Huge shout out to Dr. Kirk J. , VMD, MPH, who is a Veterinary Research Associate at Banfield Applied Research and Knowledge! He recently provided some financial tips on how to pay off your ever-growing, massive veterinary school loans. Get some money saving tips below!
Ten Money Savings Tips
- Make an extra loan payment each year.
- Pay off your credit card bill every month.
- Cut the cord on cable TV.
- Write a list before you go shopping and stick to it.
- Bike or walk instead of driving.
- Buy items that don’t perish in bulk.
- Learn about all the benefits your work offers, and take advantage of the ones that benefit you.
- Begin investing in your retirement early.
- Buy generic instead of trade brands.
- Enroll in an automatic repayment plan for educational loans since many loan service providers offer a reduced interest rate for this.
What else can you do?
Know about what education loan repayment plan is right for you. By following the below steps, you can make an educated decision about the loan repayment plan that best suits your needs and provides you with the greatest financial benefit.
- Create a personal budget. This is perhaps the most important step and the most time consuming because it needs to be realistic and detailed so you can determine what monthly loan repayment amount is feasible. It took me approximately 4 hours to create my first budget. I update this budget yearly or when my financial situation changes, which takes almost no time at all. You can create a simple budget as an excel spreadsheet or take advantage of other resources to help you such as the following:
- AVMA’s Personal Financial Planning Tool: This tool is available to AVMA members and can be updated as your financial situation changes.
- Financial Planning Applications: There are a number of applications available to help create a budget. Be sure to select one that allows you determine your monthly and yearly budget.
- Determine your monthly payments with each repayment plan, and plug these into your personal budget to assess how feasible they are. There are many calculators available to help you determine this. Three of them are listed below. I recommend using all three and comparing their results to see the range of payments that may be possible with each repayment plan.
The top two calculators make assumptions about how your income will grow over time and the taxes you will pay in the final year of the income-based and income-contingent repayment plans. It is important to understand that these assumptions may be incorrect and at the end of the life of the loan, you may have a larger than estimated final payment to pay when your loans are forgiven. Be sure to determine what the likely estimate is (or range of likely estimates) you would pay the final year when your loans are forgiven and added on as taxable income. That will help you determine how much money you need to save each month to afford this final payment.
Be sure to compare how much you will pay over the life of your loan for each repayment plan. It may benefit you in the long run to pay more upfront by enrolling in a standard payment plan, rather than an income-based plan if you can afford the increased payments.
- Reassess your financial situation and your loan repayment plan each year. You may have changes in your financial situation over time which may mean changing your repayment plan so you can save money long-term. Be certain to revisit your personal budget and the repayment calculators each year to determine this.
Kirk J. Breuninger, VMD, MPH