Altfest Answers is a video series that uses hypothetical scenarios to take a look at the impact comprehensive wealth management can make on the real lives of clients and their families.

In this episode, “The NYC Consultant with a Student Debt Conundrum,” President Andrew Altfest, CFP®, MBA, joins Financial Advisor Ben Lake, CFA, CFP®, to uncover the financial planning strategies utilized in the case of Jennifer, a young professional struggling with her student debt repayment plan. We know medical school debt is top of mind for our clients that are in their residency or early in their career, and have gone through this same process to help them take control of their financial future.

If you are interested in a complimentary consultation with Altfest, schedule a meeting with us at this link.

 

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Andrew Altfest, MBA, CFP®: I’m Andrew Altfest, president of Altfest Personal Wealth Management. I’m very pleased to be here today with Ben Lake, who’s a financial advisor at Altfest. We’re here to talk about Jennifer, the consultant with a student debt conundrum. So Ben, tell us about Jennifer  the financial planning challenge that she had.

Ben Lake, CFA, CFP®: Jennifer was a recent MBA graduate who just entered a new higher paying job than she’s ever had. She was concerned that because of the student debt she’d taken out to get her MBA, she wasn’t going to be able to pay that down as fast as she wanted while also saving for her other major goals, like buying a home one day, traveling more, and retirement. She had the mindset that she was going to have to first focus on paying down her student debt, then save for her other goals, and then start saving for retirement.

AA: That’s a common challenge that we see with your young professionals. How did you go about solving the financial challenge that she had?

BL: We started by looking at a holistic view of her income and her general expenses to maintain her lifestyle, and we suggested some ways that she could set something aside in case there were unexpected expenses by starting an emergency fund. We then looked at various strategies to focus on her main goal of paying down her student loans as quickly as she could. We also wanted to take into account the fact that she was going to hopefully be able to also contribute to retirement accounts and put something away for other larger goals. And in analyzing her student debt, we saw that her roughly $100,000 or so of graduate school loans were going to cost her about $1,100 a month. And that’s using the standard 10 year repayment plan. We then compared that to various other more aggressive and less aggressive repayment options to see what would be kind of the optimal strategy for her.

AA: Let’s get to the bottom line, what did this do for Jennifer?

BL: We concluded that for her the best situation would be to choose a more moderately aggressive pay down option, because that enabled her to achieve her primary goal of paying her debt down more quickly, while also contributing more to retirement accounts early because the tax and investment benefits of contributing to those accounts earlier in your career substantially outweigh the interest savings of just focusing on the most aggressive pay down option. We were able to help her save over $44,000 over the course of her repayment plan while also being confident that she could afford to buy her first home much, much earlier than she thought she’d be able to.

AA: Student debt planning can be very complicated, but at Altfest we have invested heavily in helping our clients with their student debt planning. Feel free to contact us to schedule a complimentary consultation, and we’ll look forward to meeting you in person or over the phone.

 

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Illustration is strictly hypothetical and is not representative of actual client experience. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.

 

Investment advisory services provided by Altfest Personal Wealth Management (“APWM”). All written content on this site is for information purposes only. Opinions expressed herein are solely those of APWM, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.