Because of Christmas, their birthdays, and our own contributions to their accounts, they each have investments worth over $500 each. Even if we never add to them again (which we totally will) that would be a nice chunk of change after the market has worked its magic and they can access it 18 years from now.
Still, you would think my net worth would be more than $500 but because of our student loans, it’s not.
Six Figures of Education Debt
I try not to worry too much about net worth. After all, when you have six figures of education debt, it can be a bit depressing to think about. My husband is nearing the end of his medical school career. In fact, we only have one more semester to pay for, but at over $30,000 per semester plus extra money for books, board exams, travel, and general living expenses, he has now crossed over the $300,000 owed threshold, something we knew would happen but still stings a bit.
I wish I could say that was our only student loan burden, but he and I both have master’s degrees and combined the loans for those are also over $100,000 now, mostly due to the private loan he took out for his master’s degree in public health.
Reducing the Burden
I know these numbers are scary to read and there are usually two responses. Some people think we’re totally foolish for going down that path and see no end in sight. Others just think that because my husband will be a doctor, we’ll have no problem paying it back. Neither of those are correct, really. The burden is serious and we feel it, and even on a six figure salary, it’s going to take significant discipline and teamwork to pay it off, which of course, is something we’re ready for and have been preparing for during the last five years of being in school.
We’ve had some small successes. I’ve been able to work hard and send back big chunks of student loans from time to time, but over the last few disbursements, I’ve taken the max and saved the money for emergencies. Once I know that my husband has matched into a residency and will have a job, I will take that saved money and make a large payment back towards his loans to kick off the process. Until now, we are just sitting with the cash waiting for the next step.
Many people would disagree with our decision to take out living loans even though my monthly income can for the most part take care of our family, but we’re worriers and we like to have large emergency funds and absolutely hate the idea of living paycheck to paycheck because we’ve been there before.
Plus, as parents, we have very large expenses and are constantly thinking about ways to save money: ways to save money on groceries especially now that we want our kids to eat nice food, ways to save money on life insurance, because if something happened to either one of us, it would be devastating, and ways to save money on health insurance, because our policy costs us over $7,000 per year for our family, and we don’t skimp on our health.
Add all of that to our desire to max out my Roth IRA, pay down my own student loans, save enough for residency interviews, and it’s a little clearer why I like to keep cash in my high yield savings accounts just in case.
I know we have a long road ahead of us, and sometimes the outlook seems bleak. However, one thing I do know and can count on is that our children will be set up so they will not have to take out student loans. I’m proud that those little babies have a higher net worth than their parents, because it means we’re making things better for the next generation. All I can hope is that the lessons we impart to them over the next two decades will make them responsible with the money we’re investing for them and that they use it wisely.