Paying off 200k/300k debt on big law salary

Discuss various money matters here. Loans (federal and private), scholarships, lottery winnings, or other school finance related information and queries.
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t-14orbust
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Re: Paying off 200k/300k debt on big law salary

Postby t-14orbust » Fri Mar 28, 2014 12:31 pm

rad lulz wrote:Including obviously

Parents or need aid


Need aid at HLS maxes out at ~34K for single individuals w/ no kids though. Wouldn't that be over 150k with interest?

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patogordo
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Re: Paying off 200k/300k debt on big law salary

Postby patogordo » Fri Mar 28, 2014 12:32 pm

if you go to HYSP undergrad hopefully you won't have to go to law school

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BruceWayne
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Re: Paying off 200k/300k debt on big law salary

Postby BruceWayne » Sat Mar 29, 2014 1:13 pm

Desert Fox wrote:
BruceWayne wrote:I just want to point something out to all the 0Ls and 1Ls. Have you guys noticed, that even amongst posters who are all very different and definitely didn't see eye to eye in the past, that ALL of us who have actually graduated and gotten out into the real world concur about a lot of things? Like how these schools (yes even the top ones) really aren't worth the debt. And how unlikely you are to actually make these massive payments every month on your loans and to get rid of that 300K debt in lol 5 years. Or how we all agree that the likelihood of you actually staying in these big firm jobs is awful. But no just go ahead and keep thinking you know everything about these issues and we're just exaggerating. I mean damn DesertFox actually pulled off what's supposed to be the best case outcome if you have sticker debt and EVEN he is telling you it's not a good idea. And straight LOL at the living off $2K a month in NYC while working at a big firm is no big deal. I'm having a hard ass time living off a little less than that in a market with a COL half of NYC.

I really do find it kind of amazing that so many of us who entered at the same time have almost all come out with very similar stances on what things are like. It says a lot about what this profession is really like at the moment. Almost every post that I've read from WorldTraveler, Desert, Rad, and rayiner sounds like what I've experienced or what other people who I graduated with experienced as well. We were all bamboozled by these schools and this field.


The bottom line is, even if you win, get the fancy big law job, you still lose when you take out six figs of debt.


EXACTLY. Basically even the "best case" outcome is still bad. Law school is really only a good idea for a select number of people with very specific circumstances. I really feel like the most you should pay for a top 14 law school is $100K total. Once you get outside of the top 14 I don't think you should pay more than 45-55K, although I know people will say that's an extreme viewpoint.

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DoveBodyWash
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Re: Paying off 200k/300k debt on big law salary

Postby DoveBodyWash » Sat Mar 29, 2014 2:03 pm

BruceWayne wrote:Once you get outside of the top 14 I don't think you should pay more than 45-55K, although I know people will say that's an extreme viewpoint.

Even a full ride at a T20 is costing me 70k because of COL and tuition increases (this is before adjusting for interest)...i don't think it's possible to pay 45k outside the T14 unless you're getting a stipend of some kind..

BruceWayne wrote:I really feel like the most you should pay for a top 14 law school is $100K total.

and same thing here..at LEAST 60-70k of that is gonna be COL depending on the city. So that means only paying 30-40k in tuition...that's basically almost a full ride

But i guess the takeaway of your point was to stress the narrow circumstances in which it's a good idea to go to law school, so it makes sense

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worldtraveler
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Re: Paying off 200k/300k debt on big law salary

Postby worldtraveler » Sat Mar 29, 2014 2:13 pm

2L and 3L year you should be able to work if you really need to. Look for TA positions on campus, tutor the LSAT, etc. I can't think of anybody who did bartending or anything like that during law school, but frankly 2L and 3L you should have a fair amount of free time unless you are killing yourself with a billion student groups and 3 journals. Find a job sitting at a front desk on campus and study while you're there.

kaiser
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Re: Paying off 200k/300k debt on big law salary

Postby kaiser » Sat Mar 29, 2014 2:20 pm

I agree 100% with those who noted how the overall attitudes and opinions of us grads seem to be in relative agreement on a large majority of issues, including the debt issue. It really goes to show how actually facing the debt payments, the sacrifices, etc. shift your perspective

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patogordo
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Re: Paying off 200k/300k debt on big law salary

Postby patogordo » Sat Mar 29, 2014 2:21 pm

the sad part about "don't go to law school without a full ride" being good advice is that those scholarships are paid for by students paying sticker

wildhaggis
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Re: Paying off 200k/300k debt on big law salary

Postby wildhaggis » Sat Mar 29, 2014 2:22 pm

Being a young biglaw associate who has lurked this forum for years, it's staggering to see how much my viewpoint has changed. I used to be the deny, deny, deny law student who'd come up with any reason to dismiss biglaw horror stories. Now I see they're all very real, and often worse.

To stay on point in this thread, I still have a fairly big debt load and do not see myself lasting long enough to pay it off. I often wonder if I will last long enough to even whittle it to an amount manageable on a much smaller salary.

That said - what's the general consensus for folks like myself? People who took out all of this debt thinking biglaw would wipe it all clean eventually, but come to the sobering realization that it is too much in too little time.

NeedAnExit
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Re: Paying off 200k/300k debt on big law salary

Postby NeedAnExit » Sat Mar 29, 2014 3:01 pm

wildhaggis wrote:Being a young biglaw associate who has lurked this forum for years, it's staggering to see how much my viewpoint has changed. I used to be the deny, deny, deny law student who'd come up with any reason to dismiss biglaw horror stories. Now I see they're all very real, and often worse.

To stay on point in this thread, I still have a fairly big debt load and do not see myself lasting long enough to pay it off. I often wonder if I will last long enough to even whittle it to an amount manageable on a much smaller salary.

That said - what's the general consensus for folks like myself? People who took out all of this debt thinking biglaw would wipe it all clean eventually, but come to the sobering realization that it is too much in too little time.



What level of debt are you facing? I would think the best thing to do is cut expenses as far as you can, start saving up cash while making the minimum payments on a 10-year plan, and then when you leave, switch to a 30-year plan and hope that you have enough of a cushion to deal with the payments until your salary goes up.

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patogordo
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Re: Paying off 200k/300k debt on big law salary

Postby patogordo » Sat Mar 29, 2014 3:04 pm

just do PAYE 10% wage-slavery for life bro

think of it as a child support payment for the accidental pregnancy your law school refused to abort

wildhaggis
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Re: Paying off 200k/300k debt on big law salary

Postby wildhaggis » Sat Mar 29, 2014 3:14 pm

patogordo wrote:just do PAYE 10% wage-slavery for life bro

think of it as a child support payment for the accidental pregnancy your law school refused to abort


Is PAYE this credited? I think I might be fucked by the 2007 cut-off.

Can a PAYE/IBR wage-slave chime in on this?

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Tanicius
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Re: Paying off 200k/300k debt on big law salary

Postby Tanicius » Sat Mar 29, 2014 3:15 pm

rayiner wrote:
Poopface wrote:
Daily_Double wrote:One issue is that it requires the assumption that you will last 4+ years in biglaw.


Wow excellent point. I bet the poster NEVER even considered this!!!!!! Thank goodness you were able to think of this and bring it to his attention.

To answer the question, there's no reason why you can't make 5-6g/mo payments, live very modestly, and have 200k+ debt paid off in 4ish years.


If you're single, your take-home in NYC is under $8,000 per month. To pay off $250k in 4 years, you have to make payments of $6,000 per month. That means living in a major metro area on $2,000 per month.

It's probably possible to do this, but almost nobody manages. People say "oh, just live like a college student!"[1] What they don't realize is that living like a college student is one thing when you're 19, in a college town, in an environment where it's okay to dress like a bum, and have maybe 3-4 hours of real work per day. It's very different when you're pushing 30, working 60-70 hour weeks in a major metro area, have to get your clothes dry cleaned, etc. At that point your desire to save a bit of money by cleaning your own bathrooms or brown bagging is zilch.

[1] Stupid things rayiner said about loan payments 5 years ago: http://www.top-law-schools.com/archives ... 15&t=71460. At the time I think I calculated I would put $4-5k/month towards loans. Instead, I barely made my $3k payment (10 year repayment) each month.


This is pretty cool. I'm terrified to rediscover what kind of dumb shit I've said on this forum a month ago, let alone back in 2009 when I joined.

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patogordo
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Re: Paying off 200k/300k debt on big law salary

Postby patogordo » Sat Mar 29, 2014 3:16 pm

wildhaggis wrote:
patogordo wrote:just do PAYE 10% wage-slavery for life bro

think of it as a child support payment for the accidental pregnancy your law school refused to abort


Is PAYE this credited? I think I might be fucked by the 2007 cut-off.

Can a PAYE/IBR wage-slave chime in on this?

you can still do IBR 15% wage-slavery then, even if you're pre-2007. your abandoned baby has slightly more expensive tastes.

wildhaggis
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Re: Paying off 200k/300k debt on big law salary

Postby wildhaggis » Sat Mar 29, 2014 4:03 pm

patogordo wrote:
wildhaggis wrote:
patogordo wrote:just do PAYE 10% wage-slavery for life bro

think of it as a child support payment for the accidental pregnancy your law school refused to abort


Is PAYE this credited? I think I might be fucked by the 2007 cut-off.

Can a PAYE/IBR wage-slave chime in on this?

you can still do IBR 15% wage-slavery then, even if you're pre-2007. your abandoned baby has slightly more expensive tastes.


Who are the resident wage-slaves? Has anyone talked about what this is actually like?

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worldtraveler
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Re: Paying off 200k/300k debt on big law salary

Postby worldtraveler » Sat Mar 29, 2014 4:04 pm

wildhaggis wrote:
patogordo wrote:
wildhaggis wrote:
patogordo wrote:just do PAYE 10% wage-slavery for life bro

think of it as a child support payment for the accidental pregnancy your law school refused to abort


Is PAYE this credited? I think I might be fucked by the 2007 cut-off.

Can a PAYE/IBR wage-slave chime in on this?

you can still do IBR 15% wage-slavery then, even if you're pre-2007. your abandoned baby has slightly more expensive tastes.


Who are the resident wage-slaves? Has anyone talked about what this is actually like?


I'm on IBR but with PSLF, so I pay zero every month. If I ever make above 65k I'll have to make a small amount.

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patogordo
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Re: Paying off 200k/300k debt on big law salary

Postby patogordo » Sat Mar 29, 2014 4:17 pm

maybe i'll just go back and do the EE PhD i should have done in the first place instead of going to law school. there's no limit on in-school deferment if i manage to stay in school forever, right?

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A. Nony Mouse
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Re: Paying off 200k/300k debt on big law salary

Postby A. Nony Mouse » Sat Mar 29, 2014 5:01 pm

I'm on IBR too. Fed gov entry level salary and I pay about $341 a month. I haven't tried to buy a house or anything, but at least I can afford the payments. Hoping for that PSLF.

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Re: Paying off 200k/300k debt on big law salary

Postby Learn_Live_Hope » Sat Mar 29, 2014 5:16 pm

rad lulz wrote:
jlamb555 wrote:
Desert Fox wrote:
300k in 5 years is 6k a month. Every month. ---- This is impossible unless someone is paying for your costs.


I calculated the following payments by year. 60, 65, 75, 87, 98. I didn't check precisely but this should pay off 300. Considering lockstep + bonuses it is not impossible.

160k in NYC is about 96k after taxes

Enjoy living off 36k (plus whatever is after tax of you paltry $10k bonus) in NYC

Be sure to think about the conveniences you'll find yourself paying for (cabs, ordered out lunch, dry cleaning) when you bill 2000+ hrs/yr


...
Last edited by Learn_Live_Hope on Tue Oct 14, 2014 10:32 pm, edited 1 time in total.

fanlinxun
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Re: Paying off 200k/300k debt on big law salary

Postby fanlinxun » Sat Mar 29, 2014 5:59 pm

wildhaggis wrote:
patogordo wrote:just do PAYE 10% wage-slavery for life bro

think of it as a child support payment for the accidental pregnancy your law school refused to abort


Is PAYE this credited? I think I might be fucked by the 2007 cut-off.

Can a PAYE/IBR wage-slave chime in on this?


Depends on your situation. It is nice if you have a family and living off of 2000 a month in NYC is not even remotely possible. For these types of folks (including myself) it may be a choice between the 10 year plan and PAYE over 20 years. Using the studentloans.gov calculator, with an unrealistic projection of a 5% wage increase every year over 20 years, a person with a family of 4 would pay around 60,000 more over 20 years than they would over 10 years. That is not an insignificant amount, even taking into account the time value of money, but for me it is worth it since my family gets to enjoy a higher standard of living now. Also, if anything happens to me my family does not have to repay the debt and, with proper estate planning, they get all of the extra money that I saved. (Though I acknowledge that term life insurance can achieve the same result for much less than 3000 a year over 20 years.) Finally, I was able to buy a house right out of law school because banks look at your monthly payments, not your total debt load. These factors make it worth it for me.

The numbers are very different if you are single. If I were single I would pay off loans ASAP to cut down on interest and to be close to debt free by the time I wanted to start a family.

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Sgt Brody.
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Re: Paying off 200k/300k debt on big law salary

Postby Sgt Brody. » Sat Mar 29, 2014 6:02 pm

Desert Fox wrote:
buffalo_ wrote:
Daily_Double wrote:One issue is that it requires the assumption that you will last 4+ years in biglaw.


I hear this all the time. That people don't "last in BigLaw." What does that even mean? Do they just fire all of the 5th year associates? And if they don't, then it means people are choosing to leave. And when they do leave does their income drop by a considerable amount? How much?


It wildly varies, but from what I hear its 50% quitting and 50% getting fired. More quit early, and more get fired later on. It's easy to say "but I won't quit!" After getting chewed out for not responding to an email at 10pm on friday night about a fake deadline, you'll change your mind.

200k in 5 years is 4k a month. Every month. That's half your salary.

300k in 5 years is 6k a month. Every month. ---- This is impossible unless someone is paying for your costs.


would paying of the loans in 10 years instead of 5 years lessen the burden?

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guano
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Re: Paying off 200k/300k debt on big law salary

Postby guano » Sat Mar 29, 2014 7:03 pm

Learn_Live_Hope wrote:
rad lulz wrote:
jlamb555 wrote:
Desert Fox wrote:
300k in 5 years is 6k a month. Every month. ---- This is impossible unless someone is paying for your costs.


I calculated the following payments by year. 60, 65, 75, 87, 98. I didn't check precisely but this should pay off 300. Considering lockstep + bonuses it is not impossible.

160k in NYC is about 96k after taxes

Enjoy living off 36k (plus whatever is after tax of you paltry $10k bonus) in NYC

Be sure to think about the conveniences you'll find yourself paying for (cabs, ordered out lunch, dry cleaning) when you bill 2000+ hrs/yr


You could always live in New Jersey :)

Doesn't make life cheaper. You'll probably need a car, your public transportation costs will go up, and your rent won't be much cheaper (but you will have more space). Additionally, when you're working 70 hours a week, do you really want to have an hour and a half commute in each direction?

Look, it is possible to live cheap (noticeably less than the $36k mentioned above) in NYC while working a professional job, but it is such a miserable existence that youeveryone will be questioning your sanity, and I doubt anyone could last long enough for it to be worthwhile

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Re: Paying off 200k/300k debt on big law salary

Postby jlamb555 » Mon Mar 31, 2014 1:37 am

rayiner wrote:
jlamb555 wrote:
BruceWayne wrote:And straight LOL at the living off $2K a month in NYC while working at a big firm is no big deal. I'm having a hard ass time living off a little less than that in a market with a COL half of NYC.


Yes living on 2k a month in NYC is absurd but I'm not even sure where that figure came from. Even a conservative estimate would indicate paying off 200k in 4 years would allow ~4.5k a month to live on at the start and ~7k a month by the end of the repayment. 300k in 6 years is also possible if you start ~4k month in living expenses.


I don't know how you're doing your math. From Paycheck City (Single, 2 allowances):

Monthly Gross Pay $13,333.33
Federal Withholding $2,927.81
Social Security $826.67
Medicare $193.33
New York $857.99
SDI $2.60
City Tax $491.75

Net Pay $8,033.18


Using the Bankrate calculator: http://www.bankrate.com/calculators/mor ... x?MSA=8872

$200k at 7.61% paid off over 48 months requires a payment of $4,846.05. That leaves you $3,187 per month in NYC. $250k at 7.61% paid off over 48 months requires a payment of $6,057.57, leaving you $1,975. $300k at 7.61% paid off over 72 months requires a payment of $5,203 per month, leaving you with $2,830 per month.

These are all unrealistic schedules. Most people will pay about $2,000 per month in rent in New York. When you're working long hours, your desire to commute from Queens from an apartment you share with two other people will be very low. Your desire to come home to a shitty, filthy apartment after a 16 hour day will be very low. Yes, lots of people live in NYC on $2k-3k/month. By and large, these folks have other things going for them, a 40 hour a week job that leaves plenty of time for relaxing and hanging out with friends that makes the scrimping tolerable. Also, speaking of friends, the ones you have will want to make the most of their limited time off and go somewhere nice for dinner. They're not going to want to head to Shake-Shack for dinner like you did with your college friends.

Also, the fact of the matter is that 80% of people won't even make it six years in big law.


Those numbers are right but I think there's a few problems with your thinking. First, you completely ignore bonuses which are important to consider. I didn't run them into the calculator but after bonuses you come to a total compensation which is something like this. 100 -> 108 -> 120 -> 136 -> 150 -> 163. Distributed out for the year you come to something like this per month. 8333 -> 9000 -> 10000 -> 11333 -> 12500 -> 13583. So for 4 years at 200k you average the following amount to live on per month. 3487 -> 4154 -> 5154 -> 6487. 6 years at 300k you'd average 3130 -> 3797 -> 4797 -> 6130 -> 7297 -> 8380. I understand bonuses are a bit uncertain but this is just an estimation.

It's also good to consider that you could lessen the financial blow in the first 2 years by paying more in the last year or two. You could get even the first few years up to 4k to live on and you can definitely live ok in NYC on 4k. I understand that once you get the big job you want to enjoy some of its benefits so there is definitely a psychological wall. However you can probably hit these targets without living like a complete poor. Especially if you are married.

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guano
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Re: Paying off 200k/300k debt on big law salary

Postby guano » Mon Mar 31, 2014 11:52 am

jlamb555 wrote:
rayiner wrote:
jlamb555 wrote:
BruceWayne wrote:And straight LOL at the living off $2K a month in NYC while working at a big firm is no big deal. I'm having a hard ass time living off a little less than that in a market with a COL half of NYC.


Yes living on 2k a month in NYC is absurd but I'm not even sure where that figure came from. Even a conservative estimate would indicate paying off 200k in 4 years would allow ~4.5k a month to live on at the start and ~7k a month by the end of the repayment. 300k in 6 years is also possible if you start ~4k month in living expenses.


I don't know how you're doing your math. From Paycheck City (Single, 2 allowances):

Monthly Gross Pay $13,333.33
Federal Withholding $2,927.81
Social Security $826.67
Medicare $193.33
New York $857.99
SDI $2.60
City Tax $491.75

Net Pay $8,033.18


Using the Bankrate calculator: http://www.bankrate.com/calculators/mor ... x?MSA=8872

$200k at 7.61% paid off over 48 months requires a payment of $4,846.05. That leaves you $3,187 per month in NYC. $250k at 7.61% paid off over 48 months requires a payment of $6,057.57, leaving you $1,975. $300k at 7.61% paid off over 72 months requires a payment of $5,203 per month, leaving you with $2,830 per month.

These are all unrealistic schedules. Most people will pay about $2,000 per month in rent in New York. When you're working long hours, your desire to commute from Queens from an apartment you share with two other people will be very low. Your desire to come home to a shitty, filthy apartment after a 16 hour day will be very low. Yes, lots of people live in NYC on $2k-3k/month. By and large, these folks have other things going for them, a 40 hour a week job that leaves plenty of time for relaxing and hanging out with friends that makes the scrimping tolerable. Also, speaking of friends, the ones you have will want to make the most of their limited time off and go somewhere nice for dinner. They're not going to want to head to Shake-Shack for dinner like you did with your college friends.

Also, the fact of the matter is that 80% of people won't even make it six years in big law.


Those numbers are right but I think there's a few problems with your thinking. First, you completely ignore bonuses which are important to consider. I didn't run them into the calculator but after bonuses you come to a total compensation which is something like this. 100 -> 108 -> 120 -> 136 -> 150 -> 163. Distributed out for the year you come to something like this per month. 8333 -> 9000 -> 10000 -> 11333 -> 12500 -> 13583. So for 4 years at 200k you average the following amount to live on per month. 3487 -> 4154 -> 5154 -> 6487. 6 years at 300k you'd average 3130 -> 3797 -> 4797 -> 6130 -> 7297 -> 8380. I understand bonuses are a bit uncertain but this is just an estimation.

It's also good to consider that you could lessen the financial blow in the first 2 years by paying more in the last year or two. You could get even the first few years up to 4k to live on and you can definitely live ok in NYC on 4k. I understand that once you get the big job you want to enjoy some of its benefits so there is definitely a psychological wall. However you can probably hit these targets without living like a complete poor. Especially if you are married.

Just because you rationalize it before you start, doesn't mean it'll actually work. When you work yourself to death in the way most biglaw lawyers do, you don't want to come home to a flea ridden shoebox and eat ramen noodles. Even if you try to do that, your colleagues will drag you out to bar nights, dinners out, or you might go on a date, all of which will cost a lot more than you think. You'll also need to take vacations every so often so you can recharge. By the time you're a third-year, I doubt you'll blink at spending a few hundred bucks on a night out. I know that I've certainly dropped half a grand on a whim (dinner, theatre, drinks, cabs in both directions for me and a plus one)

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d cooper
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Re: Paying off 200k/300k debt on big law salary

Postby d cooper » Mon Mar 31, 2014 12:33 pm

I think in most cases, going at sticker means your objectively best option is to just become an IBR/PAYE wage slave and not attempt to pay down the debt. Even if you pay it off aggressively, you will spend something like $450k over 4-5 years. On PAYE you'll pay roughly half that over 20. (EDIT: My numbers were off but the conclusion still stands — see my next post.)

Not only are you paying less overall, but your month-to-month will be a lot more normal and you won't be living on $30k in NYC.
Last edited by d cooper on Mon Mar 31, 2014 12:57 pm, edited 1 time in total.

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Re: Paying off 200k/300k debt on big law salary

Postby rad lulz » Mon Mar 31, 2014 12:39 pm

f
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