160K after taxes, NYC, and living costs? Forum

[Anonymous User]

Searched around for this but people seemed to disagree (or the answers were from more than three years ago). Would be interested in seeing what current 1st or 2nd years are taking home after tax cuts in Manhattan. Plus how much you are spending on living costs (everything before savings/loan payments, basically). Trying to decide between NYC big law and home market right now, thanks.

[stillwater]

after all that in NYC, youll probably be living in an unfurnished apartment rubbing two pennies together you found in the radiator.

[Anonymous User]

Searched around for this but people seemed to disagree (or the answers were from more than three years ago). Would be interested in seeing what current 1st or 2nd years are taking home after tax cuts in Manhattan. Plus how much you are spending on living costs (everything before savings/loan payments, basically). Trying to decide between NYC big law and home market right now, thanks.

Good friend of mine is a 3rd year (or starting his 3rd year) at a V5. We have talked about this because I was in same boat between Texas and V5 firm.

He said his take home after Taxes were 96 as a first year associate. He spent 2,700 a month on a one bed one bath (about 725-775 sq feet) so thats about 32k a year. This of course doesnt include loan payments, utilities, cable, food, going out, etc. He said that after his first year he checked how much he paid on his loans (he put every penny he could towards them) and he only put 32k toward his loans the first year.

This was a big factor in why I decided to go with Texas over NYC. Take home will be about 15-17k more a year. You will probably save 1,200 a month on rent (another 14k). Plus a ton on food, going out, etc. I think the difference is like 35k a year in the bank when all is said and done. Though, if your home market doesnt pay NYC this is a different story.

[Tiago Splitter]

Texas over NYC. Take home will be about 15-17k more a year.

No. Come on. If state and local taxes weren't deductible on your federal return I'm still not sure this would be right.

[Anonymous User]

Searched around for this but people seemed to disagree (or the answers were from more than three years ago). Would be interested in seeing what current 1st or 2nd years are taking home after tax cuts in Manhattan. Plus how much you are spending on living costs (everything before savings/loan payments, basically). Trying to decide between NYC big law and home market right now, thanks.

Good friend of mine is a 3rd year (or starting his 3rd year) at a V5. We have talked about this because I was in same boat between Texas and V5 firm.

He said his take home after Taxes were 96 as a first year associate. He spent 2,700 a month on a one bed one bath (about 725-775 sq feet) so thats about 32k a year. This of course doesnt include loan payments, utilities, cable, food, going out, etc. He said that after his first year he checked how much he paid on his loans (he put every penny he could towards them) and he only put 32k toward his loans the first year.

This was a big factor in why I decided to go with Texas over NYC. Take home will be about 15-17k more a year. You will probably save 1,200 a month on rent (another 14k). Plus a ton on food, going out, etc. I think the difference is like 35k a year in the bank when all is said and done. Though, if your home market doesnt pay NYC this is a different story.

let's finish out the math though to be fair. 96k take home - the 32 k a year for house is 64k. you're saying he put everything he could towards loans besides what he needed to. but I can't imagine how you could need to spend an additional 32k in a single year. that's a decently good amount of money to spend on things besides utilities, cables, food, and going out, he probably did a lot of going out or enjoying things (which is ok).

[wiz]

Texas over NYC. Take home will be about 15-17k more a year.

No. Come on. If state and local taxes weren't deductible on your federal return I'm still not sure this would be right.

I've seen people throw around figures like 8k more take home per year. The biggest difference, of course, is COL.

[lukertin]

let's finish out the math though to be fair. 96k take home - the 32 k a year for house is 64k. you're saying he put everything he could towards loans besides what he needed to. but I can't imagine how you could need to spend an additional 32k in a single year. that's a decently good amount of money to spend on things besides utilities, cables, food, and going out, he probably did a lot of going out or enjoying things (which is ok).

17k to a 401, 5k to an IRA and that leaves 10k for utilities, eating and having fun. Less than 1k a month of discretionary spending in NYC is being moderate

[Anonymous User]

1st year, NYC, market salary. Easiest to look at it by month:

Monthly salary pre-tax: $13,333
401(k) contribution: $1,400 pre-tax dollars
Other withholding and taxes- (a bunch of stuff here: commuting benefits, insurance, gym membership, etc.)
Actual monthly paycheck size after 401(k) contribution and deductions: Roughly $6,700
Monthly expenses: Rent + utilities + food in NYC is likely to set you back between $2,000 and $3,500 per month, but everyone does something different.

I am fairly frugal, and 40% to 60% of every after-tax dollar I earn is going towards debt or savings.

I'll probably get a tax refund in February, I haven't thought much about the size, but since state and local taxes are deductible I'd imagine it will be fairly generous.

[Anonymous User]

Searched around for this but people seemed to disagree (or the answers were from more than three years ago). Would be interested in seeing what current 1st or 2nd years are taking home after tax cuts in Manhattan. Plus how much you are spending on living costs (everything before savings/loan payments, basically). Trying to decide between NYC big law and home market right now, thanks.

Good friend of mine is a 3rd year (or starting his 3rd year) at a V5. We have talked about this because I was in same boat between Texas and V5 firm.

He said his take home after Taxes were 96 as a first year associate. He spent 2,700 a month on a one bed one bath (about 725-775 sq feet) so thats about 32k a year. This of course doesnt include loan payments, utilities, cable, food, going out, etc. He said that after his first year he checked how much he paid on his loans (he put every penny he could towards them) and he only put 32k toward his loans the first year.

This was a big factor in why I decided to go with Texas over NYC. Take home will be about 15-17k more a year. You will probably save 1,200 a month on rent (another 14k). Plus a ton on food, going out, etc. I think the difference is like 35k a year in the bank when all is said and done. Though, if your home market doesnt pay NYC this is a different story.

let's finish out the math though to be fair. 96k take home - the 32 k a year for house is 64k. you're saying he put everything he could towards loans besides what he needed to. but I can't imagine how you could need to spend an additional 32k in a single year. that's a decently good amount of money to spend on things besides utilities, cables, food, and going out, he probably did a lot of going out or enjoying things (which is ok).

This is hilarious. I am guessing you have never worked full time? When I was working between UG and LS I made something like 47k after taxes. I spent 1,500 a month in rent. So that leaves me like 29k...I had like 5 grand when I went to law school. I by no means lived it up.

[Tiago Splitter]

let's finish out the math though to be fair. 96k take home - the 32 k a year for house is 64k. you're saying he put everything he could towards loans besides what he needed to. but I can't imagine how you could need to spend an additional 32k in a single year. that's a decently good amount of money to spend on things besides utilities, cables, food, and going out, he probably did a lot of going out or enjoying things (which is ok).

17k to a 401, 5k to an IRA and that leaves 10k for utilities, eating and having fun. Less than 1k a month of discretionary spending in NYC is being moderate

The assumption was that he put everything he could towards loans. But if he's tossing 22K towards retirement savings he's obviously not doing that.

[Florence Night]

Searched around for this but people seemed to disagree (or the answers were from more than three years ago). Would be interested in seeing what current 1st or 2nd years are taking home after tax cuts in Manhattan. Plus how much you are spending on living costs (everything before savings/loan payments, basically). Trying to decide between NYC big law and home market right now, thanks.

Good friend of mine is a 3rd year (or starting his 3rd year) at a V5. We have talked about this because I was in same boat between Texas and V5 firm.

He said his take home after Taxes were 96 as a first year associate. He spent 2,700 a month on a one bed one bath (about 725-775 sq feet) so thats about 32k a year. This of course doesnt include loan payments, utilities, cable, food, going out, etc. He said that after his first year he checked how much he paid on his loans (he put every penny he could towards them) and he only put 32k toward his loans the first year.

This was a big factor in why I decided to go with Texas over NYC. Take home will be about 15-17k more a year. You will probably save 1,200 a month on rent (another 14k). Plus a ton on food, going out, etc. I think the difference is like 35k a year in the bank when all is said and done. Though, if your home market doesnt pay NYC this is a different story.

And you can certainly do better than 1500/month for a 1br in Texas....not to mention the fact that buying a place becomes a very real possibility fairly quickly in Texas, building equity rather than pissing money down the renter's well.

If money is the deciding factor I don't see how Texas is not the answer.

[Tiago Splitter]

If money is the deciding factor I don't see how Texas is not the answer.

+1. Sounds like op wants to take NYC and is trying to figure out just how big the difference is. Money is certainly going to go a lot farther in Texas.

[lukertin]

This is hilarious. I am guessing you have never worked full time? When I was working between UG and LS I made something like 47k after taxes. I spent 1,500 a month in rent. So that leaves me like 29k...I had like 5 grand when I went to law school. I by no means lived it up.

And assuming you didn't have large student loans, nor did you by any means spend wisely.

[lukertin]

let's finish out the math though to be fair. 96k take home - the 32 k a year for house is 64k. you're saying he put everything he could towards loans besides what he needed to. but I can't imagine how you could need to spend an additional 32k in a single year. that's a decently good amount of money to spend on things besides utilities, cables, food, and going out, he probably did a lot of going out or enjoying things (which is ok).

17k to a 401, 5k to an IRA and that leaves 10k for utilities, eating and having fun. Less than 1k a month of discretionary spending in NYC is being moderate

The assumption was that he put everything he could towards loans. But if he's tossing 22K towards retirement savings he's obviously not doing that.

Tossing money towards loans instead of tax advantaged retirement savings is pretty stupid.

[thesealocust]

Tossing money towards loans instead of tax advantaged retirement savings is pretty stupid.

Depends entirely on the interest rate. Lots of federal loans have such hilariously high rates right now that you'd have to take on a lot of risk to even have a chance of making the investment payoff down the line while experiencing shitloads of volatility along the way.

Tax advantaged retirement accounts are nice, but so are high guaranteed rates of return (which is what you get from paying down debt).

Random aside: It's much better financially for the first few careers to work in a TX biglaw firm than an NY biglaw firm, but I wouldn't be surprised if the story was more complicated if you looked at lifetime earnings.

[Anonymous User]

2700k as a first year in NYC for rent is really living lavishly. You can easily do 1500 with a roommate and have a reasonably respectable place. No need to be pissing away 2700 on rent as a first year when you have loans.

[bk1]

Tossing money towards loans instead of tax advantaged retirement savings is pretty stupid.

Depends entirely on the interest rate. Lots of federal loans have such hilariously high rates right now that you'd have to take on a lot of risk to even have a chance of making the investment payoff down the line while experiencing shitloads of volatility along the way.

This. Most of my loans are around 7-8%.

[lukertin]

Depends entirely on the interest rate. Lots of federal loans have such hilariously high rates right now that you'd have to take on a lot of risk to even have a chance of making the investment payoff down the line while experiencing shitloads of volatility along the way.

Tax advantaged retirement accounts are nice, but so are high guaranteed rates of return (which is what you get from paying down debt).

First, putting $5k in a retirement account nets you more take home money than $5k in loan repayments due to decreased tax liability.

Second, because savings accounts appreciate in value as you save, whereas loan accounts depreciate in value over time as you pay them off, the absolute "return" is more when you save than paying off loans. (i.e., saving 10k at 5% and reinvesting the interest nets you more money than the interest saved vs. paying off a $10k at 5% over time).

Federal loan interests may be high (up to 7.9%?) but it's about equal to the expected annual market return of the S&P500. There is no situation in which I would pay off a federal student loan if I could sock that money into a 401k.

[wiz]

Tossing money towards loans instead of tax advantaged retirement savings is pretty stupid.

Depends entirely on the interest rate. Lots of federal loans have such hilariously high rates right now that you'd have to take on a lot of risk to even have a chance of making the investment payoff down the line while experiencing shitloads of volatility along the way.

Tax advantaged retirement accounts are nice, but so are high guaranteed rates of return (which is what you get from paying down debt).

Random aside: It's much better financially for the first few careers to work in a TX biglaw firm than an NY biglaw firm, but I wouldn't be surprised if the story was more complicated if you looked at lifetime earnings.

This is interesting and relevant to my interests. Can you elaborate on the lifetime earnings distinction a little bit more? I assume you're talking about factors like compressed lockstep salary progression in TX, bonuses (particularly if/when the economy improves), and perhaps partner income.

At what point in your career do you think the financial advantage would shift from TX to NY?

[Anonymous User]

Tossing money towards loans instead of tax advantaged retirement savings is pretty stupid.

Depends entirely on the interest rate. Lots of federal loans have such hilariously high rates right now that you'd have to take on a lot of risk to even have a chance of making the investment payoff down the line while experiencing shitloads of volatility along the way.

Tax advantaged retirement accounts are nice, but so are high guaranteed rates of return (which is what you get from paying down debt).

Random aside: It's much better financially for the first few careers to work in a TX biglaw firm than an NY biglaw firm, but I wouldn't be surprised if the story was more complicated if you looked at lifetime earnings.

This is interesting and relevant to my interests. Can you elaborate on the lifetime earnings distinction a little bit more? I assume you're talking about factors like compressed lockstep salary progression in TX, bonuses (particularly if/when the economy improves), and perhaps partner income.

At what point in your career do you think the financial advantage would shift from TX to NY?

most the big Tex firms dont have compressed lockstep salary. V&E, Baker Botts, Fulbright, etc. all pay NYC lockstep.

I dont think that the pay will be better in NYC overall while still at a firm. Pay is the same years 1-8. PPP at firms like Baker Botts and V&E are somewhere in the low millions. So this is lower than some top NYC firms. I think where this changes is in-house. I would imagine in-house positions in NYC pay more (this is a guess).

[IAFG]

It's a fool's errand to try to estimate which path will maximize your lifetime earnings.

[wiz]

It's a fool's errand to try to estimate which path will maximize your lifetime earnings.

No shit. I'm not trying to make a decision based off this. I just thought it was an interesting observation and was trying to see where he was coming from.

[haiking]

Rent in major texas cities is less than half what it is in NYC for an equivalent location. Sure, you don't have to spend nearly 3K/month in NY if you move out to Queens and get a roommate. But you'll experience similar % savings in moving to low-rent locations in Texas. Even if you don't, you will still wind up paying less.

Whether that money is going towards retirement or paying off debts, there is going to be far less of it in New York. At least 8K, and probably closer to 15 if you're in Austin or Dallas instead of Houston, and are comparing good locations. An apartment that goes for 2700 in NYC will cost around 1200 in Austin. Taxes will also be substantially lower in Texas, although this was covered.

[thesealocust]

Depends entirely on the interest rate. Lots of federal loans have such hilariously high rates right now that you'd have to take on a lot of risk to even have a chance of making the investment payoff down the line while experiencing shitloads of volatility along the way.

Tax advantaged retirement accounts are nice, but so are high guaranteed rates of return (which is what you get from paying down debt).

First, putting $5k in a retirement account nets you more take home money than $5k in loan repayments due to decreased tax liability.

Second, because savings accounts appreciate in value as you save, whereas loan accounts depreciate in value over time as you pay them off, the absolute "return" is more when you save than paying off loans. (i.e., saving 10k at 5% and reinvesting the interest nets you more money than the interest saved vs. paying off a $10k at 5% over time).

Federal loan interests may be high (up to 7.9%?) but it's about equal to the expected annual market return of the S&P500. There is no situation in which I would pay off a federal student loan if I could sock that money into a 401k.

This is a mix of stupid and wrong I am too tired to sort out. See generally the personal finance thread and anybody who knows that they are talking about who has ever written or thought about this issue.

This is interesting and relevant to my interests. Can you elaborate on the lifetime earnings distinction a little bit more? I assume you're talking about factors like compressed lockstep salary progression in TX, bonuses (particularly if/when the economy improves), and perhaps partner income.

At what point in your career do you think the financial advantage would shift from TX to NY?

No idea. Depends entirely on career trajectory, but NYC has a lot more high paying jobs (financial sector exits, etc.) and the firms have a lot higher average PPP. Your odds of making partner at Cravath are nearly 0, but your odds of making partner SOMEWHERE are still relatively decent if you're gunning for it.

[Anonymous User]

OP here, responding for the first time. Home market isn't Texas, but I guess people are interested in it?

I just want to make sure that I won't be "scraping by" like the first response suggested. If I'm going to be living in NYC I want to make sure I'll be living it up, since I'd be trading in lots of savings for that NYC life.