Can You Work Towards Financial Independence While Owing Six-Figure Student Loans?

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Is the idea of FIRE (financial independence, retire early), the ability to quit work tomorrow with enough to last you through retirement, relatable to someone that has six-figure student loan debt?

Although you were warned that vet school would be expensive and tried to keep costs down, having six-figure student loan debt is the new reality for many graduates. Now, you’re left to figure out how to actually manage these loans, on top of learning how to manage your income and the regular stresses of starting your new job as a veterinarian.

Far too many of us were not introduced to the idea of taking charge of our money. We are passive participants in our financial lives, reacting to our money issues rather than taking on a proactive role. This isn’t surprising, considering we live in a society that places a lot more importance on what money can buy (material things) rather than what money can provide (security and freedom).

Financial independence sounds nice on paper, but for those that are deep in debt, it seems almost unattainable. I’m here to tell you that it may be difficult, but it is still do-able. The key ingredient you need to focus on is the gap, which I’ll discuss in a bit.


Travis Hornsby, the founder of The Student Loan Planner, addressed this topic in a podcast episode titled “How the FIRE Movement Could Help You as a Six-Figure Student Loan Borrower.” If this subject matter interests you at all, go ahead and take a listen. Here are some tips that he discusses in this episode:

  1. Max out your pre-tax retirement accounts through your employer: You get to save for retirement AND pay less taxes as a result- this is a nice winning combination!
  2. Contribute to your IRA: This is another great opportunity to save for retirement.
  3. Brokerage account: This is an option when saving for the tax bomb, which is the amount of tax you will owe if you decide to have your loans forgiven. You might as well put extra money in here to grow your savings.
  4. Don’t spend more than 2 times your household income on a home: home ownership is not cheap!
  5. Watch your spending in other categories: including car, food, clothing, and travel.
  6. Aim for as high of a savings rate as possible, at least 25% of your take home pay.


I used to think I was being smart with money by staying away from impulse purchases and buying things on sale. I would have been even smarter if I took this one step further and had understood the simple principles of building wealth.

Wealth building relies on:

  1. Earning income
  2. Spending less than you earn
  3. Save/invest the difference

It’s all about the gap between income and spending. The bigger your gap, the faster you will build wealth and get to the point of financial independence. This works for all income levels. No matter if you focus on the income side or the saving side (or both at the same time for maximal results), growing the gap is essential to building wealth.

What do most people do? They don’t think about actively growing a gap. Most people succumb to lifestyle inflation, because it’s ridiculously easy to do once you have the means. Most people think that debt is a normal part of life that needs to be a part of your budget until you retire (or maybe even until you die). Most people think that as long as the bills are paid at the end of the month, everything is great.

Well, you don’t have to be like most people. That’s not what’s going to get you to financial independence. The best case scenario is that you did save some money along the way, and you’ll be able to retire in your 60’s. Then there’s the sad reality that even those making six-figure salaries can find themselves living paycheck to paycheck, perhaps even digging themselves further into debt to fund their current lifestyle. That’s the exact opposite of financial freedom and independence.


Growing the gap is such a simple concept. But it’s certainly not always easy to implement, especially the higher your debt and the lower your income.

Do student loans make this more difficult? Of course. It’s a line item that takes up a significant portion of your monthly budget for up to 25 years.

But let’s not forget that your budget is made up of a number of other expenses. The three biggest categories in a typical budget are housing, transportation, and food. You could easily save an incredible amount of money by being very intentional with which house you buy, what kind of car you drive, and how much money you’re spending on groceries and eating out. The potential savings in these categories alone could be more than enough to offset your student loans.

And for those of you where cutting back in these categories isn’t enough, you have the option to choose an income driven repayment plan (IDR), where your monthly payment is calculated based on your income, not your debt load. There are definitely considerations you have to take into account when you go this route, because this also means that you’re signing up to have your loans eventually forgiven. For more information about forgiveness, you can read this post.

People opt for forgiveness in order to lower their monthly payments. If you have a greater than 2:1 debt to income ratio, you’ll see a big difference in your calculated monthly payment when comparing the standard 10 year repayment plan versus an income driven repayment (IDR) plan like PAYE.

Here’s an example using the VIN Foundation Student Loan Repayment Simulator:

Loan amount: $300,000

Interest rate: 6.5%

Income: $80,000

Debt to income ratio: 3.75

Standard 10 year Repayment Plan: $3,406 monthly payment for 10 years

PAYE Plan: 0-$511 monthly payment the first year, going up to a maximum of just over $1,000 at peak income level. Loan term is 20 years.

Remember, with a forgiveness plan, you’ll need to save money on the side for the tax bomb. In this case, the projection recommends that you save $413 every month, on top of your regular payment of $511. Even when adding up these two numbers ($924), it’s obvious that choosing PAYE will result in much more financial flexibility in the form of a lower monthly payment. But as I alluded to earlier, what do most people do when they find extra cash in their bank account?

They spend it.

And this isn’t just frivolous spending. Life happens. Emergencies happen. Events that end up costing you a lot of money because you didn’t prepare for them financially.

How about being intentional with your money from the get-go? How about using this extra financial cushion to your advantage by making savings a priority? How about using this as a chance towards growing your gap and reaching financial independence sooner rather than never?


Travis mentions that his wife is a physician, and her reaction to FIRE is a little less enthusiastic than his own. Why? Because of the RE (retire early) part of the acronym. She views her job as a calling, so why would she ever NOT want to work?

I would think that many veterinarians can agree with her line of thinking. I was certainly not thinking about retirement straight out of vet school. What’s the point of pouring all of this time and money into a degree if you plan to retire early?

But now, I realize that working towards financial independence is not about retiring early (I go into more detail in this post). It’s about creating financial security. It’s about having options. It’s about the freedom to walk away from a job or a situation that doesn’t fulfill your needs.

No matter how much you love your job, it’s not a bad idea to grow the gap in order to give your future self options down the line. Maybe you will want to switch jobs. Maybe you will want to cut back a little when you have children. Maybe you will finally pursue the idea of owning your own practice. The math shows that it IS possible, even with six-figure student loans.

Want to read about some of our colleagues who are well on their way to financial independence? I have their stories here.


It all starts with a purpose and a plan. Financial independence doesn’t happen by accident. It happens because you’re intentional about your money, a resource that you are working so hard to earn day in and day out.

Knowing your numbers enough to understand your gap is the important first step. You paid a lot of money for a valuable degree that has allowed you to have your dream job. If you’re interested in working towards financial independence, your journey starts today. It’s never too late to make changes that will lead you towards the path to financial independence.

Do you believe it’s possible to work towards financial independence with a high student loan debt burden? What have you been doing to grow your gap? Comment below!


  1. DA on March 5, 2019 at 3:32 pm

    I think the idea of attaining financial independence in particular can be very relatable to someone with large student loan debt that’s in a situation where they plan to repay it on their own. I’d argue it may even be more relatable than someone starting with a clean slate. The reason for this is that in order for someone to dig themselves out of debt (preferably quickly), they’ll be forced to increase the gap – as you mentioned – between their income and everyday spending. This gap would be used to pay down debt. However, once the debt is gone, one could then immediately transfer that margin from debt reduction to investing without any changes to their lifestyle as they’re already used to living within the confines of that amount of spending.

    I agree with your statement that financial independence and early retirement should be viewed separately. While everyone may not be interested in the latter, it’s hard to argue against working toward the former in my opinion.

    • Financial Wellness DVM on March 5, 2019 at 9:54 pm

      Great insight! It seems counterintuitive, but having student loans can actually put you in a situation where you become good with money out of necessity. The key is learning the concept of financial independence early on, before lifestyle inflation really takes a hold and prevents you from creating that gap. Thanks for stopping by!

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