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

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

Postby buffalo_ » Mon Mar 31, 2014 12:45 pm

d cooper wrote: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.

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.


Not quite. If you use the calculators here: https://studentloans.gov/myDirectLoan/m ... ment-plans

I get about 430k paid on standard 10 year plan (so presumably 5 years would be much less), and about 480k paid on PAYE (IBR was insansely high).

What's the difference for IBR/PAYE and how do I know which one I could qualify for?

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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 12:55 pm

My numbers were off in that post but PAYE still makes sense. Obviously the tax bomb is still a concern.

I used $296,787 total debt at graduation (sticker at NU, accounting for yearly tuition hikes and interest), 6.41% interest (Grad PLUS).

I assumed $100,000 gross salary.

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

Postby buffalo_ » Mon Mar 31, 2014 1:04 pm

d cooper wrote:My numbers were off in that post but PAYE still makes sense. Obviously the tax bomb is still a concern.

I used $296,787 total debt at graduation (sticker at NU, accounting for yearly tuition hikes and interest), 6.41% interest (Grad PLUS).

I assumed $100,000 gross salary.

Image


Yeah the estimates are going to be different depending on factors. I used a mix of 6.8% stafford loans and 7.8% grad plus and totaled them to 300k (mostly a conservative estimate). For repayment, to me it only makes sense to put in 160k (BigLaw) or 50k-60k (PI). I don't think 100k makes sense because most people on TLS seem to imply that MidLaw is a myth, so that doesn't seem like a likely salary. With the lower income PAYE probably becomes even more attractive.

But my point was that standard (10 year) is under 450k, even with the relatively high interest rate estimates I plugged in. So paying it off in 5 years will be even less (probably around 380K).

That doesn't change the fact that PAYE might be the best option, but until loan forgiveness after 20 years is explicitly guaranteed (or at least grandfathered to 2014 entering 1Ls) then it is a risk. It would be really awful if in 2025 when you're halfway into PAYE the policy is removed and you cannot have the debt forgiven. You could have negative amortization and owe more than you when you started and no sign of the end in sight.

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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 1:12 pm

I went with $100k as a rough 20 year average to account for a few years in Biglaw and then ~15 years elsewhere. You're right that it's probably too high.

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

Postby buffalo_ » Mon Mar 31, 2014 1:16 pm

d cooper wrote:I went with $100k as a rough 20 year average to account for a few years in Biglaw and then ~15 years elsewhere. You're right that it's probably too high.


Maybe if you did BigLaw -> Public then it could average to 100k, but I still think the average would be higher. Even just 3-5 years of BigLaw is well above 100K, with increases every year. And most exit options won't bottom out to 50K, probably still right around 100k even after big law. So maybe 125k or 130k average for short term BigLaw -> non-public exit.

My estimates for PI are probably too low. 50K-60K is a good starting salary, but over 20 years that should creep up to the high 5-figures, maybe even hit 6-figures. So maybe a 75K average is more appropriate.

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rutgers17
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Re: Paying off 200k/300k debt on big law salary

Postby rutgers17 » Tue Apr 01, 2014 12:22 pm

buffalo_ wrote:
d cooper wrote:I went with $100k as a rough 20 year average to account for a few years in Biglaw and then ~15 years elsewhere. You're right that it's probably too high.


Maybe if you did BigLaw -> Public then it could average to 100k, but I still think the average would be higher. Even just 3-5 years of BigLaw is well above 100K, with increases every year. And most exit options won't bottom out to 50K, probably still right around 100k even after big law. So maybe 125k or 130k average for short term BigLaw -> non-public exit.

My estimates for PI are probably too low. 50K-60K is a good starting salary, but over 20 years that should creep up to the high 5-figures, maybe even hit 6-figures. So maybe a 75K average is more appropriate.


are you figuring taxes into that? since you're not taking home $160k, it seems like very high estimates to try to figure this stuff out with.

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

Postby d cooper » Tue Apr 01, 2014 12:24 pm

rutgers17 wrote:
buffalo_ wrote:
d cooper wrote:I went with $100k as a rough 20 year average to account for a few years in Biglaw and then ~15 years elsewhere. You're right that it's probably too high.


Maybe if you did BigLaw -> Public then it could average to 100k, but I still think the average would be higher. Even just 3-5 years of BigLaw is well above 100K, with increases every year. And most exit options won't bottom out to 50K, probably still right around 100k even after big law. So maybe 125k or 130k average for short term BigLaw -> non-public exit.

My estimates for PI are probably too low. 50K-60K is a good starting salary, but over 20 years that should creep up to the high 5-figures, maybe even hit 6-figures. So maybe a 75K average is more appropriate.


are you figuring taxes into that? since you're not taking home $160k, it seems like very high estimates to try to figure this stuff out with.


The repayment calculations use an "adjusted gross income."

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

Postby blckwsl » Tue Apr 01, 2014 12:32 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.


I'm not sure about other cities, but in Chicago, it's pretty easy to live off of $2000 a month. So if you throw everything else into paying back loans, it's totally doable in 4 years. Just expect to be living only slightly better than a college student though.

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

Postby rad lulz » Tue Apr 01, 2014 12:39 pm

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

Postby Tiago Splitter » Tue Apr 01, 2014 12:47 pm

rad lulz wrote:(ie do your own laundry or clean yourself)

I really hope this means you hire someone to clean you. Ain't got time for those plebe things like preparing my own bath!

blckwsl wrote:I'm not sure about other cities, but in Chicago, it's pretty easy to live off of $2000 a month. So if you throw everything else into paying back loans, it's totally doable in 4 years. Just expect to be living only slightly better than a college student though.

As others have said, it's possible but not recommended. The best reason why not is that it severely limits your flexibility. The important takeaway for 0L's shouldn't be that all debt is bad and that going into debt for law school is unacceptable, it's that debt needs to be a bigger consideration when deciding where to go. The vast majority of people going to law school can either re-take to limit their debt or go to a lower ranked school which provides similar job prospects to the more expensive one they were considering. Do those things.

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

Postby rad lulz » Tue Apr 01, 2014 1:11 pm

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

Postby baloneydanza » Tue Apr 01, 2014 3:36 pm

sad lulz wrote:
Tiago Splitter wrote:
rad lulz wrote:(ie do your own laundry or clean yourself)

I really hope this means you hire someone to clean you. Ain't got time for those plebe things like preparing my own bath!

blckwsl wrote:I'm not sure about other cities, but in Chicago, it's pretty easy to live off of $2000 a month. So if you throw everything else into paying back loans, it's totally doable in 4 years. Just expect to be living only slightly better than a college student though.

As others have said, it's possible but not recommended. The best reason why not is that it severely limits your flexibility. The important takeaway for 0L's shouldn't be that all debt is bad and that going into debt for law school is unacceptable, it's that debt needs to be a bigger consideration when deciding where to go. The vast majority of people going to law school can either re-take to limit their debt or go to a lower ranked school which provides similar job prospects to the more expensive one they were considering. Do those things.

I have not cleaned my apt once. It's been 4 months. I do shower. Laundry is becoming a burden. Strongly considering a laundry service. Cleaning I might take a weekend to do. I'm not home that much any more so maybe I can at least do that


So basically you're living like a college student.

I jest

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

Postby patogordo » Tue Apr 01, 2014 11:00 pm

sad lulz wrote:
d cooper wrote: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.

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.

Ok dude then you have to pay tax on PAYE forgiven income even if PAYE is still around (not guarantee) and you still have a shitload of debt hanging over you when you want to like I dunno buy a house or some shit

with PAYE you get 20 years to pay jack shit on your loans. you shouldn't have much of a problem buying a house cause your DTI will still be good and installment loans don't really affect your credit much.


after 20 years you just kill yourself.

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

Postby rad lulz » Tue Apr 01, 2014 11:17 pm

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

Postby patogordo » Tue Apr 01, 2014 11:17 pm

sad lulz wrote:
patogordo wrote:
sad lulz wrote:
d cooper wrote: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.

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.

Ok dude then you have to pay tax on PAYE forgiven income even if PAYE is still around (not guarantee) and you still have a shitload of debt hanging over you when you want to like I dunno buy a house or some shit

with PAYE you get 20 years to pay jack shit on your loans. you shouldn't have much of a problem buying a house cause your DTI will still be good and installment loans don't really affect your credit much.


after 20 years you just kill yourself.

I'll be 45 so all my good years will be behind me anyway

exactly. joke's on you, obama.

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

Postby SemperLegal » Tue Apr 01, 2014 11:32 pm

So, I feel like a dick for asking, because I'm 99% sure that I am in good shape, but I want to make sure I'm not special snowflaking.

Me: Biglaw, No debt, NYC
Mrs. Legal: $230k debt, Family medicine resident (three years @ $55k(ish), then a bump to low 6 figures)

This is easily manageable, right?

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

Postby patogordo » Tue Apr 01, 2014 11:33 pm

banned

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

Postby guano » Wed Apr 02, 2014 11:34 am

SemperLegal wrote:So, I feel like a dick for asking, because I'm 99% sure that I am in good shape, but I want to make sure I'm not special snowflaking.

Me: Biglaw, No debt, NYC
Mrs. Legal: $230k debt, Family medicine resident (three years @ $55k(ish), then a bump to low 6 figures)

This is easily manageable, right?

I highly recommend maxing out repayments on her debt as soon as possible Having a combined income north of $200k means you can afford to allocate her entire income toward repaying her debt.

Assuming you flame out of biglaw after 3 years toward a low 6 figure income, you two will still have a combined income of around $200k, and hopefully will have knocked the debt to around $100k or so. That's manageable if you live in NYC, though probably still not enough if you plan to buy a decent size apartment in the next 5 years.

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

Postby SemperLegal » Wed Apr 02, 2014 5:31 pm

guano wrote:
SemperLegal wrote:So, I feel like a dick for asking, because I'm 99% sure that I am in good shape, but I want to make sure I'm not special snowflaking.

Me: Biglaw, No debt, NYC
Mrs. Legal: $230k debt, Family medicine resident (three years @ $55k(ish), then a bump to low 6 figures)

This is easily manageable, right?

I highly recommend maxing out repayments on her debt as soon as possible Having a combined income north of $200k means you can afford to allocate her entire income toward repaying her debt.

Assuming you flame out of biglaw after 3 years toward a low 6 figure income, you two will still have a combined income of around $200k, and hopefully will have knocked the debt to around $100k or so. That's manageable if you live in NYC, though probably still not enough if you plan to buy a decent size apartment in the next 5 years.



I plan on living in JC or Further West on NEC or the RVL so that I have a 45 minute commute.

We do plan to max out repayment, as in put her entire pre-tax pay into paying off her loans and lay the taxes, rent, etc. out of mine.

She also will qualify for a tax-free* repayment of $15,000 a year for up to 4 years if she gets an attending job at the hospital where she is going to be a resident. I am thinking this means that we want to end up with $60,000 in loans or more after year three. Not sure if she is going to be PSLF, but I am assuming not. That plan , if possible, will get us down to a sizable debt, as long as I can last 3 years in biglaw and find a decent position afterwards. My thought is that two people can live on 160k less (double) taxes is Northern NJ. Are all my assumptions close enough to correct?



*there's a special IRC section for it

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

Postby guano » Wed Apr 02, 2014 7:34 pm

SemperLegal wrote:
guano wrote:
SemperLegal wrote:So, I feel like a dick for asking, because I'm 99% sure that I am in good shape, but I want to make sure I'm not special snowflaking.

Me: Biglaw, No debt, NYC
Mrs. Legal: $230k debt, Family medicine resident (three years @ $55k(ish), then a bump to low 6 figures)

This is easily manageable, right?

I highly recommend maxing out repayments on her debt as soon as possible Having a combined income north of $200k means you can afford to allocate her entire income toward repaying her debt.

Assuming you flame out of biglaw after 3 years toward a low 6 figure income, you two will still have a combined income of around $200k, and hopefully will have knocked the debt to around $100k or so. That's manageable if you live in NYC, though probably still not enough if you plan to buy a decent size apartment in the next 5 years.



I plan on living in JC or Further West on NEC or the RVL so that I have a 45 minute commute.

We do plan to max out repayment, as in put her entire pre-tax pay into paying off her loans and lay the taxes, rent, etc. out of mine.

She also will qualify for a tax-free* repayment of $15,000 a year for up to 4 years if she gets an attending job at the hospital where she is going to be a resident. I am thinking this means that we want to end up with $60,000 in loans or more after year three. Not sure if she is going to be PSLF, but I am assuming not. That plan , if possible, will get us down to a sizable debt, as long as I can last 3 years in biglaw and find a decent position afterwards. My thought is that two people can live on 160k less (double) taxes is Northern NJ. Are all my assumptions close enough to correct?



*there's a special IRC section for it

Yeah, sounds about right. Except, don't live in JC, it's a dump (relative to other towns near there). Quick question: where's your office? If you're in midtown, great (especially west side), but if you're downtown it'll limit your living options.

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

Postby SemperLegal » Wed Apr 02, 2014 10:17 pm

guano wrote:
SemperLegal wrote:
guano wrote:
SemperLegal wrote:So, I feel like a dick for asking, because I'm 99% sure that I am in good shape, but I want to make sure I'm not special snowflaking.

Me: Biglaw, No debt, NYC
Mrs. Legal: $230k debt, Family medicine resident (three years @ $55k(ish), then a bump to low 6 figures)

This is easily manageable, right?

I highly recommend maxing out repayments on her debt as soon as possible Having a combined income north of $200k means you can afford to allocate her entire income toward repaying her debt.

Assuming you flame out of biglaw after 3 years toward a low 6 figure income, you two will still have a combined income of around $200k, and hopefully will have knocked the debt to around $100k or so. That's manageable if you live in NYC, though probably still not enough if you plan to buy a decent size apartment in the next 5 years.



I plan on living in JC or Further West on NEC or the RVL so that I have a 45 minute commute.

We do plan to max out repayment, as in put her entire pre-tax pay into paying off her loans and lay the taxes, rent, etc. out of mine.

She also will qualify for a tax-free* repayment of $15,000 a year for up to 4 years if she gets an attending job at the hospital where she is going to be a resident. I am thinking this means that we want to end up with $60,000 in loans or more after year three. Not sure if she is going to be PSLF, but I am assuming not. That plan , if possible, will get us down to a sizable debt, as long as I can last 3 years in biglaw and find a decent position afterwards. My thought is that two people can live on 160k less (double) taxes is Northern NJ. Are all my assumptions close enough to correct?



*there's a special IRC section for it

Yeah, sounds about right. Except, don't live in JC, it's a dump (relative to other towns near there). Quick question: where's your office? If you're in midtown, great (especially west side), but if you're downtown it'll limit your living options.


Its Midtown West.

I'm originally from the area and still spend a lot of time in Hudson County, so as much as I very much suggest that random TLSers don't live in JC, I know all the gentrified areas (read, north Newport). I really, really want to live in West NY, doe.

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

Postby guano » Thu Apr 03, 2014 6:51 am

SemperLegal wrote:Its Midtown West.

I'm originally from the area and still spend a lot of time in Hudson County, so as much as I very much suggest that random TLSers don't live in JC, I know all the gentrified areas (read, north Newport). I really, really want to live in West NY, doe.

Do you mean western NYC, or the town of West New York? Because in that case, I'd recommend Cliffside park instead, which has a much, much lower crime rate

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

Postby moopness » Thu Apr 03, 2014 8:18 am

This thread is making me very, very depressed about my future :(

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

Postby yomisterd » Thu Apr 03, 2014 9:23 am

So would folks in this thread say that half to full tuition at CCN is better than fully debt financed HYS? Or, in what situations is 250k from HYS preferable?

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

Postby DoveBodyWash » Thu Apr 03, 2014 9:26 am

yomisterd wrote:So would folks in this thread say that half to full tuition at CCN is better than fully debt financed HYS? Or, in what situations is 250k from HYS preferable?

If you're gunning for PI/govt work (lets just assume that u can get those jobs if you want it), the loan forgiveness at HLS is completely different (dunno abt YS), and much much better.




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