Renzo wrote: ChrisC wrote:
Also, to those saying that living on 20k/year in an urban area isn't possible: you've outed yourselves as people who have never had to live poor, apparently.
Based on my current living numbers in Chicago:
Rent, including internet: $775/month
CTA pass: $86/month
Misc necessities: $100/month
Total: $1,361 a month, or $16,332/year; leaving you with $305 spending money per month for entertainment. Is it a glamorous life? No. Is it plausible for someone who wants to have paying off loans as #1 priority? Sure.
Exactly. Those critical posters also overlooked the possibility of a spouse or significant other adding income to the equation. And if the poster has a summer associateship, there's a pretty good chance he'll get hired at market.
I have lived very poor. But I had a job that didn't require me to look expensive. I don't see any allowance for maintaining a business wardrobe in you budget.
Also, you really think you can spend no more than $250 a month on food in a job that keeps you at the office until well after dinner most nights? You're not going to be sneaking home for ramen, and you won't be employed very long if you're always telling partners you can't go to lunch with them at Nobu because you're on an $8 dollar-a-day budget.
There is a substantial amount of money required just to maintain the appearance of belonging in a firm. Now, if one had a spouse that was contributing to household expenses, that's a little different than just living poor.
You bring your food with you to the office: eat at your desk on late nights. Not a difficult concept. This is a basic key for healthy living in addition to cheap living. Same goes for lunch. Not to mention, many firms (the one I'm going to be at included,) pay for your dinner if you're there past a certain time. $250 a month was a high estimate for food--it is considerably more than I currently spend (and I'm long past my ramen days).
The "lunches at Nobu" aren't at all frequent for younger associates, fall under the "entertainment expense" rubric, and are going to be billed to clients, more often than not. Not to mention such lunches are often (though not always) deductible, as long as significant business is discussed at the lunch.
Wardrobe expense I can grant you, though the misc expense $100/month was designed to cover a significant amount of the dry cleaning expense that goes with wearing dry-clean only stuff. That said, contrary to popular belief, associates do not need to be wearing $1,000 suits every day. You need one or two of those for client meetings; aside from that, more reasonable suits will suffice.
None of this is to say that I honestly believe any fresh-out-of-law-school grad is going to live like this. I'm certainly not going to--my napkin sketches point to $30-40k/year. I figure:
Base pay: $160k
Pre-tax input to employer-matched 401k: $12k (I think $1k a month is the max)
Taxes: 60% (ah, I love Illinois, and I vote against my own self-interest whenever I put pull the handle for a dem)
After-tax pay: $59,200 (This is almost certainly a low-ball estimate, because I don't think taxes get up to 60%, even in Illinois)
Rent: $1,300 including utilities and internet (I'm going to allow myself this upgrade--I'm still going to live with a roommate after I graduate because living alone is just incredibly inefficient, but I will probably look for a nicer place in a more interesting part of town, i.e. Lincoln Park)
CTA pass: $86 (owning a car in Chicago is pointless, I'll be using the L to commute anyway, etc.)
Food: $350 (allowing myself an upgrade here to buy higher-quality meat)
Entertainment (including eating out): $500
Wardrobe expenses: $200
Total: $2,736/month; $33k/year, which leaves me $26k/year for loan payments: a little over 7 years for repayment, which gets me done in time for the up-or-out. When one considers that I'm putting in the max to the matching 401k, not accounting for pay raises or bonuses, and using a 60% tax rate (and an 8.2% interest rate on the loan), this is a very pessimistic outlook: 4-5 years is more realistic, and I consider my expense projections, especially $500/mo for entertainment, to be ridiculously high.
I expect I'll actually be done with repayment in 4 years.