150k Student Loan Debt

17 Replies

If the loans have low interest rates then I would just pay minimums until you are able to pull in enough cash flow to comfortably increase your monthly payment. FHA into a duplex or small multifamily property to house hack. This would give you a taste of REI and land-lording, and if done properly provide you with extra cash flow to pay down those student loans.

@Joseph Georgi Student loans can not be discharged in a bankruptcy i.e. if can't make payments, they will come after your other assets. Something to think about.

Mathematically, I agree with @Christopher Krug but in real life having the spectre of 150K hanging over your head is going to cause you some headaches. Unless you're a doctor, engineer or some other high paying profession, I would suggest getting your debt down to a manageable level first - if only for peace of mind.

@Joseph Georgi It is hard to offer a solution without knowing the specific around your income (plus, that's none of my business). From a behavioral point-of-view, I would bring my debt down to a manageable level by aggressively paying it off. I would consider real estate investing after that. 

Don't worry,  you won't be getting behind because you will be able to make up for it owing to your high income potential. 

Originally posted by @Joseph Georgi :

@Omar Khan , if I start acquiring knowledge now about real estate investing, work on bringing down my debt, and  start investing in my thirties you think I won't be behind?

You won't be behind at all! But the same rules will apply - aggressively saving, conservatively investing and diligently following a plan. You will be ahead of most people purely based on your income potential.  

Its not just paying the loan and developing your billiables to earn income, you need to control your spending. I Suggest you consider your housing and car choices and read the debate on is your personal home an asset or liability. Maybe start by getting a house that either has income potential or value add. I bought my first house in grad school. You are in a profession that should be able to handle those loans but the flip side is that there could be pressure to spend more in you profession.
@Joseph Georgi , we had 120k and are down to 18k now. I’d reccomend refiing into a fixed low interest rate loan over a reasonable timeline. We used Sofi and I recommend them. We did 5 years at 4.25%. I’ve invested anything left over in my 401k and picking up real estate with low money down. Owner occupied 2-4 family FHA, 3.5% down is a great option. I did a trIplex and it has been awesome.
Originally posted by @Joseph Georgi :

@Omar Khan I am starting my career as an attorney this September but hoping to add real estate to my portfolio. 

 with $150k in student debt, I would build up a nice cash reserve and then house hack a multifamily. I would not consider purchasing non-owner occupied property until that debt got down to a much more manageable level.

As long as you are carrying bad debt you do not actually have any money to invest. Pay off your debt first unless you like being a very high risk gambler.

Real estate investing has a great deal of swing and having bad debt will likely cause you to fail when the hard times come around. Keep in mind 95% of new investors fail. Having bad debt going into investing will only make your odds of failure even higher.

I agree with most on this thread - pay off a sizable portion of your loans first. Paying off your loans is a guaranteed interest rate albeit elimination of a percentage rate that is working against you. 

If you haven't already, I would check out Scott Trench's book Set For Life and mrmoneymustache.com

Also, although not directly relevant to your situation, here is a specific article from Mr Money Mustache that has a lot of really good points. 

How much debt you have isn't really the important thing. It's the knowledge you have (or don't have) that's important. If you have no debt and millions of dollars, but no knowledge about real estate investing, you have no business investing in real estate. On the other hand, someone with no money and lots of debt but has the right skill and knowledge can do just fine.

@Joseph Georgi You are insinuating that you can pay off only $15,000/year for 10 years. I think with a proper budget and focus you can pay it off on less than half the time. Like other folks have suggested, develop a plan to pay it off as quickly as possible. Use an FHA 3.5% down to purchase an owner-occupied multi-family to begin your real estate journey. You can repeat every two years, refinancing to conventional while paying off debt. This way you are reducing debt burden but also not delaying investing in real estate. Like someone else suggested, stick to house hacking owner occupied investments until you are debt free. All the best.
@Joseph Georgi . There is not any reason for it to take you 10 years to pay off your loans as a lawyer. If you want to be an investor I would live like a broke college student in the cheapest rental possible so that you can pay it off quickly. If you do not live with a partner then share an apartment with a roommate and drive a car which you can pay for with cash so that you are not making a car payment. Live as cheaply as possible by preparing most of your meals instead of eating out. Look for ways to reduce yiur busget so that most of your money can go towarda your debts. If you are focused on paying off your debts you will be a successful investor one day. I would only accept a lawyer job with a big salary instead of working for the govt or a non profit until these loans are gone.