Monthly savings rate

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whsy

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Monthly savings rate

Postby whsy » Tue Jan 16, 2018 12:29 am

Curious how much people are able to save after taxes and loans, especially those living in high cost areas such as NYC or SF.

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Re: Monthly savings rate

Postby Anonymous User » Tue Jan 16, 2018 1:30 am

4th yr.

After taxes/401k; 10K.
After mortgage; 7K.
After student loan; down to 4k
After student loan is paid (mid-'18), probably save 4-6k.

Southern metro of +6M.

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Yugihoe

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Re: Monthly savings rate

Postby Yugihoe » Tue Jan 16, 2018 10:34 am

I'm at the extreme end. Max out 401k and Roth each year, NYC 1st year, no loans. Of my 15k monthly gross paycheck, I aim to save 6k or 40%. Use 2.5k for monthly expenses, and rest goes to tax, insurance etc. Any extra money left from that, as well as my bonus, generally accumulates into vacation/ additional going out money.

I commute an hour to the office though, if you want to live closer, and don't have loans, you can probably save at least 4K/month.

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Re: Monthly savings rate

Postby Anonymous User » Tue Jan 16, 2018 11:16 am

First year in NYC Biglaw. I maxed out my 401K and put $500 into my savings every paycheck. Not sure how long I will continue to save $500 per paycheck, but I wanted to get some emergency cash saved up.

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Re: Monthly savings rate

Postby Anonymous User » Tue Jan 16, 2018 12:04 pm

I'm a senior associate at a V50 in secondary market. My wife is a senior manager at a Big4. Student loans were paid off in beginning of 2015. We max out on all pre-tax investments and live only off of her pay. My pay gets stanched away. We have a kid and another one on the way, and we have plenty of discretionary income with living off of her pay. Want to retire in our mid-50s.

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Re: Monthly savings rate

Postby Anonymous User » Tue Jan 16, 2018 12:34 pm

2nd year associate.

I maxed out my 401k last year. 1000 goes into loans each month, probably saved around 60k last year, hoping to do better this year living off spouse’s salary...

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Re: Monthly savings rate

Postby Anonymous User » Wed Jan 17, 2018 6:47 pm

Are there any lawyers here who have a massive amount of student loans? I'm a second year associate with a minimum student loan payment of $3k a month and with rent in a metro area and general life expenses, I can only set aside 1-2k a month in savings (this is without a 401k at this point).

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Re: Monthly savings rate

Postby Anonymous User » Wed Jan 17, 2018 7:15 pm

I went from negative $75,000 net worth (according to Mint) from when I started in Sept 2015 to positive $105,000 net worth today (after 28 months of working at V100 in Texas).

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Desert Fox

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Re: Monthly savings rate

Postby Desert Fox » Wed Jan 17, 2018 7:23 pm

-264k networth to + 200k after 4.4 years of big law, but I'm married and my wife contributes. Not counting her retirement, but our finances are otherwise combined, so its hard to separate.
Last edited by Desert Fox on Fri Jan 26, 2018 11:18 pm, edited 1 time in total.

PorscheFanatic

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Re: Monthly savings rate

Postby PorscheFanatic » Wed Jan 17, 2018 7:39 pm

Anonymous User wrote:Are there any lawyers here who have a massive amount of student loans? I'm a second year associate with a minimum student loan payment of $3k a month and with rent in a metro area and general life expenses, I can only set aside 1-2k a month in savings (this is without a 401k at this point).


First year here. $2.5k loan payment. Living in a high COl area, and my wife and I live on my income only. I max my 401k, save $500/mo toward a house, another $500 toward loan savings (so I have funds earmarked to keep paying my loan if I ever got fired or was between jobs), and about $500/mo into general/emergency fund savings.

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Re: Monthly savings rate

Postby Anonymous User » Thu Jan 18, 2018 12:51 pm

Desert Fox wrote:-264k networth to + 200k after 4.4 years of big law, but I'm married and my wife contributes. Not counting her retirement, but our finances are otherwise combined, so its hard to separate.


In a similar vein, for those in biglaw who are looking to hit a certain net worth figure and then get out (which I suspect might be some who are purposefully saving a ton and have commented in here), what is that number, and why? What would you like to do once you reach that number?

Just curious as to people's goals/plans in this regard, as I have been thinking about this myself lately.

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Re: Monthly savings rate

Postby Anonymous User » Thu Jan 18, 2018 12:51 pm

.

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Re: Monthly savings rate

Postby Anonymous User » Thu Jan 18, 2018 1:13 pm

3rd year in DC. Didn't have loans. The stock market's wild acceleration has made separating equity gains from savings hard, but I think I put away $6,000 (401k included) and also give $1,000 away each month, not including bonus. I tend to just check my bank account after each pay period and dump whatever excess is in there into Vanguard index funds (90% stocks usually). I try to keep just $10-$12k in the bank and then $6k in a 1.25% Ally savings account.

How much excess there is to move depends on the time of the year. Right now 30% of my paycheck goes to the 401k (it's most efficient to max it quickly in the beginning of the year, as that way gains during the remainder of the year are tax free), and right now I also have to pay social security taxes, which will cut out in July after I hit the $118k limit. After 401k and SS cut out, I'll move a lot more manually.

I'm helped by DC's somewhat mildly cheaper rent (relative to NYC), not having a car, and having a roomie I like (my rent and utilities come to $1900ish/month). I also tend to prefer cheaper kinds of food (Indian, Thai, etc.), and my friends prefer cheap places to go out since most aren't lawyers, and so it's easy to just save tons on autopilot without thinking about it too hard. I still buy lunch every day and get cocktails when I want/have time for them. I think I can put away $100k this year if bonuses are constant.
Last edited by Anonymous User on Thu Jan 18, 2018 1:19 pm, edited 1 time in total.

thisismytlsuername

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Re: Monthly savings rate

Postby thisismytlsuername » Thu Jan 18, 2018 1:18 pm

Anonymous User wrote:3rd year in DC. Didn't have loans. The stock market's wild acceleration has made separating equity gains from savings hard, but I think I put away $6,000 (401k included) and also give $1,000 away each month, not including bonus. I tend to just check my bank account after each pay period and dump whatever excess is in there into Vanguard index funds (90% stocks usually). I try to keep just $10-$12k in the bank and then $6k in a 1.25% Ally savings account.

How much excess there is to move depends on the time of the year. Right now 30% of my paycheck goes to the 401k (it's most efficient to max it quickly in the beginning of the year, as that way gains during the remainder of the year are tax free), and right now I also have to pay social security taxes, which will cut out in July after I hit the $118k limit. After 401k and SS cut out, I'll move a lot more manually.

I'm helped by DC's somewhat mildly cheaper rent (relative to NYC), not having a car, and having a roomie I like (my rent and utilities come to $1900ish/month). I also tend to prefer cheaper kinds of food (Indian, Thai, etc.), and my friends prefer cheap places to go out since most aren't lawyers, and so it's easy to just save tons on autopilot without thinking about it too hard. I think I can put away $100k this year if bonuses are constant.


I realize you're a 2015 grad, but just so you know, the stock market doesn't always go up like this.

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Re: Monthly savings rate

Postby Anonymous User » Thu Jan 18, 2018 1:22 pm

I know, it's insane. Global savings glut may mean that elevated P/E ratios are a new normal though, and I can't think of any macroeconomic indicators signaling doom in the near future. My long-range math assumes just a 3.5% real return or so. I'm not counting on this lasting forever.

I imagine it'll be emotionally tough sledding to watch it crash in 2-3 years and lose literally $100k in some small time period, but I hope I'll just grit teeth and buy more shares. A finance friend said the best time to buy is when blood is in the streets, even when it's your own.

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Re: Monthly savings rate

Postby thisismytlsuername » Thu Jan 18, 2018 1:31 pm

Anonymous User wrote:I know, it's insane. Global savings glut may mean that elevated P/E ratios are a new normal though, and I can't think of any macroeconomic indicators signaling doom in the near future. My long-range math assumes just a 3.5% real return or so. I'm not counting on this lasting forever.

I imagine it'll be emotionally tough sledding to watch it crash in 2-3 years and lose literally $100k in some small time period, but I hope I'll just grit teeth and buy more shares. A finance friend said the best time to buy is when blood is in the streets, even when it's your own.


Mostly just wanted to point out that things like "it's most efficient to max it quickly in the beginning of the year, as that way gains during the remainder of the year are tax free" aren't always true. Don't forget that a healthy, balanced portfolio includes cash.

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Re: Monthly savings rate

Postby bk1 » Thu Jan 18, 2018 1:52 pm

thisismytlsuername wrote:
Anonymous User wrote:I know, it's insane. Global savings glut may mean that elevated P/E ratios are a new normal though, and I can't think of any macroeconomic indicators signaling doom in the near future. My long-range math assumes just a 3.5% real return or so. I'm not counting on this lasting forever.

I imagine it'll be emotionally tough sledding to watch it crash in 2-3 years and lose literally $100k in some small time period, but I hope I'll just grit teeth and buy more shares. A finance friend said the best time to buy is when blood is in the streets, even when it's your own.


Mostly just wanted to point out that things like "it's most efficient to max it quickly in the beginning of the year, as that way gains during the remainder of the year are tax free" aren't always true. Don't forget that a healthy, balanced portfolio includes cash.

It's not more "efficient" to max retirement accounts early in the year but it is better to do it earlier (though it has nothing to do with taxes). More time in the market is simply statistically better in terms of returns. I'm not sure what you're trying to get at with the "balanced portfolio" response.

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Re: Monthly savings rate

Postby albanach » Thu Jan 18, 2018 2:27 pm

Yugihoe wrote:I'm at the extreme end. Max out 401k and Roth each year, NYC 1st year, no loans. Of my 15k monthly gross paycheck, I aim to save 6k or 40%. Use 2.5k for monthly expenses, and rest goes to tax, insurance etc.


I'm curious about folk who use a Roth over an HSA. If your employer offers a high deductible health plan, why would you max out the Roth and not the HSA, given HSA contributions are tax free?

You can withdraw from the HSA tax free for medical treatment, and once over 65 you can withdraw it as taxable income. It can be invested in an index fund in much the same way as a 401k.

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Re: Monthly savings rate

Postby Anonymous User » Thu Jan 18, 2018 2:28 pm

Re 401k "efficiency": It actually does have to do with taxes. The expected value over time in the stock market is positive. Ergo, earlier investments in a given year will more likely than not incur greater capital gains than later investments in the year. Therefore, it makes sense to put earlier investments in tax advantaged accounts like IRAs and 401ks, and then make your later-in-the-year investments in taxable accounts after the tax-advantaged ones are full up.

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Re: Monthly savings rate

Postby bk1 » Thu Jan 18, 2018 2:38 pm

Anonymous User wrote:Re 401k "efficiency": It actually does have to do with taxes. The expected value over time in the stock market is positive. Ergo, earlier investments in a given year will more likely than not incur greater capital gains than later investments in the year. Therefore, it makes sense to put earlier investments in tax advantaged accounts like IRAs and 401ks, and then make your later-in-the-year investments in taxable accounts after the tax-advantaged ones are full up.

That's fair (I was thinking of a world where you didn't make taxable investments).

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Re: Monthly savings rate

Postby Anonymous User » Thu Jan 18, 2018 2:47 pm

2nd year in Dallas. Spouse does not work. Max out 401K, plus save an additional 2.5K a month. Have 140K in student loans and about 10K in credit card debt left, or savings would be higher. Right now those debt payments eat up about 2K a month.

So all-in save about 45K-50K a year. Goal is 250K net worth as a fifth year associate.

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Re: Monthly savings rate

Postby Anonymous User » Thu Jan 18, 2018 5:14 pm

DC 3rd year big law.

Savings rate = 50-60% (calculated on an after-tax basis, i.e., i save about half of my monthly take home pay)
Max out 401k and backdoor Roth and HSA
Still have about 30k in loans but interest rate is less than 3%
Total net worth was -70k before first year started and is now about 140k (single)
Rent and utilities is about $1600 with a roommate in a nice apartment

Eat out for lunch everyday and go out for dinner too much.
My budgeting isn't very precise or probably ideal but it works for me - I send a little more than half of each paycheck to index funds, pay rent and bills, buy food, and then do random stuff with the rest

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Re: Monthly savings rate

Postby Anonymous User » Thu Jan 18, 2018 9:22 pm

Anonymous User wrote:2nd year in Dallas. Spouse does not work. Max out 401K, plus save an additional 2.5K a month. Have 140K in student loans and about 10K in credit card debt left, or savings would be higher. Right now those debt payments eat up about 2K a month.

So all-in save about 45K-50K a year. Goal is 250K net worth as a fifth year associate.


gonna be starting big law dallas soon - how much of your income is eaten up by rent?

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Re: Monthly savings rate

Postby Anonymous User » Fri Jan 19, 2018 3:41 pm

In-House Attorney in Chicago. Just left Biglaw about six months ago. Monthly savings rate is currently 50% of after-tax $. Will increase to 60% once I finish paying off my student loans ($9,000 to go) and finish paying off my car.

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Re: Monthly savings rate

Postby Anonymous User » Fri Jan 19, 2018 7:35 pm

DC 6th year big law, single, no kids, renting

Savings rate is usually in the 60% range every month (including maxed out 401k)
Started with approx $140k in loans, paid off all loans just before 5th year (was throwing tons at the loans just to get rid of them asap)
Total net worth is now approx $250k

Like one of the anons above, I try to keep a specific amount in my checking account every month, and once I go over (accounting for any upcoming bills etc) I throw everything else into my vanguard account.

Definitely spend more than I should on some things (eating out, shopping) but also save in other areas. The idea is to be able to take a significant pay cut and still be able to save. Knowing I am already saving more than half helps keep things in perspective for when the firm inevitably decides to cast me off.



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