Biglaw: How much to spend on rent?

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Biglaw: How much to spend on rent?

Postby Anonymous User » Mon Nov 05, 2012 1:53 pm

NYC, 130k or so in loans, how much is too much to spend in rent? Is 1750 too much?

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Re: Biglaw: How much to spend on rent?

Postby Sgtpeppernyc » Mon Nov 05, 2012 2:19 pm

That's reasonable. For post-undergrad living, where most are making < $60k, the going rate is $1,000-$1,400, with some outliers paying less in Brooklyn or Astoria. Given you'll be making 3-5 times that, you can certainly afford to pay $1,750. While a lot go into the $2k - $3k range, given the current legal market, it can't hurt to live cheaper, pay down your debt, and amass a rainy day fund.

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Re: Biglaw: How much to spend on rent?

Postby thesealocust » Mon Nov 05, 2012 3:07 pm

At the upper range, many apartments won't qualify you unless you can demonstrate earning 40x the monthly rent or have a guarantor sign with you. The "general" rule of thumb is that around a third of your income should be for rent. Most people use pre-tax numbers, but if you're earning biglaw money you'll also have a hellacious tax bill so thinking about it post-tax might be smarter.

I know people paying everything from 1,500 to over 3,000 per month with biglaw jobs; it comes down to debt load, preferences, and needs (cat? souse? kid? car?) . Roommates make things much cheaper but obviously come with the challenges (and joys) of sharing space.

At the end of the day it all comes down to budgeting. After loan payments, rent payments, utilities, transportation costs, health insurance costs, retirement contributions, gym memberships, etc. how much will you feel comfortable living on? Make sure your rent lets you hit that number as comfortably as possible.

TL;DR: personal finance 101 -> pay no more than 1/3 salary in rent, establish a rainy day fund with 3-6 months rent + bills ASAP, contribute to your retirement in tax advantaged funds (roth IRA, 401(k), and the attractive but often overlooked series I savings bonds) as possible but be advised paying down debt is likely a higher return on investment if you have to choose between the two. Use credit cards to build a credit score even if (and it's a good idea) you pay the balance in full each month.

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Re: Biglaw: How much to spend on rent?

Postby Lwoods » Mon Nov 05, 2012 3:20 pm

In NY, you can typically be approved for a property that's monthly rent is 1/40th of your annual salary. At NY BigLaw market, that's $4k/month. Considering you can get a luxury 1bdrm in a good neighborhood for under $3k/month (and that's without really trying; obviously there are deals to be found...I never paid nearly that much), I would bank any extra to go toward your retirement and/or loan payments. And if you have a place for $1750 that you like, I'd go for it.

Remember the big saving in NY is going without a car. I know the city is in rough shape right now, but if you're comfortable with walking and taking the subway, your transportation costs will be minimal. Most if not all Biglaw firms in NY will pay for you to take a black car home (often only to the 5 boroughs, not Jersey/CT/LI) if you're working past a certain hour, so if you're conservative with cab spending in your social life, you'll likely be paying a lot less in transportation than you would in other cities. You can then take that savings into account when you set your monthly budget.

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Re: Biglaw: How much to spend on rent?

Postby shock259 » Mon Nov 05, 2012 4:28 pm

I'm planning on keeping rent costs low with roommates. You can get a lot nicer place for $2k in a 2br than you can for $2k in a studio.

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