 What's happening guys? It's Shane here. So in today's video, we're going to be going over a Dave Ramsey video that's called $1 million in student loan debt. Now, if you don't know who Dave Ramsey is, he's an extremely popular financial advice guy who has people call into his program and he gives them advice on what they should do with their current situation. I'm going to be doing a reaction to this video. This is going to be Justin from Florida. I just recently graduated from residency to become an orthodontist and I have student loans that total just over $1 million. You're kidding me. Okay, so this guy is a millionaire, just kidding. He's literally a debt millionaire and unfortunately not the good kind of debt. All joking aside, $1 million in loans is a lot and a quick Google search shows that orthodontists make somewhere around $230,000 a year. Now, there's a lot of theories out there about how much in student loans that you can take out and still be able to reasonably pay off the debt. Now by reasonable, I mean not do it in like 40 years or something like that. And it depends on a bunch of different things but as a general rule of thumb, these range from either a one-to-one or a three-to-one debt-to-income ratio. So what does that mean? That means if you're making $100,000 a year, you don't want to take out any more than $300,000 a year in debt and preferably you want it to be less than that. And again, there's a lot more to this. I'll probably make a video on it in the future. The more money you make, the higher the debt-to-income ratio that you can have. This is why it's really common to see doctors that are 500,000 plus in debt because they make so much money that their debt-to-income ratio if they make 250,000 is only about two-to-one. So when you're doing research on different degrees and different careers and you're deciding whether the student debt is gonna be worth it, make sure that you don't take out any more than three times whatever you would be making yearly. And again, three times it would be on the high side. So you really want to be, you know, two times more or even one-to-one if possible. Now, in this case, Justin took out over four times what the average orthodontist makes. That's ridiculous. What were you thinking? Well, I wasn't thinking clearly. Yeah, this is a really bad situation. I mean, I've seen worse, but man, this is really bad. And remember guys, he's not just paying that $1 million. He has to pay interest on that money as well. And since he went to graduate school in order to get a doctorate, that interest is probably really high. So I've sat down and calculated my interest rates and my interest is about $5,800 a month. All right, there you go, $5,800 a month, just an interest alone. That's not even touching the $1 million in principle at all. Now, this is an example of someone who's so deep in debt that a lot of people that get in this situation just pretty much give up and they decide that they're just gonna pay the minimum payment for as long as they have to. Some of them are willing to just keep doing it for the rest of their life. Now, that might sound ridiculous to you, but you would be surprised at how many people are starting to think this way because of how bad the student debt situation is getting. So if you make $250,000 a year, why are you only putting $120,000 on your debt? Okay, Dave, in his defense here, the reason he can only put $10,000 a month toward the debt is because of the fact that he has to pay taxes on that $250,000 a year. And on that much money, he might end up paying around $100,000 in taxes. Like, seriously, it's no joke. So he puts 10K a month towards the debt. That's $120,000 a year. He's paying $100,000 in taxes. That means he would have about $30,000 a year for him to live on and that's supporting his wife as well. So when you see a huge number like this, you might think that you can pay it off in four or five years, but in reality, it's more like 10 to 15 years because taxes take so much of your money. Now, not knowing anything else about this situation, there's a lot of other things that could change this advice, but in general, the best advice for someone who's in a situation like this is to do the 20-year pay-as-you-earn or the 25-year revised pay-as-you-earn plan. And basically, you'd be paying 10% of your discretionary income and then after 20 or 25 years, in theory, it would be forgiven. Now, he would have to pay taxes on whatever is left, which would be a significant amount of money and he'd have to pay income tax on this. So let's say he gets $1 million in debt forgiven. He would have to pay income tax on that $1 million in debt. That would be a huge chunk of money. So he'd have to also be saving money on the side during this 20-year period just to be able to pay that off. Now, since he started his own private practice and he doesn't actually know how much he's gonna be making in this period, he's kind of guessing that he's gonna be making $250,000, I really think this is the right way to go for him. He doesn't know whether his practice is gonna be successful or not at this point. So the smartest thing for him to do is to do the lowest possible payment, which is the 10% of your discretionary income. If he started aggressively paying down the loan at this point when you own your own business, you really don't know how much money you're gonna be making. So for instance, something like what happened right now could come along with this pandemic and all of a sudden, you're not making any money. If you did the aggressive payment plan where you re-consolidate and refinance your loans so that you can pay it off as fast as possible, there's a good chance something can happen in the world, something can happen to your business, and all of a sudden, you don't have any income. So the 20-year pay-as-you-earn plan is probably a better idea for him at least at first. Once his business is off the ground, it's doing really well. Maybe he's making even more than $250,000 a year. At that point, that's when you can switch your strategy up and start aggressively paying down the loan. At this point, starting up a business like that, he probably has a ton of business expenses. He doesn't have that much cash flow, and so for that reason, he wants to have as much reserve cash as possible. But that's just my opinion. After watching this one, I kinda just wanted to give my quick opinion on this Dave Ramsey video. I think Dave gives really good advice for a lot of people, but I also think he's a little bit too stuck in his ways and he doesn't see the big picture sometimes. And I do disagree with some of his advice on this video. But actually, go ahead and check out the video for yourself. I'll make sure to leave that down in the description. Other than that, check out my videos right here. I made them just for you. Smash the like button, hit the subscribe button, ring the notification bell, and then comment down below any comments, thoughts, criticisms, et cetera that you have on the video.