Just getting started in this - looking for feedback on my general plan.
I've been interested in investing for a while now but I have also been a broke student for the past 3 years. Now I have graduated from law school, taken the bar exam, and realized that I don't want to work 9-5 for paychecks for the next 20-30 years. So, I have decided to start planning to achieve financial independence. I've heard talk on the podcast about how it can be very helpful to have a steady paycheck when starting out with real estate investing, for obtaining financing. So, I plan to use my legal career as a springboard to becoming independently wealthy.
I have about $150,000 in student loans. I also work for the state. My current understanding of the situation is that I am eligible for Pay As You Earn repayment and Public Service Loan Forgiveness, which means that I would just have to put 10% of my discretionary income (income left over after subtracting 150% of the poverty level) towards my loans for 10 years and then they'll be wiped away. So, I am thinking that it might be a good plan to plan on keeping a state job for 10 years while I make the minimum payments on those loans; according to my calculations, if I just made $60,000/yr for those 10 years, I could pay off the $150,000 in loans with only $40,000 in total payment, and the forgiveness is non-taxable.
Meanwhile, I can use the rest of my discretionary income to invest, using my steady paycheck from the state to obtain financing, and, after working for 10 years, my student loan debts can be forgiven and I could also have a portfolio of assets. At that point it would be feasible to go into solo law practice so I can work as much as I want while focusing more on growing my assets and my passive income.
However, I would like some feedback and I have some questions. Can some more experienced and sophisticated persons tell me if there are circumstances under which it might be a net gain to quit my state job earlier? I figured that the potential tax-free return from loan forgiveness probably makes it worthwhile but still, 10 years is a long time, and if anyone sees a better route, I'd like to know.
Second, what would be the best investment strategy while I continue to work? Buy-and-hold seems to a better complement to a 40 hour workweek compared to flipping or wholesaling because it requires less legwork. I was thinking I could just collect assets during the first 10 years. But, what I am ignorant of are the tax consequences of different methods. Am I correct in thinking that flipping or wholesaling would result in capital gains that would affect my Pay As You Earn loan repayments, while collecting and holding a portfolio would not affect my liability on my loans as long as I don't sell anything until 10 years are up? If that is the case, it seems like the far superior plan.
I'm just getting started on this and would welcome all feedback and suggestions. Also, if it makes any difference, I currently live in Alaska and also have ties to Washington. Thank you.