How to be a Financially Successful Pharmacist after Graduation

October 10, 2018

Pharmacy school teaches you most everything you need to know about being a pharmacist, but most don’t teach you about personal finance. If you’re like a lot of pharmacy grads, you’ve probably dug yourself into a bit of a hole. That’s okay. Now what you need is a plan to get back out. For some people, that’s figuring out how to get out of debt as fast as possible. For others, it’s a slow but steady plan to get there. Just as in pharmacology, what’s right for some people isn’t for others. Your plan will depend on your circumstances, but the important thing is not to let it overwhelm you. You’ve finished your educational journey, now it’s time to move on to the next chapter.

After graduation – set a realistic goal.

Getting to where you want to be financially is attainable, but you have to define what that is. Is it to be out of debt in 3 years? Refinance student loans? Save for a house? Make sure you have enough money for an emergency? Or some combination of all of those? All great and worthy goals, but if you don’t define a goal, you won’t know the things you need to do to attain it.

Assessing your situation.

Even if you know your goal, you can’t get there unless you know where you’re starting. You need to assess your debts and any assets you may have. The average pharmacy grad has nearly $160,000 in student loan debt. Quite often they also have credit card debt. If this is you, it’s okay. You may even have a car loan. You just need to know, that all debt is not equal and the best way to prioritize is to look at your interest rates to determine which ones you should try and pay down first. Consider using a debt pay down method like the debt snowball method.

Credit Cards

If you’re carrying credit card debt, that’s probably your highest priority. Typically credit card interest rates are between 15 and 20%, but they can go even higher. If you’re holding any significant balance with that kind of rate, making minimum payments will essentially have you paying the balance until the end of time. Even though your student loan balance is higher, it doesn’t make sense to pay beyond the minimum payment until your credit card debt is in control.

If you have multiple credit cards, figure out which one has the highest interest rate and start paying more there first. You may even be able to transfer to another lower interest card you have. Establish how much you’re going to pay over the minimum, say $500 or $1,000 and stick to it. It’s probably not wise to open a new card now, but as you pay down your cards you may notice special offers from the cards you have. You might see things like 0%APR for 12 months on balance transfers. Read the fine print, and if it’s good, do it. It can really speed up the process and save you a lot of money. If you have good credit, consider getting a Personal Loan to pay off your credit card balances. A Personal Loan will usually come with a lower interest rate than you had been paying with the credit cards.

Refinance your student loans from pharmacy school.

One of your best bets to improve your financial situation both in the short- and long-term is to refinance your student loans. Many student loans carry an interest rate around 5.8% While much lower than the average credit card, it’s a number you may be able to reduce several percentage points which can save you thousands of dollars over the life of the loan. Another thing refinancing can do is adjust your loan term. We’ll look at two general approaches that should help you decide what might work best for you.

Option 1: As fast as possible.

If you’re starting from a pretty good place financially and you’re not carrying a lot of other debt you may want to just knock out your student loans as quickly as you can. This approach would likely mean refinancing to a shorter term, say 5 years. The lower interest rate could save you money as will the shorter term, but it also means you’ll pay it off a lot sooner. This also means you might have a hefty payment every month. Though hefty, this monthly payment will knock out the balance accrued by interest faster, so you pay down more on the principal balance of the loan. This may mean a lot of scrimping and saving. Brown bag lunches and making do with what you have for now, but if you’re in a position to make it work without putting too much of a burden on yourself then this can set you up to be in a very good place financially and much faster than if you didn’t refinance.

Option 2: Slow and steady

A lot of us don’t have the luxury to do a shorter-term loan, but that doesn’t mean you still can’t take advantage of refinancing your student loan debt. It will still save you lots of money in the long run. And refinancing to say a 10-year loan can give your budget a little more breathing room. You may even be able to lower your monthly payments to give yourself a little more cash to pay off your credit cards or to save for an emergency.

Don’t skimp on retirement savings!

When you’re starting your pharmacy career it may be tempting to forego things like your 401K to have more money in your paycheck. This is a bad idea for many reasons. You want to establish your retirement savings right away. What you contribute in your 20s and 30s becomes much more valuable to you in your 40s and 50s. It’s just a habit you want to start early and not wish you had later.

Enjoy the ride.

Don’t stress over finances. Worrying will get you nowhere, but a plan can take you anywhere you want to go. Concentrate on getting your career going and stick to your financial plan and you’ll soon see the results you want.

Why You Should Not Put Student Loans In Deferment or Forbearance

1. Nearly half of millennials have a side gig

During the 2008 recession, many millennials watched their parents lose their long-time jobs and investments. They learned the importance of diversifying their investments and of having multiple income streams. With that experience in mind, millennials are leading the charge when it comes to side hustles. In a BankRate survey, 48% of responding millennials said they earned extra money on the side. On average, people with side gigs earn $1,122 in extra income per month, working 12 hours a week. They use those additional earnings to boost their savings, pay down debt, and even afford their regular living expenses.

2. Millennials have one of the highest student loan balances of any generation

Millennials are dealing with unprecedented levels of student loan debt. However, that’s not entirely their fault. In recent years, college costs have skyrocketed. The College Board reported that from 1989-1990 to 2019-2020, the average cost of tuition and fees at a public four-year university tripled. With such high expenses, millennials have had to take out more in student loans to pay for school. In fact, the average loan balance for millennials is $34,505. That’s the third-highest average balance for student loan debt. Only Gen-Xers and Baby Boomers have more. Such a high loan balance affects millennials’ ability to pursue other goals, like buying a home, getting married, or starting a business.

3. Millennial households are earning more than ever before

Despite their substantial student loan debt, millennials have very high earning potential. According to the Pew Research Center, the median income for millennial households is $69,000. That’s significantly higher than the median household income for all age groups, which is just $61,937. While that’s good news, much of that higher income goes toward their student loan payments and living expenses, so the economy is not reaping the benefits of millennials’ salaries as much as you’d expect.

4. Millennial credit card debt is lower than average

After watching their families struggle with debt, millennials are notoriously wary of taking on consumer debt themselves. That’s especially true when it comes to credit cards. Experian reported that consumers carry $6,028 in credit card debt, on average. But for millennials, the number is much lower; they carry an average of just $4,712. That’s a good decision. Credit cards often have sky-high interest rates. According to the Federal Reserve, the average interest rates on credit cards that assess interest was 16.88% as of November 2019, the last available data. But some credit cards have interest rates of 25% or higher, which can cause you to owe far more than you initially charged on your card. Keeping your balances low — and paying off your statement balance in full each month — helps you reap the advantages of credit card rewards without paying interest charges.

5. Millennials are delaying home ownership

While previous generations considered home ownership a huge step in becoming an adult, millennials are delaying this milestone. According to CNBC, the home ownership rate for millennials is eight percentage points lower than it was for Gen X-ers and Baby Boomers when they were in the same age group. There are a few reasons behind their reluctance to buy:

Fear of commitment: Many millennials prize flexibility. They want to be able to take advantage of new opportunities that come along, like a dream job in a new city. They feel like home ownership would prevent them from being able to pursue those opportunities, while renting allows them to be more nimble.
Lack of starter homes: Business Insider reported that there is a massive shortage of starter homes in the real estate market. Baby Boomers looking to downsize and real estate investors making all-cash offers are swooping up available homes, making home ownership unattainable for many millennials.
Prevalence of student loan debt: With high monthly student loan payments and a high debt-to-income ratio, millennials struggle to qualify for a mortgage and keep up with their payments. Until they pay off a significant portion of their debt — or eliminate their loans entirely — many millennials simply don’t feel comfortable making such a large investment.

Millennials and money: Maximizing your finances

If you’re a millennial with student loan debt and it’s causing you to put off your other financial and personal goals, there are some steps you can take now to improve your situation:

Create a budget: If you don’t have one already, spend some time creating a budget. Make sure you earn more than you spend each month and look for areas where you can cut back so you can free up extra money to put toward your debt so you can pay it off faster.
Use your side hustle strategically: If you have a side hustle — such as graphic design, driving for a rideshare service, or delivering groceries — set aside your earnings solely for debt repayment. By using your extra income to make additional payments, you can pay off your student loans months or even years ahead of schedule — and cut down on interest charges.
Refinance your student loans: To pay off your student loans even faster, consider refinancing your student loan debt. With this approach, you consolidate your loans together by taking out a loan through a lender like ELFI. The new loan has different repayment terms; you could even qualify for a lower interest rate, helping you save money over time.

If you think that student loan refinancing sounds like a good idea for you, use ELFI's Student Loan Refinance Calculator to get a rate quote without affecting your credit score.*

*Subject to credit approval. Terms and conditions apply. Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

2020-03-23

How to Appropriately Ask for a Raise

So you’ve been taking on more responsibility at work, your boss says you’re a real asset to the company, but your salary hasn’t changed in a few years. If this describes your current work situation, it might be time to ask for a raise. According to PayScale’s “Raise Anatomy” report, only 37% of workers have asked for a raise. Of those that did ask, 70% received some sort of increase in compensation. Those are pretty good odds so if you’re excelling at your job, you should ask! The average raise in 2019 was 3%, according to the 2020 Compensation Best Practices Report. This means that if you are earning $40,000, your raise would increase your income by $1,200 per year. The amount of a raise depends on the sector of work, location, and demand for the position. Typically, jobs in the private sector usually receive higher raises than jobs in the government. As a best practice, you should usually wait to request a raise after you have worked for the company for at least one year. Additionally, in most cases, you should not ask for a raise more than once a year. If you feel it is time to ask for a raise, here are some tips on how to appropriately request one.

Prepare for a Meeting

When you are ready to ask for a raise, request a meeting with your boss and let them know you’d like to discuss your salary.

1. Plan your request at the right time

When you want to ask for a raise, pay attention to the timing of the meeting with your boss. An appropriate time for a meeting would be:

After you successfully completed a big project that brought value to your company
During a performance review meeting when you have exceeded expectations. Performance review meetings are a typical time when companies award raises. Being prepared to ask for a raise during this time could allow you to negotiate for more than the planned raise.

Times to avoid a meeting:

During a busy season of work when your boss will not be able to focus on your request
When you are behind on your work. If you are not able to perform your current workload, it will be hard to justify a raise to your boss.

2. Prepare talking points

Go into the meeting prepared to advocate for yourself. Although you don’t have to memorize a speech, it’s good to be prepared with the following information:

Specific examples of accomplishments you have achieved at work recently. This could be anything from securing a big client to implementing an idea that brings in extra revenue for your company.
How you have exceeded expectations for your position.
Additional responsibilities you have undertaken. If you have taken on more responsibilities by taking initiative, be sure to highlight those.
The value you will continue to bring to the company in the future and examples of how this will be accomplished.

3. Do your research

It’s important to know that the salary you are requesting is realistic for your position and your location. A great resource is Glassdoor. You can compare salaries for your sector or receive a personalized salary estimate based on your market and position.

4. Practice, practice, practice

Asking for a raise can be a nerve-wracking conversation. By preparing and practicing before your meeting, you can walk in confidently and armed with data to back up your request. In addition to practicing your talking points, you will want to be ready for any questions or negotiations that may arise. While it’s good to have a specific salary in mind, you should also be open to other numbers or benefits that your boss may offer. For example, the company may offer you work from home or extra vacation time in place of a salary increase.

In the Meeting

You’ve requested a timely meeting, prepared extensively, and now it’s go-time. Once you’re in the meeting here’s what you should focus on:

1. Your Demeanor

Pay attention to your tone and body language when speaking. You want to appear confident in yourself and your abilities. Show a positive attitude about the value you bring to the company, but do not appear arrogant. If you get questioned about why you deserve a raise, keep your cool and answer with the talking points you prepared.

2. Communicate Your Accomplishments

Instead of just rattling off a laundry list of accomplishments, focus on a few incredible examples and, if possible, bring proof of your work. Here are a few ideas of what you can present in the meeting:

Two-three examples of big projects you accomplished
Work you did that was beyond the scope of your job
Specific examples of when you took the lead and were successful
Examples of work brought that brought monetary value to the company
Ideas for your future at the company. Companies value loyal workers so be sure to point out how you have demonstrated loyalty and your desire to remain with the company.

3. Explain Why You’ve Earned It

Be sure to avoid talking about why you need the extra money and instead focus on how you have earned a raise. For example, if you are in sales, instead of saying you need the money because of increased living costs, say you have earned this raise because you are the most successful sales associate, have brought in $100,000 in revenue, and receive great reviews.

4. Bring a Specific Number

It’s best to have a specific number you are requesting, according to a study by Columbia Business School, instead of a range. For example, you want to request $55,000 as opposed to saying $52,000 to $57,000. Provide the reasoning for how you arrived at that number and, if applicable, give examples of how it is in line for the type of work you do.

Bottom Line

If you have been in your role for over a year and are killing it at your job, you should seriously consider asking for a raise. But before you do so, preparation is absolutely critical. Follow the steps above and you’ll be in a great place to have this discussion with your boss. Good luck!

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

2020-03-20

A Lawyer’s Guide to Student Loan Refinancing

When Matt Sembach, an assistant public defender, graduated from law school, he had a mix of both private and federal student loans — some with interest rates as high as 10.75%.

By Kat Tretina

Kat Tretina is a freelance writer based in Orlando, Florida. Her work has been featured in publications like The Huffington Post, Entrepreneur, and more. She is focused on helping people pay down their debt and boost their income.

“In terms of law school, I took out an estimated $135,000,” he said. “When I graduated from law school, I owed about $147,000. The $147,000.00 figure is higher than the amount that I actually took out because my big loan was unsubsidized and the interest was accruing while I was still in law school.” Sembach’s situation isn’t unusual. According to the AccessLex Institute, the vast majority of law school graduates borrow money to pay for school. On average, they leave school with $142,870 in student loan debt. While attorneys take on a significant amount of debt, their earning potential is immense. The National Association for Law Placement reported that the overall median first-year salary in private practice was $155,000 in 2019, a $20,000 increase from 2017. With large balances but six-figure incomes, lawyers are good candidates for student loan refinancing, especially if you have high-interest student loans.

When refinancing law school debt makes sense

When you refinance your law school debt, you take out a loan from a lender like Education Loan Finance for the amount of your current debt. The new loan has different terms, including interest rate and length of repayment. While refinancing isn’t for everyone, it’s a good idea in the following scenarios:

1. You have high-interest student loans

As Sembach found out, graduate, professional, and bar exam loans can have extremely high interest rates. Over time, those high rates can cause your loan balance to balloon, adding thousands to your loan cost. When you refinance your debt, you can qualify for a lower interest rate and save money over the life of your loan.

2. You want to pay off your loans early

If you refinance your loans and qualify for a lower interest rate, more of your monthly payment will go toward the principal rather than interest charges. If you keep making the same payment that you had before you refinanced, you can pay off your loan months or even years early.

3. You want to simplify your payments

If you’re like most graduates, you had to take out a number of different loans to pay for school. “When I graduated law school, I had 10 to 15 different loans that I needed to consolidate,” said Sembach. Unfortunately, that’s very common. Graduates often have several loans to manage, with multiple payment due dates and loan servicers to remember. By refinancing your debt, you consolidate your loan together. After that, you have just one loan and one payment to handle.

4. You want to reduce your monthly payments

If your payments are currently too expensive, refinancing may provide you with some relief. When you refinance your debt, you can extend your repayment term. For example, if you are currently on a 10-year repayment plan, you could opt for a 20-year repayment plan. You’ll pay more in interest charges with a longer term, but your monthly payments will be much more affordable.

5. You aren’t eligible for loan forgiveness

While student loan refinancing can be an effective tool for managing your debt, one of its biggest drawbacks is that you lose out on federal benefits when you refinance federal student loans. If you’re a public defender or work for a legal aid organization, you could be eligible for loan forgiveness through Public Service Loan Forgiveness (PSLF). But if you refinance your loans, you’ll lose your eligibility. However, lawyers who work in private practice or who have loans from private student loan lenders don’t qualify for PSLF. In that case, refinancing can make good financial sense.

How to refinance your loans

Refinancing law school debt is surprisingly easy. Just follow these three simple steps:

1. Check the eligibility requirements

Before refinancing, make sure you meet the lender’s eligibility requirements and collect the necessary documentation to speed up the process. With ELFI, you must meet the following criteria:

You must be a U.S. citizen or permanent resident
You must have at least $15,000 in student loans
You must have a bachelor’s degree or higher
You must have a credit score of 680 or higher
You must have an income of $35,000 or higher
Your credit history must be at least 36 months old
Your degree must be granted by an approved post-secondary institution

If you don’t meet the criteria on your own, you may still be able to get a loan by adding a co-signer to your application. A co-signer is usually a parent, relative, or friend who applies for a loan with you and is responsible for making the payments if you fall behind. Adding a co-signer increases your chances of qualifying for a loan and securing a lower interest rate.

2. Get a rate quote

Before submitting your application, get a rate quote. With ELFI’s Find My Rate tool, you can get an interest rate estimate and view loan terms without affecting your credit score.* Once you find a loan that works for you, you can proceed with the application process.

3. Submit your application

To complete the application, you should be prepared to enter personal information about yourself, including your name, address, Social Security number, employer information, and income. You’ll also need to submit documentation, including:

A copy of a government-issued ID, such as a driver’s license
Proof of income, like a W-2 or recent tax return
Bank account information if you’re signing up for automatic payments
Current billing statement or payoff letter for each current student loan

Alternatives to student loan refinancing

Refinancing can help you save money and pay off your debt early, but it’s not a great solution for all attorneys. If you don’t think that student loan refinancing is right for you, there are other ways to manage your debt more effectively.

1. Apply for PSLF

One option is to pursue loan forgiveness through PSLF. For many borrowers, like Sembach, PSLF can be a powerful debt relief tool. Previously, Sembach worked in private practice. But he switched career tracks to take advantage of PSLF. “I pursued PSLF to help get rid of the debt,” he said. “I took a $10,000 pay cut when I left private practice to become a public defender, but I took the pay cut because of PSLF.” To qualify for PSLF, you must have federal student loans and work for a qualifying non-profit organization or government agency for at least 10 years. During that time, you must make 120 qualifying monthly payments. If you meet those requirements, your remaining loan balance will be forgiven tax-free.

2. Apply for an income-driven repayment plan

If you can’t afford your monthly payments and you have federal student loans, you may be able to reduce your payments by applying for an income-driven repayment (IDR) plan. Under an IDR plan, your loan servicer extends your repayment term and sets your monthly payment at a percentage of your discretionary income. You can apply for an IDR plan online or by contacting your loan servicer over the phone.

3. See if you qualify for repayment assistance

Some states try to attract talented attorneys by offering student loan repayment assistance programs. They will repay some or all of your student loans in exchange for a service commitment. For example, attorneys in Vermont who work for certain civil legal aid organizations can qualify for up to $5,000 per year in student loan repayment assistance from the Vermont Bar Foundation. The American Bar Foundation hosts a database of student loan repayment assistance programs available all over the nation. You can search the database to find programs you may be eligible for near you.

Repaying your student loans

As a lawyer, you likely have a significant amount of student loans. While your loan balance can be a burden, student loan refinancing can help you save money and lower your monthly payments. To find out how much you can save by refinancing law school debt, use the student loan refinance calculator.*