The Best Student Debt Repayment Option for Those Seeking Financial Independence (FIRE)

*The information contained in this post is not meant to be specific for you or your situation and is not meant to be financial advice, as I am not licensed as a financial planner. Before making any decisions, I strongly recommend speaking to someone licensed in this area to consider your unique situation. My recommendations in this area would be Will Butler or Joseph Reinke. 

In previous posts I have put some numbers behind the different student debt repayment options as well as included some non-financial reasons why I have chosen to go the income driven repayment route. For some background, please start here and here. Also if you’re unfamiliar with the idea of financial independence/early retirement, read this for context on what it means to me.

When I wrote those posts, I tried to keep the information general so that it would apply to as many people with student loans as possible. I really enjoyed doing the calculations and going through the considerations necessary to arrive at a conclusion, as it further cemented my decision. By the end, I determined that Revised Pay As You Earn (REPAYE) is the best option for my situation and likely the best option for the majority of those with student debt, but it is very important for everyone to run the numbers for themselves. I have to admit that for a long time I wavered back and forth on whether I truly wanted to continue on an income driven repayment plan when I have the money in cash that I can make my student loans disappear today. The numbers don’t lie though, and I am in this for the optimal financial outcome and not what is most convenient. I also have additional reasoning now that I fall back on when I’m in doubt.

Why REPAYE?

Let’s look at my situation and consider the best and worst case scenarios.

Best case: I make minimal payments, likely less than $100/month and almost definitely $0/month once at financial independence, for 25 years. At the end of 25 years my, now inflated, loan balance is “forgiven,” but I’m on the hook for paying taxes on the unearned income produced. I estimate that at this point my $97,000 initial loan balance will have grown to a little over $200,000 (6% interest rate reduced to an effective rate of 3%/year due to only half of accumulated interest being capitalized under the REPAYE plan), and I’ll be taxed at around 30% between federal and state taxes. This means I will have a $60,000 tax bill at the end of 25 years, plus only minimal (tax deductible) payments made throughout the course of the 25 years. What would I have to invest today to have $60,000 to pay this bill in 25 years at an average market return of 7%? About $11,000! So basically I could decimate my savings to destroy my $100,000 in debt today, OR I could invest only $11,000 of it in an S&P 500 index fund earmarked for my future tax bill. Sign me up for option 2!

Worst case: say 5 years from now all income driven loan forgiveness is repealed and everyone counting on it is left out in the cold. This is highly unlikely to happen without the people currently enrolled being grandfathered in, but this is the worst case scenario so humor me. In this situation, likely the income driven payment plans would still exist, but now no forgiveness at the end. Is this a disaster for my financial future? Not in my estimation. In this case I would remain on REPAYE (at the effective 3% interest rate as mentioned above) for as long as possible. A large loan with a 3% interest rate when market returns will likely be at least 6%/year and hopefully much more over the next 25 years, sounds like a great situation to me. In fact, if someone reputable approached me today and offered to loan me $1,000,000 at a 3% interest rate for the next 20-25 years, I would take that any day of the week! The student loan scenario is even better than the hypothetical loan though because all interest paid is tax deductible, which actually further reduces the effective interest rate.

To summarize, in the best case scenario I pay ~$70,000 over a 25 year period for a $100,000 loan. In the worst case scenario, I get a large tax deductible loan at a low 3% interest rate. Even the worst case scenario seems pretty good to me. I’m happy to plan for the worst and hope for the best here.

Narrowing the Focus

Alright, I’m already 700+ words in here and I haven’t even gotten to what I really want to discuss, so this may end up being a long one. Instead of looking at broad, more generalized scenarios like in my previous posts on student loans, I want to zoom in on those specifically shooting for becoming Financially Independent, Retired Early (FIRE). If you have read my blog for any length of time, it should be apparent that FIRE is my goal and that I believe it should be the goal of everyone, although with respect to their own life situations.

For people in the FIRE community, one of the foremost objectives is to reduce taxes by as much as possible to maximize savings rate. The primary way this is achieved is with maximizing tax deferred accounts (401k, traditional IRA, and HSA). This is paramount because for those of us seeking early financial independence, our tax rate will be much lower, possibly zero, after FI than before. This goes hand in hand with choosing REPAYE for student loan repayment. Since only roughly 30-40% of the final loan balance will be paid in taxes at the end for most people, keeping monthly payments as low as possible to have the maximum amount forgiven is optimal. Monthly payments are based on Adjusted Gross Income (AGI), for income driven repayment plans, so the lower your AGI, the lower your payment. AGI is reduced using the same strategies as reducing current tax burden, so we’re essentially killing two birds with one stone.

How Low Can You Go?

Yesterday, being the finance nerd that I am, I decided to play around with the student loan repayment estimator for a while (great use of a Saturday afternoon, right?) to determine how high of an AGI I could have to keep my monthly payment at $0. It turns out that $18,685 is the magic number for me being single and living in VA. I know what you’re thinking, that is pretty low. I agree, but keep in mind AGI is determined after subtracting contributions to tax deferred accounts. So in reality, I could have a gross income of $18,685 (AGI) + $18,000 (401k contribution) + $5,500 (traditional IRA contribution) + $3,400 (HSA contribution) = $45,585. This number seems a little more realistic. Having an AGI that low may not be feasible or desirable for many, and that’s understandable. The good news is that for every $10,000 that my income goes over the $18,685 threshold, my payment only increases by ~$88/month. That is, an AGI of $28,685 = a monthly payment of $88/month. An AGI of $38,685 = a monthly payment of $172/month, and you can extrapolate from there. As mentioned above, since the accumulated interest is much higher than these monthly payment amounts, every dollar I would pay would be interest. Normally this would be bad thing, but student loan interest is tax deductible so I’ll get a portion of what I pay back at the end of the year.

Everyone’s situation will certainly not be in the same as mine so I encourage you to play with the estimator yourself to find the magic AGI for you depending on your family size and state.

A Little Deeper

So for those trying to reach FIRE, a low AGI is already desirable so that is a big benefit, but there is another benefit from choosing REPAYE in this population. After financial independence, we will have much more control over our taxable income each year. It should be no problem keeping my AGI at $18,685 or lower and no longer having a monthly student loan payment. In addition, I can strategize with my income as the loan forgiveness date closes in. Since the total forgiven loan balance is taxable income, it is in our best interest to have as close to zero taxable income as possible in the year that the tax bill hits for the forgiveness to avoid the additional taxable income being taxed in a higher bracket. After financial independence this should be fairly easy due to much more flexibility. I would simply withdraw twice as much from taxable accounts in the year before (or withdraw money from a Roth IRA that has been rolled over from a Traditional IRA previously tax free) to cover my expenses for the year in which the tax bill hits, so that my taxable income, besides the unearned income, is at or very close to zero. Using this strategy and my estimated loan balance ~23 years from now, I determined that I would pay only an effective federal tax rate of 25.9% or $52,602 (on my total forgiven balance.

Keep in mind that this is based on today’s tax brackets. It is definite that the tax brackets and percentages for those brackets will be different in 23 years when I reach forgiveness, but I’m optimistic that this will benefit me more than it will hurt me. This is due to the steady increase in the lower tax brackets with inflation each year as well as a larger standard deduction and personal exemption.

That is my case for why REPAYE is the optimal option for those seeking FIRE with student debt and especially those with large amounts of debt.

Thanks for reading. What is your opinion on this matter? Are there considerations that I missed? What is your plan for your student debt?

Revisited: Seek Forgiveness or Pay off Your Student Loans Early?

*The information contained in this post is not meant to be specific for you or your situation and is not meant to be financial advice, as I am not licensed as a financial planner. Before making any decisions, I strongly recommend speaking to someone licensed in this area to consider your unique situation. My recommendation in this area would be Will Butler.

Disclaimer: From discussions that I have had on this subject in the past, I realize that this is a controversial topic. I have never been one to shy away from discussion on touchy subjects whether ethical or financial in nature. This post will be about the financial side of the decision that I have made.

One of the first posts I ever wrote on this blog was regarding student loan repayment. This was about 10 months ago and it has been the second most popular post that I have written to date. This is not surprising considering the huge amount of outstanding student loan debt faced by many from rising tuition costs. If you have no idea about income based repayment options then it would probably be a good idea to go back and read my original post before you continue for some context. Since I wrote that post, I have continued to ponder the different options and research what is best for me financially in the long run. In the original post I concluded that the Pay As You Earn (PAYE) option was the best option in my situation and likely to be a very good option for others. Since then, I have discovered that there is an even better option available that I had completely dismissed previously.

The income driven repayment plan that I have determined is best for me financially at this point is the Revised Pay As You Earn (REPAYE) plan. This option was first introduced at the end of 2015 and at first glance it didn’t seem very enticing for those with graduate school debt, but upon further investigation, it is likely a very good option for most of us choosing between income driven repayment plans. Under the REPAYE option, your payment is set at 10% of your discretionary income which is the same as PAYE. Forgiveness for undergraduate loans occurs after 20 years, exactly like PAYE, but for graduate school loans, the remaining balance is not forgiven until 25 years of payments. The 25 year forgiveness is the reason that I didn’t initially consider this option fully since all of my loans are graduate loans. However, REPAYE has a very powerful benefit: half of all accumulated interest will be forgiven each month.

This is a huge benefit for those of us with income based payments that are less than our accumulating interest. Under the PAYE plan your balance would grow much more quickly in this situation due to the remaining interest being capitalized (added to the principle balance) at the end of each month. Let’s look at some easy example numbers to demonstrate this. If you have $100,000 in loan balance and your average interest rate is 10% and your monthly payment is $0/month based on your income, you would be accumulating $833.33 per month in interest that would be added directly onto your principle balance based on the PAYE plan. With REPAYE, this accumulated interest is cut in half and only $416.67/month would be added to your balance. The benefit will change based on your loan terms and your monthly payment, but for some this will be a blessing.

In this post I’m going to compare three different options for repayment, those being: Standard 10 year repayment, PAYE, and REPAYE. I’ll use the numbers for my personal situation and then also the numbers for a more average new grad who is taking a regular full time job. The reason my situation is different than many others is due to the tax free stipends involved in travel physical therapy. Because of these stipends, my adjusted gross income (how income based payments are determined) is not as high as it would be if I was working a full time permanent job.

Before I get to the numbers, I want to bring up some of the points from my last post that still apply.

  • There is a tax deduction based on the amount of interest you pay on your student loans up to $2,500 per year, even if you don’t itemize your return. This deduction is phased out if your AGI is above $80,000, but I don’t think that will ever happen for me based on 401k contributions reducing my AGI. You do not receive that full $2,500 back on your taxes, but will receive some percentage of it based on your income, likely somewhere in the neighborhood of 20%-25%. That means somewhere around $600 being returned to you each year on your taxes. $600 x 20 years = $12,000. If you choose the standard 10 year repayment, you total deduction will be less than half of that, due to paying less interest the last few years as your principle balance decreases.
  • There has been legislation proposed to no longer have the forgiven loan balance count as unearned income (meaning that you have to pay taxes on what’s forgiven), which would make loan forgiveness a much better option. There is no way to know if this will ever go through, but I would imagine there is at least a small chance over the next 20 years.
  • Investing the difference between what you would have spent on the standard 10 year repayment plan and your payment on an income based repayment plan can serve as a life insurance policy of sorts. The reason for this is that student loan debt is discharged upon death. Imagine that you put all of your money toward your loans and then pass away at the end of the 10 year repayment period. You wouldn’t have any assets to leave to your loved ones. On the other hand, imagine that you choose an income driven repayment option and invest your extra money and then pass away after 10 years. The remainder of the loans will be forgiven and all of your investments can be passed on to your heirs. This may not be a game changer for many but it is something to consider.

Alright, so all of the considerations above should make one lean in favor of an income based repayment plan, but let’s look at the numbers, first for someone in a situation like mine with a lower adjusted gross income ($50,000) and a starting loan balance of $97,000 at 6% interest:

Under both PAYE and REPAYE, monthly payments would be $218 (10% of discretionary income). For standard 10 year repayment, the payment would be $1077/month.

REPAYE: ~$112,000 paid total over a 25 year period. This includes $65,400 paid in monthly payments $218 * 12 * 25 = $65,400. At the end of the 25 year period a balance of $155,400 would be forgiven. Assuming a 30% tax rate on this forgiven amount, $155,400 *.3 = $46,620. This leads to the total amount paid, $65,400 + $46,620 = $112,020.

PAYE: ~$116,800 paid total over a 20 year period. This includes $52,320 paid in monthly payments $218 * 12 * 20 = $52,320. At the end of the 20 year period a balance of $214,900 would be forgiven. Assuming a 30% tax rate on this forgiven amount, $214,900 * .3 = $64,470. This leads to the total amount paid, $52,320 + $64,470 = $116,790

Standard 10 year repayment: ~$129,000 paid total over a 10 year period. $1,077 * 12 * 10 = $129,240.

In this scenario REPAYE is clearly the winner with PAYE in second and standard repayment in last place.

Now let’s look at a scenario with the same interest rate and loan balance but with an AGI of $70,000:

Under both PAYE and REPAYE, monthly payments would be $435 (10% of discretionary income). For standard 10 year repayment, the payment would be $1077/month.

REPAYE: ~$162,900 paid total over a 25 year period. This includes $130,500 paid in monthly payments $435 * 12 * 25 = $130,500. At the end of the 25 year period a balance of $107,900 would be forgiven. Assuming a 30% tax rate on this forgiven amount, $107,900 *.3 = $32,370. This leads to the total amount paid, $130,500 + $32,370 = $162,870.

PAYE: ~$140,100 paid total over a 20 year period. This includes $104,400 paid in monthly payments $435 * 12 * 20 = $104,400. At the end of the 20 year period a balance of $119,100 would be forgiven. Assuming a 30% tax rate on this forgiven amount, $119,100 * .3 = $35,730. This leads to the total amount paid, $104,400 + $35,730 = $140,130

Standard 10 year repayment: ~$129,000 paid total over a 10 year period. $1,077 * 12 * 10 = $129,240.

Uh oh, in this scenario we can see the impact that the extra five years of repayment has when the accumulating interest is less each month due to a higher monthly payment. This puts REPAYE in last, PAYE second, and standard 10 year repayment first. But not so fast, there is a very important factor that is not being accounted for here.

Monthly payments under any income based repayment plan are based on your adjusted gross income. Your adjusted gross income is reduced with eligible deductions such as 401k contributions ($18,000 maximum per year), traditional IRA contributions ($5,500 maximum per year) and HSA contributions ($3,350 maximum per year). This means that making smart decisions for your retirement will not only help you later in life but also will decrease your AGI and therefore your total amount paid on your loans when using an income driven repayment plan.

So if $70,000/year AGI leads to paying more overall when using an income driven repayment plan and $50,000/year AGI leads to a lower overall amount paid, you may be wondering where the cut off values are for this scenario. Well, I spent a long time trying to figure out how to display this in a graph (I’m not great with Excel) and here is what I came up with:

loan-repayment-options-97000-6

The Y axis is the total amount paid over the life of the loan. The X axis is yearly AGI. Keep in mind that these numbers are based on $97,000 in direct subsidized loans with an average interest rate of 6%.

Based on the graph for this scenario, if your AGI is below ~$52,500 you come out ahead with REPAYE. If it’s between ~$52,500 and ~$58,000 then PAYE is the best choice and if your AGI is above $58,000 then the standard 10 year repayment is the best option. That seems simple enough, but the total amount paid doesn’t tell the whole story. The reason for this is that with PAYE that amount is paid over 25 years, with PAYE it’s paid over 20 years and with the standard repayment it is paid over 10 years. In that 15 year period between the standard repayment finish date and the REPAYE finish date, the value of money will generally decrease by quite a bit. Historically, the dollar loses 35% of it’s spending power in an average 15 year period due to inflation. Trying to factor inflation into each payment over the 25 year period is way above my level of Excel prowess, but it would likely push these cut off numbers to the right by a decent amount making the argument for income driven repayment even better.

Now I’ve talked to a lot of other new grad physical therapists over the years and it seems that, unfortunately, $100,000 in student loans is on the low end of the spectrum. For that reason I made a graph for those with $150,000 in student loans at an average interest rate of 6% to see what the difference would be:

loan-repayment-options-150000-6

On this graph we can see where income driven repayment plans really shine. As total student loan debt increases, the argument for income based plan repayment plans becomes much better. If you have $150,000 in student loan debt at an average interest rate of 6%, you would have to have an AGI of well over $80,000 (factoring in inflation) in order to come out ahead by using the standard repayment option. Although the numbers are interesting to see, it shouldn’t come as a surprise that having high student loan debt makes income driven repayment a better option because these are the exact people for which these plans were made.

Alright so let’s try to wrap this all up and come to some sort of a conclusion.

From the very beginning of your career, you should be contributing a decent amount (likely 10-15% or more) of your income to tax advantaged accounts (401k, traditional IRA, HSA). This will not only allow you much more freedom later in life but also reduce your student loan payment and total amount paid under an income driven repayment plan. Putting $10,000 per year into a combination of a 401k and HSA can lead to a significant reduction in your AGI, which not only spares you in taxes at the end of the year but also reduces the total amount paid over the life of your loans ($20,000+ in some of the scenarios above). The higher your student loan balance, the more likely that an income driven repayment plan is the best option for you. The lower your AGI, the more likely an income driven repayment plan is the best option for you. Inflation has a significant impact on money over time, so paying $100,000 over a 25 year period is far from the same as paying $100,000 over a 10 year period. Tax deductions for payments made on student loan interest can lead to significant savings over a 20-25 year period which makes income driven repayment plans even more compelling. The tax rate I used for the forgiven balances in the examples above was 30%, but this will be different based on your situation. Personal preference should be a factor in your decision. I have talked to some people that are extremely debt adverse and although they may come out ahead with an income based option, it isn’t worth the psychological stress carrying the debt would cause for them over such a long time.

One last thing to note is that I did not account for any sort of yearly increase in pay in the calculations above. There are three reasons for this: first, because it is impossible to generalize a standard increase in pay because everyone’s career will be different. Second, because I have spoken to very few physical therapists that have worked 25 straight years full time. Most seem to transition to PRN or part time as they advance in their careers which will obviously mean a lower AGI later on, not higher. Third, because as your pay increases throughout your career, you should strive to keep expenses close to the same level and contribute the difference to tax advantaged investment accounts which would keep your AGI, and therefore your payments, at the same level.

I know this is a lengthy post, but this is not a simple topic. I get a lot of questions regarding student loans and I want this to be a resource for new grads that are lost. What is your opinion of standard repayment vs. income based repayment? I’d love to hear your thoughts in the comments.

Seek Forgiveness or Pay off Your Student Loans Early?

Disclaimer: From discussions that I have had on this subject in the past, I realize that this is a controversial topic. I have never been one to shy away from discussion on touchy subjects whether ethical or financial in nature. This post will be about the financial side of the decision that I have made, but I can always write about the ethical side in the future if there is interest.

This is a subject that I have spent a very long time learning about, pondering, and crunching numbers on. No matter how many times I revisit the topic, I come to the same logical conclusion. For my situation, it is financially in my best interest to seek student loan forgiveness. As much as the thought of watching the balance of my student loans grow over the next twenty years sickens me, I know that it is in my best interest based on the calculations that I have performed. You may be wondering, how will the balance grow if you are making payments on the loans each month? The answer is that my minimum payment, based on the Pay As You Earn plan (that I have determined is the best choice for me), is not enough to cover the interest that is accruing each month. Although this is the path that I am choosing, there are a number of factors to consider in your own situation about what is the best option. Some of these include:

  • Is working at a nonprofit an option for you in order to seek Public Service Loan Forgiveness*? (The best option for most if this is plausible)
  • Are you able to be responsible with money that you have left over from choosing to have a lower student loan payment? (If you spend the extra money, from choosing an income based repayment plan, on unimportant things, then it is probably better to go with standard repayment)
  • What will be your estimated adjusted gross income? (this is important to determine what your income based payment amount would be)
  • Do you believe that your income will increase significantly over the next 20 years? (As your income increases, so does your income based payment)
  • What are the interest rates on your loans? (With low interest rates, you may be better off investing the extra money than paying off the loan early)
  • What will the balance on your loans be at the end of 20 years? (Based on the current tax laws, the amount forgiven at the end of the 20 year period will count as “unearned income” and lead to a significant tax bill)
  • Which income based repayment plan would be best for you if you choose to go that route? (Check out the student aid website if you have no idea about this)

* Public Service Loan Forgiveness does not require taxes to be paid on the forgiven loan amount, in addition to having the loan forgiven 10 years earlier. Obviously a very good option if possible.

As a travel PT, I consider my situation to be somewhat unique in the loan repayment regard. Since part of my pay is untaxed, for living expenses while away at an assignment, my adjusted gross income (AGI) is less. I have also been contributing a significant amount to my 401k which further reduces my AGI. Both of these things combined, give me a somewhat low AGI. This makes my student loan payment low while also allowing me to save a significant amount of money. So I was then faced with the decision to either pay the minimum and invest the rest, or pay extra on my loans and pay them off as soon as possible. This is where the calculations came into play and helped me make the decision. Of course all of the numbers I used are estimates because there is no way to know what my exact pay will be in the future.

To give a little context without going too in depth, I currently owe just below $100,000 after accumulated interest while in school. My average weighted interest rate is a little over 6%. I had no debt from undergrad and lived at home during PT school in order to save on living expenses. For the most part, I lived as cheaply as I could, so the figure above is mostly from tuition, books, and food.  Based on my estimates, if I put all of the money that I possibly could into paying off my loans quickly, I would be able to achieve that goal in around two years if everything went according to plan. This would lead to total payments of about $103,000. On the other hand, I could make minimum, income based, payments on the loans for 20 years, and then have the balance of the loans forgiven. The forgiven balance will count as “unearned income” and will be taxed. This means a big tax bill at the end of the 20 year period. For my calculations, I assume a 30% tax rate on the amount forgiven. The actual rate is unable to be determined because tax rates will be different at that time, and I am unsure of exactly what my income will be then, but I believe that 30% is a conservative estimate.

Using the studentloans.gov repayment estimator, it is estimated that over the 20 year period, making the minimum payments on the Pay As You Earn plan, I will pay about $88,000 and be left with a balance of about $126,000 to be forgiven. At first this seems like a much worse option but keep in mind that this is 20 years in the future. Based on an average 3%/year inflation rate, $103,000 is worth more today than $126,000 will be 18 years from today. Let’s look at the calculations to determine the total paid in this scenario.

$126,000 * 30% = $37,800 owed in taxes for forgiven debt

$37,800 (tax bill from $126,000 forgiven) + $88,000 (amount paid in minimum payments over a 20 year period) = $125,800 paid in total at the end of 20 years

This means that I could pay about $103,000 over two years’ time, or I could pay a total of $125,800 over a 20 year period. In the 18 year period between the two estimates, it would only take an approximate 1.1% annualized interest rate to grow $103,000 to $125,500. If I am able to earn anything above a 1.1% interest rate on my money in that 18 year period through investments, then it is in my best interest to wait the 20 years and pay the tax bill at the end while making minimum payments along the way. I am confident that, with the asset allocation that I have chosen, I will earn a much better return than 1.1% over an 18 year period and therefore will be better off investing my money instead of paying off my loans early.

For the sake of comparison, if I were to choose the standard 10 year repayment plan, I would pay a total of $129,000 over a 10 year period. This is clearly worse than both of the options discussed above.

Now let’s consider another factor. Imagine that two years from today I pass away due to some unfortunate event. In the first scenario, I have my student loans paid off in full, but nothing to leave to my family. In the second scenario, I have paid very little toward my loans, but have somewhere around $100,000 in retirement and investment accounts. Since student loans are discharged upon death, I will leave my family with $100,000 and the loans won’t matter anymore. In this way, the second scenario can be viewed as a life insurance policy of sorts. Although the chance of death is much lower for younger people, you never know what may happen in life and the second scenario is clearly better in this regard.

But wait, there’s more. There is also a tax deduction based on the amount of interest you pay on your student loans up to $2,500 per year, even if you don’t itemize your return. This deduction is phased out if your AGI is above $80,000, but I don’t think that will ever happen for me based on 401k contributions reducing my AGI. You do not receive that full $2,500 back on your taxes, but will receive some percentage of it based on your income, likely somewhere in the neighborhood of 20%-25%. That means somewhere around $600 being returned to you each year on your taxes. $600 x 20 years = $12,000. In addition to the deduction, there has been legislation proposed to no longer have the forgiven loan balance count as unearned income, which would make loan forgiveness a much better option. There is no way to know if this will ever go through, but I would imagine there is at least a small chance over the next 20 years.

Remember that all of the numbers above are approximate and are meant to illustrate my point. This can all be very confusing which is the reason that I have performed these calculations several times over the past year to make sure that I’m not overlooking anything. It is all further confounded by the fact that the future is so uncertain. Based on all the information available and my best estimates, I’m choosing income based repayment and hoping for the best. Keep in mind, this plan would completely fall apart if I wasn’t positive that I will be financially responsible with the extra money each month. If you are spending the difference instead of investing it then this option will turn out badly for you. What is your plan? Is there anything that I am missing? I would appreciate any feedback or discussion on the topic. Thanks for reading!