My budget for paying off 240k in loans

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ExAnt3
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My budget for paying off 240k in loans

Postby ExAnt3 » Fri Jan 18, 2013 9:43 pm

TLS brethren-

I'm currently a 3L and I'll have around 240k in loans once all is said and done. Fortunately (?) I've been able to snag DAT NYC BIGLAW, which should help ease my (loan-related suffering). I copied a rough version of my budget below and would welcome all feedback. With the budget below, I should be able to pay everything off during my fifth year (yes, I know about attrition rates, but I'm operating under the assumption that I'll be able to stick it out this long and I'm fairly confident with this assumption). My biggest complaint with my budget is that I'm not contributing enough to savings/retirement. Also, at some point, I'm sure that I'd move in with my gf, which would obviously decrease rent, but I'm not sure when that'd happen. I'm read most loan-related threads on these boards and I'm torn between aggressively paying off loans and building a nest egg.

What do you guys think? Here's the approximate monthly breakdown:

First year
Rent 2500
Expenses+play money 1500 (extra goes to loans/retirement/savings somehow)
Loan pmt 3500
Savings 200
Retirement 200

Second year
Rent 2500
Expenses+play money 1500
Loan pmt 4000
Savings 300
Retirement 200

Third year
Rent 2500
Expenses+play money 1500
Loan pmt 5000
Savings 400
Retirement 300

Fourth year
Rent 2500
Expenses+play money 1500
Loan pmt 6200
Savings 500
Retirement 300

Fifth year
Rent 2500
Expenses+play money 1500
Loan pmt 7000
Savings 500
Retirement 300

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ph14
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Re: My budget for paying off 240k in loans

Postby ph14 » Fri Jan 18, 2013 9:43 pm

Is it possible to spend less than $2500/month on rent?

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ExAnt3
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Re: My budget for paying off 240k in loans

Postby ExAnt3 » Fri Jan 18, 2013 9:44 pm

Yeah, i'm likely (hopefully) going to end up in the 2k range, but I wanted a cushion just in case.

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Wholigan
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Re: My budget for paying off 240k in loans

Postby Wholigan » Fri Jan 18, 2013 10:48 pm

So I'm assuming "expenses and play money" includes food/groceries, dining out, cell phone, TV/internet, utilities, clothes, dry cleaning, apartment furnishings, transportation, entertainment and vacations? It can probably be done on 1500/month, but I think you would have to live significantly more frugally than most of your colleagues.

Also, maybe this is nit-picky but most firms only subsidize health insurance and don't pay it in full, so if that is the case at your firm you are going to have to pay something in the range of 150 a month.

Skyblaze
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Re: My budget for paying off 240k in loans

Postby Skyblaze » Fri Jan 18, 2013 10:57 pm

I wouldn't save that much depending on the interest rate of your loans. If you're paying something like 9% then it doesn't make sense to save money that could pay down that debt unless you're getting above 9% rate of return on it, which probably won't happen.

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dingbat
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Re: My budget for paying off 240k in loans

Postby dingbat » Fri Jan 18, 2013 11:09 pm

Skyblaze wrote:I wouldn't save that much depending on the interest rate of your loans. If you're paying something like 9% then it doesn't make sense to save money that could pay down that debt unless you're getting above 9% rate of return on it, which probably won't happen.

I disagree with that last part. It's essential to have a cash cushion, even if it means taking a little bit longer to pay off your loans. It's hard to say what a reasonable cushion would be, and everyone's got their own comfort level, but have some cash, just in case

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Wholigan
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Re: My budget for paying off 240k in loans

Postby Wholigan » Fri Jan 18, 2013 11:31 pm

dingbat wrote:
Skyblaze wrote:I wouldn't save that much depending on the interest rate of your loans. If you're paying something like 9% then it doesn't make sense to save money that could pay down that debt unless you're getting above 9% rate of return on it, which probably won't happen.

I disagree with that last part. It's essential to have a cash cushion, even if it means taking a little bit longer to pay off your loans. It's hard to say what a reasonable cushion would be, and everyone's got their own comfort level, but have some cash, just in case


Agreed. At his rate of savings, he will only have a little over $10k after three years. That's less than two months of a cushion. Like you said everyone has his own comfort level, and if it were me, I'd probably save even a little more.

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dingbat
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Re: My budget for paying off 240k in loans

Postby dingbat » Fri Jan 18, 2013 11:41 pm

Wholigan wrote:
dingbat wrote:
Skyblaze wrote:I wouldn't save that much depending on the interest rate of your loans. If you're paying something like 9% then it doesn't make sense to save money that could pay down that debt unless you're getting above 9% rate of return on it, which probably won't happen.

I disagree with that last part. It's essential to have a cash cushion, even if it means taking a little bit longer to pay off your loans. It's hard to say what a reasonable cushion would be, and everyone's got their own comfort level, but have some cash, just in case


Agreed. At his rate of savings, he will only have a little over $10k after three years. That's less than two months of a cushion. Like you said everyone has his own comfort level, and if it were me, I'd probably save even a little more.

When I had the earnings to do so, I picked a nice round number, put that much away early on, then stopped saving.

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ExAnt3
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Re: My budget for paying off 240k in loans

Postby ExAnt3 » Sat Jan 19, 2013 12:24 am

Thanks for the input guys, I appreciate it. I factored cell phone, health care etc into the 1500, but not apt furnishings. I have some savings now and am actually working a bit during the semester which helps. In terms of a cash cushion, my family lives nearby so in the worst case scenario I could always move back home for a bit. I'll likely have around 5k (maybe more) in savings by the time I start my first year. I'm planning to use some of this (and some help from mom and dad) to furnish an apt, etc.

shock259
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Re: My budget for paying off 240k in loans

Postby shock259 » Sat Jan 19, 2013 11:32 am

If you have a family nearby and they have some money, there's not a huge need for a cash cushion. Also, you can definitely live on $1500 for rent in Manhattan if you are willing to 1) live in an older building and 2) have a roommate. That said, I think your monthly expenses are pretty low. I'm estimating $2000-$2500 for my monthly NYC living expenses (cell phone, internet, food, going out, etc).

timbs4339
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Re: My budget for paying off 240k in loans

Postby timbs4339 » Sat Jan 19, 2013 12:29 pm

Another thing to think about is sharing a 2 or 3 bedroom apartment with 1 or 2 roommates. You can live in a brand-new luxury building for less than $2500 per person and often the apartments have multiple bathrooms so you only have to share kitchen and living room area. I know several biglawyers and other young professionals doing this.

Also you can probably apply directly to the managing offices of these buildings and don't need to pay a broker.

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shepdawg
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Re: My budget for paying off 240k in loans

Postby shepdawg » Sat Jan 19, 2013 3:36 pm

Lucky. I've got that debt with small law money, so I'll be commuting from TJ to save money.

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dingbat
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Re: My budget for paying off 240k in loans

Postby dingbat » Sat Jan 19, 2013 3:45 pm

shepdawg wrote:Lucky. I've got that debt with small law money, so I'll be commuting from TJ to save money.

Tijuana?

keg411
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Re: My budget for paying off 240k in loans

Postby keg411 » Sat Jan 19, 2013 5:24 pm

timbs4339 wrote:Another thing to think about is sharing a 2 or 3 bedroom apartment with 1 or 2 roommates. You can live in a brand-new luxury building for less than $2500 per person and often the apartments have multiple bathrooms so you only have to share kitchen and living room area. I know several biglawyers and other young professionals doing this.


Yup, tons of people do this and it's probably what I'm going to do (although I've heard landlords are becoming less and less accepting of the wall-building thing; but I own room dividers, so not so worried).

LSTfan
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Re: My budget for paying off 240k in loans

Postby LSTfan » Sat Jan 19, 2013 6:11 pm

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Last edited by LSTfan on Tue Mar 12, 2013 11:56 pm, edited 1 time in total.

redline380
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Re: My budget for paying off 240k in loans

Postby redline380 » Sun Jan 20, 2013 12:22 am

ExAnt3 wrote:First year
Rent 2500

this figure blows my mind. i literally spend $100 less than this on rent where i live for the WHOLE year. yeah, i know i'm not living in a high end apartment in NYC, but just to imagine spending that much on rent in a month humbles me. i don't know how you east-coasters do it.

spyke123
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Re: My budget for paying off 240k in loans

Postby spyke123 » Sun Jan 20, 2013 12:34 am

redline380 wrote:
ExAnt3 wrote:First year
Rent 2500

this figure blows my mind. i literally spend $100 less than this on rent where i live for the WHOLE year. yeah, i know i'm not living in a high end apartment in NYC, but just to imagine spending that much on rent in a month humbles me. i don't know how you east-coasters do it.


:shock: where do you live sir? you spend 200 bucks a month on rent?

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EvilClinton
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Re: My budget for paying off 240k in loans

Postby EvilClinton » Sun Jan 20, 2013 12:42 am

LSTfan wrote:
ExAnt3 wrote:Fifth year


You might want to look a little closer at the attrition rates at a typical NY Biglaw shop.

+1, you will be lucky to make it to year 4.

redline380
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Re: My budget for paying off 240k in loans

Postby redline380 » Sun Jan 20, 2013 12:46 am

spyke123 wrote:
redline380 wrote:
ExAnt3 wrote:First year
Rent 2500

this figure blows my mind. i literally spend $100 less than this on rent where i live for the WHOLE year. yeah, i know i'm not living in a high end apartment in NYC, but just to imagine spending that much on rent in a month humbles me. i don't know how you east-coasters do it.


:shock: where do you live sir? you spend 200 bucks a month on rent?


i'm from minnesota. i live in house owned by a buddy's dad. its nothing special, but its cheap and keeps the cold weather out. i'm not trying to derail this thread, just noting that perhaps OP could find something a little more modest if possible. if i had 240k in law debt, i'd be paying that shit off ASAP. theres no shame in saving a few bucks. you'll have a huge bump in disposable income after the debt is paid. splurge then

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dingbat
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Re: My budget for paying off 240k in loans

Postby dingbat » Sun Jan 20, 2013 12:54 am

redline380 wrote:i'm from minnesota. i live in house owned by a buddy's dad. its nothing special, but its cheap and keeps the cold weather out. i'm not trying to derail this thread, just noting that perhaps OP could find something a little more modest if possible. if i had 240k in law debt, i'd be paying that shit off ASAP. theres no shame in saving a few bucks. you'll have a huge bump in disposable income after the debt is paid. splurge then

In manhattan, people would gladly pay twice as much to sleep in a closet. You should see the kind of shitty apartments that can fetch a thousand a month

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ExAnt3
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Re: My budget for paying off 240k in loans

Postby ExAnt3 » Sun Jan 20, 2013 1:15 am

EvilClinton wrote:
LSTfan wrote:
ExAnt3 wrote:Fifth year


You might want to look a little closer at the attrition rates at a typical NY Biglaw shop.

+1, you will be lucky to make it to year 4.


Well, I can hope. Also, based on my experiences speaking with associates at my firm and in my group staying until year 4-5 shouldn't be much of a stretch. As long as I don't suck.

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ExAnt3
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Re: My budget for paying off 240k in loans

Postby ExAnt3 » Sun Jan 20, 2013 1:18 am

redline380 wrote:
ExAnt3 wrote:First year
Rent 2500

this figure blows my mind. i literally spend $100 less than this on rent where i live for the WHOLE year. yeah, i know i'm not living in a high end apartment in NYC, but just to imagine spending that much on rent in a month humbles me. i don't know how you east-coasters do it.


Yeah, I know this is more than I should be spending on rent. I'm hoping to get a studio/1br from 1900-2200.

Edit: After browsing a bit on craigslist, I've found some nice apts for around 1900.

z0rk
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Re: My budget for paying off 240k in loans

Postby z0rk » Sun Jan 20, 2013 1:28 am

ExAnt3 wrote:
redline380 wrote:
ExAnt3 wrote:First year
Rent 2500

this figure blows my mind. i literally spend $100 less than this on rent where i live for the WHOLE year. yeah, i know i'm not living in a high end apartment in NYC, but just to imagine spending that much on rent in a month humbles me. i don't know how you east-coasters do it.


Yeah, I know this is more than I should be spending on rent. I'm hoping to get a studio/1br from 1900-2200.

Edit: After browsing a bit on craigslist, I've found some nice apts for around 1900.



You said you could potentially move in with parents if things don't work out. You may want to consider doing that and forgoing an apartment for the first six months just to see how things go. Imagine being able to put your expected payments PLUS that $2500 at the loan. You'd start to really pay down the principal and minimize the risk. It might sound like a horrible idea, but really consider how much time you will actually spend in your apartment. Will it be much?

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ExAnt3
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Re: My budget for paying off 240k in loans

Postby ExAnt3 » Sun Jan 20, 2013 3:36 am

z0rk wrote:
ExAnt3 wrote:
redline380 wrote:
ExAnt3 wrote:First year
Rent 2500

this figure blows my mind. i literally spend $100 less than this on rent where i live for the WHOLE year. yeah, i know i'm not living in a high end apartment in NYC, but just to imagine spending that much on rent in a month humbles me. i don't know how you east-coasters do it.


Yeah, I know this is more than I should be spending on rent. I'm hoping to get a studio/1br from 1900-2200.

Edit: After browsing a bit on craigslist, I've found some nice apts for around 1900.



You said you could potentially move in with parents if things don't work out. You may want to consider doing that and forgoing an apartment for the first six months just to see how things go. Imagine being able to put your expected payments PLUS that $2500 at the loan. You'd start to really pay down the principal and minimize the risk. It might sound like a horrible idea, but really consider how much time you will actually spend in your apartment. Will it be much?


Yeah, I've definitely been struggling with this. I've been tempted to do this at least for a few months and see. They're about 45-1hr out of NYC and I wouldn't be able to take a car service home after working late nights (at least I don't think I'd be able to, but I have to check). It's definitely something I'll strongly consider

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BlaqBella
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Re: My budget for paying off 240k in loans

Postby BlaqBella » Sun Jan 20, 2013 7:26 am

Why wouldn't you be able to take a cab home at night? I've known partners who took rides back home as far as CT. Living 45-1hr from the office isn't so bad so long as youre accesible when needed.

Also look at apartments in BK and Astoria, Queens. 30-45 minutes away for $1000/month rent.




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