Check my math

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scribelaw
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Check my math

Postby scribelaw » Sun Apr 18, 2010 11:14 am

I'm looking @ NYU sticker and trying to figure out the post-graduate debt to income scenario. I'm assuming borrowing $200,000 after small student contribution and having money from 2L summer to lower debt load my third year. That's a $2,500 a month payment.

$160,000 salary. Take $10,000 off the top for 401 (k). So we're down to $150,000. 35 percent total taxes (federal withholding, social security, medicare, state income) -- $52,000 a year. Ouch. Down to $98,000 after taxes and retirment contribution.

That's about $8,170 a month (or $3,800 per paycheck on an every-other-week cycle).

So it'd be something around $5,500 a month to live on. This seems roughly doable, although I don't think it's an eating-caviar-off-$100-bills kinda lifestyle.

What did I screw up?

Big Dog
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Re: Check my math

Postby Big Dog » Sun Apr 18, 2010 11:17 am

35% (and increasing) is only the marginal tax rate, i.e., the taxes on the last xx of dollars earned. Your first $10k is income tax free, for example. Thus, your effective tax rate is bound to be less than 35%.

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scribelaw
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Re: Check my math

Postby scribelaw » Sun Apr 18, 2010 11:18 am

Big Dog wrote:35% (and increasing) is only the marginal tax rate, i.e., the taxes on the last xx of dollars earned. Your first $10k is income tax free, for example. Thus, your effective tax rate is bound to be less than 35%.


Correct. I figured the overall effective federal withholding would be more like 22-25 percent. But you have to add in social security (6 percent on first $96,000 I think), medicare taxes, local taxes. I took a conservative estimate -- I don't think there's any way it could be higher than 35 percent, and it could well be more like 28-30 percent if you have good deductions.

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cardnal124
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Re: Check my math

Postby cardnal124 » Sun Apr 18, 2010 11:26 am

http://www.paycheckcity.com

Put in your info for a salary, state, etc and it will give you a rough estimate of after tax income.

Edit: Net Pay $90,262.11 is the result based on your situation living in NYC. So long as you are single no kids and the 10k/year 401k. State and city taxes are a bitch.

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scribelaw
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Re: Check my math

Postby scribelaw » Sun Apr 18, 2010 11:41 am

cardnal124 wrote:http://www.paycheckcity.com

Put in your info for a salary, state, etc and it will give you a rough estimate of after tax income.

Edit: Net Pay $90,262.11 is the result based on your situation living in NYC. So long as you are single no kids and the 10k/year 401k. State and city taxes are a bitch.


No kidding.

But the 401(k) contributions aren't taxed, so you have to take that off the top...Also it changes slightly if you put down a few exemptions, assuming you'll have some deductions.

I get $96,000 in New York and $98,000 in Virginia (for DC market).

Still that's a crap ton of taxes, and then you have to deduct $30,000 in annual loan payments from that.

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neimanmarxist
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Re: Check my math

Postby neimanmarxist » Sun Apr 18, 2010 11:57 am

$5,500 to live on is definitely liveable. More than liveable. I know a few people who got their degrees , kept the standard of living that they had as law students (minus necessary expenses like work wardrobe- but little eating out, fancy vacations, expensive cars, brand-new mortgages) and they knocked out their debt in a couple of years. Being smart early pays off so much in the end.

Mr. Pablo
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Re: Check my math

Postby Mr. Pablo » Sun Apr 18, 2010 12:02 pm

neimanmarxist wrote:$5,500 to live on is definitely liveable. More than liveable. I know a few people who got their degrees , kept the standard of living that they had as law students (minus necessary expenses like work wardrobe- but little eating out, fancy vacations, expensive cars, brand-new mortgages) and they knocked out their debt in a couple of years. Being smart early pays off so much in the end.

+1
$5,500/month is $66,000/year. Most people don't make that much before taxes.

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clintonius
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Re: Check my math

Postby clintonius » Sun Apr 18, 2010 12:04 pm

Yeah, a market-rate job is going to net you significantly less than $160k, especially if you live in NYC. My take-home pay here is disturbingly close to half of my gross salary.

Another thing to consider is how long it'll take you to pay off your loans if you're making minimum payments. If you are looking to maintain the appearance of wealth, that's fine, but consider that it will take you much longer to actually accumulate money if you're only making minimum payments. If you've got $66k in take-home pay after minimum loan payments, it would behoove you to consider throwing half of that at your loans, as well.

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scribelaw
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Re: Check my math

Postby scribelaw » Sun Apr 18, 2010 12:15 pm

Mr. Pablo wrote:
neimanmarxist wrote:$5,500 to live on is definitely liveable. More than liveable. I know a few people who got their degrees , kept the standard of living that they had as law students (minus necessary expenses like work wardrobe- but little eating out, fancy vacations, expensive cars, brand-new mortgages) and they knocked out their debt in a couple of years. Being smart early pays off so much in the end.

+1
$5,500/month is $66,000/year. Most people don't make that much before taxes.


It's definitely more than I make now before taxes. But then again, I've never lived in NYC or the DC metro area.

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neimanmarxist
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Re: Check my math

Postby neimanmarxist » Sun Apr 18, 2010 12:29 pm

It's definitely a markup from smaller cities in the US but you can always live in a cheaper part of town, avoid the finest eating and drinking establishments in town, and drive what you drove in law school. Read a couple of personal finance books about saving and investing. You'll never want to waste money on that kind of stuff again anyway. PF books have this eerie ability to utterly brainwash you. :mrgreen:

Mr. Pablo
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Re: Check my math

Postby Mr. Pablo » Sun Apr 18, 2010 12:29 pm

Granted everything in NYC is more expensive, but it is really only the rent that will be hugely different. The other stuff is marginally more expensive, but its not like a can of tuna is suddenly going to cost you ten bucks, and your other monthly expenses aren't really going to skyrocket either (you will still be raped a mere $100/month for your phone service, for instance). You won't be able to eat at Nobu every night, but you aren't going to be stuck eating Ramen, either. Or drinking Schlitz- unless that's your thing.

edit: bad spelling

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clintonius
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Re: Check my math

Postby clintonius » Sun Apr 18, 2010 12:34 pm

But you do have to consider the fact that you're paying federal, state AND municipal income taxes. Those cut into your paycheck significantly, especially when you compare your take-home to that of somebody who's making market salary in Texas where there is no state income tax.




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