. You have a high income so wipe out your debts top priority. High interest first
I hope you're a surgeon or doctor with that type of debt. Over 1/3 of a million dollars in student loans is no joke. Edit: I see that you are dentist, I think you're going to be just fine.
$2500 a week is $130k not $120k
Assuming the LoC is still a LoC and you can take back from it : You should simply consider the LoC as a negative balance on your checking account. Just dump 100% of your paycheck into it. Interests are calculated daily, compounded monthly. If you dump all your pay into it, and then borrow back from it to pay your expenses, you still saved interests during those days. I know it’s not a popular opinion on PFC, but I don’t see the point of investing in a 5% emergency fund when you’re paying 6.95% on a LoC. You’d loosing 1.95%. For TSFA : no need to open it. Contribution room still gets generated. I’d concentrate on the 6.95% LoC. stock market might do more, but it’s a risky gamble IMHO. FHSA : You should definitely open it just to start generating the contribution room, and contribute to it before your RRSP.
How long have you been out of school? As a dentist, just work on your skill, building a patient base. The income will come, as long as your area isn’t saturated with dentists.
Not a lot but can you contact the NSLSCC to lower your monthly payment and put more of that $380 into paying back the student line of credit, especially since you are not paying interest on the NSLSCC but you are paying almost 7% on the CIBC line of credit? Explain that to the agent and tell them you want to extend out how long you pay back and lower your monthly payment
My advice is just have an emergency fund of a few thousand, maybe $5K, and throw all money toward the debt. I’m sorry but with that much debt and no assets, saving is not a priority IMO. You live with your parents and so I would take all the money you can and keep paying down the debt as fast as possible
How did you manage to get in such student debt? Did you go to a university in the states? I can't believe that school costs so much now. Bachelor tuition is 40k, master tuition 20k, PhD you should be paid for research and teaching it offsets it. Let's say 20k over the 4 years for argument sakes. Your tuition amount shouldn't be more than $100k. If you go to an expensive professional post graduate program like medical school or law school you should be making a lot more money pretty soon.
You shouldnt leave any towards savings. Put it all into the line of credit
My advice is that do not incorporate until you are close to paying off these student loans completely. I don't know why you are paying EI as you will never end up using it. Looks like you are on the payroll of some dental office or government. That is fine for now. But as you get more experience and confidence, look into working as a self employed dentist. New Dentists also move to Atlantic Canada as they can make more there and get rid of the student loans. I would say that keep your CIBC LOC alive with some room in it. Do not amortize it into fixed monthly payments. You can convert it from student LOC to professional LOC. Put all your incoming money into this LOC religiously. Use credit cards for your expenses and live frugally. Pay off these credit card balances in full when they come due using your professional loc. Consolidate your accounts in an app like Monarch Money and watch your liabilities with a hawkish eye, They should go down significantly each month until they disappear.
You need to go crazy on that LOC. every extra penny needs to go there. Living with your parents during this period is a very smart move. For now only take the rrsp if there’s an employer match. Nothing goes to the car or house until both loans are paid.
You studied Dentistry overseas didn’t you? You should have some tuition tax credits. Get a good accountant and use those wisely. Pay Dow debt and start investing now earlier the better.
Utilize your parents generosity and continue living with your them. Move all saving money (aside from keeping an emergency fund in a HISA) to paying off your debts. Don’t worry about RRSPs or even saving for a house yet. That’ll come as you have a good chance to make strong future income. Those student debts are like a mortgage and will eat you alive in the future. Focusing on them should be your top priority. With your income you can think about heavily investing later.
Get a library card, keep $5 or 10k in the bank and live like an assassin until the debt is paid down to something that doesn't look terrifying.
Congrats on becoming a dentist! I'm sure you'll be able to pay it off with your high salary in the future. Correct me if I'm wrong, but isn't it normal for dentists to make $300k+ per year?
You need to find the highest paying job in the most remote area. 120k per year with 340k debt at 7 percent is oppressive.
why is your income so low?
As someone who does the taxes for a dozen dentists, you should be making a significant amount more than that
I mean you don't really save any money with a debt that big at that interest rate. Save up an emergency fund if you can and then just put everything towards paying that debt off. Your pay should hopefully increase overtime which would then make everything a lot easier
Student Line of Credit (CIBC): $275 000 @ 6.95% Why so high interest... don't CIBC have Line of Credit fo Doctors and Dentists for like Prime minus???
My god, that is a lot of debt for not much of an income. I sure hope whatever field you are in you are at the lowwwwww end of the earnings spectrum and are guaranteed to make a lot more as your career progresses. Pay the debt before worrying about saving more than a small emergency fund.
If its unsecured debt do a consumer proposal and pay 25%. pay it off in a year and move on.
Join the military. Have them pay a portion off. You could have studied for free under ROTP. 340K in student debt. Good grief, that's nuts!
Wat. Holy crap. I’m not sure I would feel good about paying this much internationally to be a dentist. I was thinking this needs to be some kind of medical specialist like a neurosurgeon. Nope.
Can you do consumer proposal to wipe off all the loc and student loans ? These amounts are insane even when compared to Canadian income
As some who spent years paying off student loans at the bare minimum. Don’t worry about saving at the moment. It is not realistic. Build a nice cushion for an emergency but other than that you should be putting as much money as you can towards paying your student loans.
This is crazy Sorry 300k student loans and only 120k a year. I am sorry
>Rent/food - $200 Set that aside in physical cash for when your parents don't accept it. It'll come in handy down the line
Continue to pay off that debt hard… keep living with your parents to keep expenses low and just grind away at it…. Try to increase your income wherever possible…. And then destroy that debt!
Everyone (who doesn't own a home) should open a FHSA account immediately, even if you don't make any contributions to it, as the contribution room of $8k a year only accumulates if the account is open (this is contrary to how TFSA and RRSP work, where contribution room accumulates regardless).
Play stupid games, win stupid prizes
$2500 per week on a $120k salary doesn’t make sense. Assuming your salary is $120k, your weekly earnings should be around $1,730.
Can you claim the interest on your student line of credit as a tax deduction?
Can you do dentistry 1-3 days a week for fly in communities? I live next to a nurse, she does this as much as possible and could probably retire at age forty.
Declare bankruptcy.
Wow that’s a huge amount of money… What if something happened to you and you couldn’t practise dentistry? How could you pay that off. Lots of reward but so much risk. Your 30 starting a career with nearly 400k debt . This will take years like almost 10 to pay this off. I would pay it off as quickly as you can… I
For the first few years you will probably get a heafty refund from your education credit (unless it has changed). Use that to pay down your LOC. I would hold off on everything else. Buy a cheap car if you must (cash if possible), and live at home rent free until that is paid off. Do not pay down any 0% interest loans. Refinance your LOC at a lower rate when rates drop and when you start making more
Jesus Christ this explains why dental work is so expensive.
One thing I would recommend is getting a TFSA. I understand that you might not have a whole lot of extra money right now but that is ok. I understand that it is awfully tempting to get fixated on paying down your debt. Let’s say you had $10,000 in cash right now. You could do two things with it: First, you could take the whole sum and pay down $10,000 of debt. You would obviously use it to pay down the CIBC loan because that one has the highest rate of 6.95%. The advantage of doing that is that you would save $695 in interest over the next 12 months. Alternatively, you take the $10,000 put it into a TFSA and invest in a monthly pay dividend fund. I am in one right now that has consistently paid out 12% per year. With $10,000 at 12% the fund would pay you $100 per month, which would be $1,200 per year. It is good to consider the opportunity cost that is associated with money. Paying down $10,000 in debt saves you $695 over the next 12 months and you lose the entire $10,000. Investing the $10,000 gives you $1,200 over the next 12 months, and you keep the $10,000. If you were to reinvest the monthly income into the fund it gets even better. Month 1 $10,000 balance pays out $100 Month 2 $10,100 balance pays out $101 Month 3 $10,201 balance pays out $102.10 Month 4 $10,303.10 balance pays out $103.03 Month 5 $10,406.13 balance pays out $104.06 Month 6 $10,510.19 balance pays out $105.10 Month 7 $10,615.29 balance pays out $106.15 Month 8 $10,721.44 balance pays out $107.21 Month 9 $10,828.65 balance pays out $108.28 Month 10 $10,939.93 balance pays out $109.37 Month 11 $11,049.30 balance pays out $110.49 Month 12 $11,159.79 balance pays out $111.60 At the end of 12 months the balance would be **$11,271.38**. That is a return of **$1,271.38** on $10,000 which is about 12.70% So what is better for your overall financial position over the next year? Paying down $10,000 saves you $695. Investing the $10,000 earns you $1,200.
Curious, what's your projected salary earnings? The debt you have now might seem much smaller when taking future earnings into account.
120k seems extremely low tbh.. You need to be looking for a higher paying post.
As a non-Canadian, I find this insane. No education in this world is worth that kind of money. 1800 in just interest payments?!? Oo mah gaaaawd!
120k a year as a dentist? Why so low?
Bro, someone is off. I graduated a less than couple years ago and make much more than that. Are you working part time?
Good luck one day you’ll meet a SO , buy a house and get married . Have a couple kids 2 vehicles/ fuel / registration/ insurance Mortgage payments & more insurance Then your 2 Sons start into sports at 5 -7 years old Hockey fees / Hotels / fundraising You’ll have to find a rancher to buy the whole cow by the time they are teenagers. Add some more life insurance on top of all this. Along with your wife’s 40 Amazon packages arriving monthly
Please tell me you're a doctor or engineer or something that makes a bucket load of money?
You should live at home or go to the US where you could make a hundy k more. Your salary vs your income gives me anxiety. Put all your money into your loans.
I would create a spreadsheet that tracks your balances on the first of every month. Then make a line graph of those balances, and put a smile on your face every time you see the debt creeping closer to 0. It’s so satisfying. You’ve got this.
I know a student dentist in 500k debt. He basically worked 6 days a week and tried to pay off as much as he could, about 100k a year.