NYC Big Law and Saving for the future.....

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Anonymous User
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NYC Big Law and Saving for the future.....

Postby Anonymous User » Wed Nov 08, 2017 11:50 am

Hi TLSers,

Just wanted to get some experienced answers on this topic.

Assuming you start as a first year associate in NYC (180+normal bonus)..... how much did you actually save/how much did you expect to save, each year?

I'm a 3L, not from NYC originally, who will be starting as a first year in NYC after I graduate; looking for some actual advice on how to best balance saving for the future and short term pleasure. (Not married, single man, don't want to live like a complete hermit).

Thanks!

1styearlateral
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Re: NYC Big Law and Saving for the future.....

Postby 1styearlateral » Wed Nov 08, 2017 12:03 pm

If you want to live in Manhattan or Brooklyn (Williamsburg, Park Slope, Bushwick, etc.), expect to pay $3k+/mo. for a nice (read: luxury) 1br. With a roommate, you can probably shave off a couple hundred. If you want to spend less, YMMV with respect to amenities/cleanliness/overall satisfaction.

I would allocate a small percentage of your paychecks to investing in cryptocurrencies and act as though your digital wallet is a bank account. If you dumped $20k into ether today you might see that explode into over $1 million in the next year or two.

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Lincoln
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Re: NYC Big Law and Saving for the future.....

Postby Lincoln » Wed Nov 08, 2017 12:19 pm

Do you have loans? If not, just save $2,000/mo, which is a pretty typical loan payment.

You should always max out your 401(k), too, which is $18k/yr.

I second the advice of having a roommate at least your first year. I've never paid more than $2k/mo even in "desirable" neighborhoods in Manhattan because I lived with roommates or SO.

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nealric
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Re: NYC Big Law and Saving for the future.....

Postby nealric » Wed Nov 08, 2017 12:27 pm

Anonymous User wrote:Hi TLSers,

Just wanted to get some experienced answers on this topic.

Assuming you start as a first year associate in NYC (180+normal bonus)..... how much did you actually save/how much did you expect to save, each year?

I'm a 3L, not from NYC originally, who will be starting as a first year in NYC after I graduate; looking for some actual advice on how to best balance saving for the future and short term pleasure. (Not married, single man, don't want to live like a complete hermit).

Thanks!


I started in NYC biglaw when rents were a bit lower, but salaries were still at 160. Rent was 2K/mo at a reasonably nice (but hardly fancy) 1.5br in brownstone Brooklyn I found on CL. Same apartment would probably be closer to $3k today- which would soak up most of the salary difference. Cash surplus in excess of mandatory loan repayments was around $40k/yr. I was more limited by time than money in terms of going out and doing things.

You can spend a boatload of money going out and doing things in NYC, but I personally don't find the super-expensive activities/places more enjoyable than more laid back/cheaper places. Never understood why people pay $300 for a bottle of liquor that's $30 at the liquor store so they can say they got "bottle service"- but they do. My favorite activities in the city was running (marathon training is a great way to see the city) and just hanging out in the parks- both free. I also bought the cheapest clothes I could get that were presentable professionally and reasonably durable. YMMV.

I'd avoid the "luxury" apartments in big high rises. Biglaw is full of people who spent half their salary on these places and complain of poverty. I wasn't single, so roommates weren't really an option, but I would have done the roommate thing without a second thought had I still been single. Finally, I'd avoid living in Manhattan if possible (having lived in both Brooklyn and Manhattan). Stay on the right subway line, and your commute should stay very reasonable from Brooklyn or Queens.

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Re: NYC Big Law and Saving for the future.....

Postby Anonymous User » Wed Nov 08, 2017 12:32 pm

No student debt.

Is living outside Manhatten much worse than living in it? How long can commutes expect to be?

1styearlateral
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Re: NYC Big Law and Saving for the future.....

Postby 1styearlateral » Wed Nov 08, 2017 12:48 pm

If I wanted to dump all my extra cash on rent, I'd just live in the city and walk to work.

I live in Hoboken, so I just hop on the bus and take the 7 train to midtown east. On a good day, takes about 30 min. door-to-door in either direction (if you leave at 5-6 to go home during rush hour it'll probably take longer). Rents are a lot more reasonable in North Jersey, but you could spend as much (or more) there if you wanted to.

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nealric
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Re: NYC Big Law and Saving for the future.....

Postby nealric » Wed Nov 08, 2017 12:56 pm

Anonymous User wrote:No student debt.

Is living outside Manhatten much worse than living in it? How long can commutes expect to be?


It depends on where your office is- good subway connections are key in the mornings. Less so in the evenings when you are more likely to be taking a car home. It was about 20 minutes for me from Brooklyn to lower Manhattan.

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deepseapartners
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Re: NYC Big Law and Saving for the future.....

Postby deepseapartners » Wed Nov 08, 2017 1:07 pm

nealric wrote:
Anonymous User wrote:No student debt.

Is living outside Manhatten much worse than living in it? How long can commutes expect to be?


It depends on where your office is- good subway connections are key in the mornings. Less so in the evenings when you are more likely to be taking a car home. It was about 20 minutes for me from Brooklyn to lower Manhattan.

Seconded. If you can reliably spend less than 30 min commuting into the office, it will be worth every single penny you may not otherwise save. It's not hard to find commutable areas to either Midtown or FiDi that meet that criteria, and if you include that with a roommate, you'll be good to go.

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2014
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Re: NYC Big Law and Saving for the future.....

Postby 2014 » Wed Nov 08, 2017 6:56 pm

Lol at $3k for a luxury apartment in MFH

Depending on whether your office is in Midtown West, Midtown East or FIDI you will have at least one (and probably more) option for living within ~30 min in an outer borough or NJ and you can certainly save rent by doing so. If maximizing savings in your time in Biglaw is your #1 goal it's all but necessary to have a roommate.

Rent/utilities, student loans, health insurance and 401K (I presume given what appears to be high financial responsibility) aside, the rest of your costs are variable and can be as low as like $20 a day if you prepare your own meals and stick to cheap/free entertainment. The busier you are the more life expenses you can get reimbursed as well so that helps. Query whether the added sacrifice of living on a strict budget is worth it in combination with the job-related sacrifices but that's an individualized decision.

Waupli
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Re: NYC Big Law and Saving for the future.....

Postby Waupli » Wed Nov 08, 2017 9:20 pm

If you want to live in Brooklyn, remember the L train is about to shut down for 15 months starting in spring 2019 and the M train is doing weird things currently. So you probably want to avoid those unless you want to move soon or suffer. Figure out the most reliable train (if such a thing even exists) and live next to it. That will make you significantly happier than picking somewhere 10 mins closer on an unreliable/infrequent line.

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Re: NYC Big Law and Saving for the future.....

Postby somedude » Mon Nov 13, 2017 4:58 pm

On 190K as 2nd year, not including bonus, I will have (i) maxed 401 (18K) and Roth IRA (5.5K), (ii) paid $48K to loans, and (iii) contributed $14K to taxable investment account. Almost exactly what I budgeted for the year because I auto pay the loans, stick to the budget as much as possible, and put the remainder into investments at the end of each month.

Saved less as a first year than I expected due to: spending more on start-up expenses than anticipated (complete work wardrobe, furniture, brokers fee) and taking $10K "bar loan" from firm to pay for life before work started. (Also, it was $160 K for most of the year before the $180 K bump so I don't think the raw numbers are useful to you). Definitely keep these expenses in mind to make a realistic first year budget.

Best advice I got was to avoid lifestyle creep as much as possible. Make a budget asap (as detailed as possible: are you going to take cabs across town at 2 am on Saturday? dry cleaning? coffee 5 days a week?), and revisit it every now and then...if you do this before you start looking for apartments, it may impact your decision about where to live.

Many live in bk and have somewhere between 20 and 60 minute commutes. I recommend trying to keep the rent cost down, but very personal choice. My rent is $2200/mo (costs shared in part with a partner) in BK and I love my apartment. 30 to 45 minute subway commute (depending on trains), 20-25 min if I take a car home. I have never once thought this was too much commute, and I've been on nightmare matters with very late nights for days/weeks/months on end. Other people think this is crazy. For me, the cost savings is definitely worth it, and makes it feel a lot easier to be a bit more flexible with spending on other things. An argument against this is that if you're likely to find the commute difficult and it might contribute to the stew of considerations that cause you to leave blaw early, it may not be worth the cost savings given the high-earning that comes later. You'd save even more living in Jersey City / Hoboken (taxes), as a smaller but still significant number of people do.

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bruinfan10
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Re: NYC Big Law and Saving for the future.....

Postby bruinfan10 » Mon Nov 13, 2017 5:06 pm

somedude wrote:On 190K as 2nd year, not including bonus, I will have (i) maxed 401 (18K) and Roth IRA (5.5K)

Aren't you over the income limit for a ROTH? or are you using the backdoor approach?

dabigchina
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Re: NYC Big Law and Saving for the future.....

Postby dabigchina » Mon Nov 13, 2017 5:08 pm

1styearlateral wrote:
I would allocate a small percentage of your paychecks to investing in cryptocurrencies and act as though your digital wallet is a bank account. If you dumped $20k into ether today you might see that explode into over $1 million in the next year or two.


OR OP could just invest in index funds through tax advantaged vehicles like 401k and Backdoor Roth and not live in constant fear of the cryptocurrency bubble bursting.

I wouldn't allocate more than 5% of your portfolio to cryptocurrency.

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Re: NYC Big Law and Saving for the future.....

Postby Anonymous User » Mon Nov 13, 2017 5:54 pm

bruinfan10 wrote:
somedude wrote:On 190K as 2nd year, not including bonus, I will have (i) maxed 401 (18K) and Roth IRA (5.5K)

Aren't you over the income limit for a ROTH? or are you using the backdoor approach?


Backdoor roth.

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Yugihoe
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Re: NYC Big Law and Saving for the future.....

Postby Yugihoe » Mon Nov 13, 2017 7:11 pm

Seconding on making a budget and living 30-45 mins away. I only spend about $2500 total/month and this includes going out for drinks/dinner with friends. Don't let lifestyle creep get to you. Going to save about 60k/year in my Roth, 401k and taxable.

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smokeylarue
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Re: NYC Big Law and Saving for the future.....

Postby smokeylarue » Mon Nov 13, 2017 8:50 pm

Not counting loan repayments, you should expect to spend between $30,000 and $50,000 a year living in New York, probably landing somewhere close to 40ish. 30k is cutting it really cheap, you're probably penny pinching somewhat here and your apartment is probably not that great. 50k you're probably spending a lot on going out/eating with friends and/or lots of traveling (weddings with friends add up).

If you have a significant other, add about 5k lol.

v5junior
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Re: NYC Big Law and Saving for the future.....

Postby v5junior » Mon Nov 13, 2017 10:49 pm

I try not to think about money and just do what I want to do in life. In case an extra data point is helpful:

I spend about $2k/mo on rent (have a roommate) and about $2k/mo on social expenses (I like to eat out, buy gifts for my S/O, visit family and friends when possible, attend weddings out of town, etc., but am, e.g., not dropping crazy amounts of money on clubbing or buying expensive clothing or whatever). I also spend about 5k/year on my 4 weeks of vacation, b/c the job is painful and it helps me maintain my sanity. So roughly 53k/year, for whatever that is worth.

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Re: NYC Big Law and Saving for the future.....

Postby Anonymous User » Tue Nov 14, 2017 3:00 am

another datapoint from non-NYC (but similar cost) major market:

Rising second year. Firm doesn't bonus stub years. Rough expenses:
- 2k/mo rent (was $1500 with a roommate, who broke the lease midway because no longer wanted to live in shitty neighborhood)
- 2.4k/mo loans (regular payment)
- 600/mo car+insurance+parking
- idk maybe another 500/mo on various monthlies, groceries, utilities, etc
- probably another 500-1500/mo, depending on month, on stupid shit, watches, games, very unnecessary takeout
- totally variable/irregular: significant other fund
- rest into:
> First part of the year was paying off residual no-interest credit card debt from taking a longer post-bar summer to delay the crushing hopelessness of biglaw; did not start until essentially winter
> Middle part of the year was building up efund
> Third part of the year shifted toward focusing down some of the worse interest-rate loans. Refied some, but not all, on Sofi last year after entering repayment for various unique-life-situation personal reasons. Planning to refi again on FRB after bonus season assuming no shitcan.

Currently have a little under 20k saved from the year.

I do think I should have been able to save more. I think 40k is realistic if you are diligent, even in a high CoL city like NY/SF/etc, and even with >2k/mo loan payments. I didn't reach the halfway point due to a combo of bad financial decisions (late start date, buying stupid shit), less-bad decisions (loan targeting strategy), and some of what v5junior says re "try not to think about money and just do what i want to do" because that's a luxury i've never had and probably never will have again. Idk unless I buy some ether, apparently.

Post classic dril meme
"spend less money on stupid shit"
"no"

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Re: NYC Big Law and Saving for the future.....

Postby Anonymous User » Tue Nov 14, 2017 6:29 pm

Can't say exactly but my net worth when I started was -17k and 26 months later it's 238k but (a) I had a ~100k balance in 401k from life before law school which has done well the last two years, (b) I get paid above market, and (c) I spend a lot less than typical NYC biglaw associate so not sure how realistic I am as an example.

Roughly, subtracting out the gains from the pre existing retirement account and the higher comp, I think I'd be somewhere in the 170k range.

I live decently but my priority is to make that nut while I can still stand working at a firm then get out. Think I may try to find something else after next year's bonus check. Just 13 more months...




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