BigLaw and Loan Payments

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sunynp
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Re: BigLaw and Loan Payments

Postby sunynp » Thu Apr 05, 2012 7:26 am

Renzo wrote:
sunynp wrote:Also I live in new York. I think living a biglaw lifestyle with the requisite attire and expenses can cost more than $70,000. You also need to include deducted firm costs like insurance.

I get nervous when people who haven't lived in new York calculate how cheaply they will live on a biglaw salary. And I don't think anyone should make this calculation until after they have an actual biglaw job. Biglaw is not an easy gig to get and it is not an easy gig to keep. If you go to school counting on biglaw to save your ass from debt, you need to seriously consider dropping out if you don't make it.


While I agree with your second point, I disagree with the first; as I said, I am able to maintain my entire family on about $70k a year, so most new associates should be able to live on much less if they choose to.

How do you manage this? I would sincerely appreciate this advice.

redbullvodka
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Re: BigLaw and Loan Payments

Postby redbullvodka » Thu Apr 05, 2012 12:57 pm

I can understand $ 70+ being needed for a family, but can someone break down for me how I'd honestly need more than 48-50K that first year as a single adult male? That's 4Kish a month. In that number I'm saying $2000/month max for rent--will not live in Manhattan. I'm able to live super comfortably on $250/month in groceries in an urban environment now, and much of my food might actually be covered by the firm (since I'll be staying so late anyway). $104/month for a metro card. I figure I'll need to spend ~$6000 on a solid warddrobe, so that's $500 per month effectively. So $2,854.00/month. That leaves ~$1,200 per month or $14,400 per year for drinks, entertainment, savings, retirement stuff. Am I missing something or does this sound reasonable, especially considering this is only year 1.

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sunynp
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Re: BigLaw and Loan Payments

Postby sunynp » Thu Apr 05, 2012 1:12 pm

Did you include fixed costs like utilities,insurance, etc? I don't think you can live without internet service or electricity or gas. You will have to wash and dry clean your clothes. Firm will require a contribution for medical insurance. Food is probably more expensive in New York then you are used to. The firm might buy dinner but they aren't going to cover every meal. I guess if you live on cereal you only need cereal, milk, and a bowl and a spoon. I'm assuming you will just get coffee at the office. What about furniture? Do you have that? Are you getting an advance from the firm for the bar, if so you will owe them money. What about a gym membership of some kind? Does your firm cover that as well? What about medicine, toiletries, stuff like that?

I'm not sure how many clothes you can buy for $500 a month. It depends on what wardrobe you already have. You need to look good and professional at your job. So you need to add in haircuts, shoeshines, manicures.

There are more fixed costs than you are considering.

redbullvodka
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Re: BigLaw and Loan Payments

Postby redbullvodka » Thu Apr 05, 2012 1:47 pm

sunynp wrote:Did you include fixed costs like utilities,insurance, etc? I don't think you can live without internet service or electricity or gas. You will have to wash and dry clean your clothes. Firm will require a contribution for medical insurance. Food is probably more expensive in New York then you are used to. The firm might buy dinner but they aren't going to cover every meal. I guess if you live on cereal you only need cereal, milk, and a bowl and a spoon. I'm assuming you will just get coffee at the office. What about furniture? Do you have that? Are you getting an advance from the firm for the bar, if so you will owe them money. What about a gym membership of some kind? Does your firm cover that as well? What about medicine, toiletries, stuff like that?

I'm not sure how many clothes you can buy for $500 a month. It depends on what wardrobe you already have. You need to look good and professional at your job. So you need to add in haircuts, shoeshines, manicures.

There are more fixed costs than you are considering.


Built utilities into rent. Shopped during a summer in NYC and that was what I spent on groceries -- super comfortable. Wash/dry cleaning easily covered in the $14,400 left over. Will have furniture by this time. Will be starting at a firm ~age 25 so will be covered the first year by parents medical insurance, so long as that provision of Obamacare remains. Toiletries i'm including in the grocery bill, just how I happen to group things. You're correct that I forgot about the bar advance.

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Mr. Somebody
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Re: BigLaw and Loan Payments

Postby Mr. Somebody » Thu Apr 05, 2012 1:48 pm

Do most biglaw associates in NYC get a car?

redbullvodka
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Re: BigLaw and Loan Payments

Postby redbullvodka » Thu Apr 05, 2012 1:54 pm

Didn't see the point in my calculus.

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ganggreen
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Re: BigLaw and Loan Payments

Postby ganggreen » Thu Apr 05, 2012 3:47 pm

redbullvodka wrote:
bk1 wrote:
redbullvodka wrote:Even if you don't stick it out 5 years, that trajectory puts you on a strong downward debt path, so if you leave after 3 years (the typical first wave if I'm remembering correctly) you'll have a solid amount of debt paid off, and can take in-house/smaller firm jobs that pay on order of ~100K.


I don't necessarily agree with this. If you start with 250k debt at graduation and live off 70k/year, your debt will be around 150k after 3 years. If you then downgrade to a 100k/year job, you're looking at what, 65k after taxes? After having lived at 70k/year prior to that you're only making 65k/year without even factoring in debt repayments or the fact that you have 150k left to repay. A 4th year in biglaw on the other hand can chop that 150k almost in half.



If I pay off in 5 years (which I'm planning), I'd rather front load the debt, and attempt to pay 48-50K per year, at the 160K, 170K, and 185K brackets, rather than commit to 70K/year regardless of salary. Without bonuses factored in, the math looks something like this:

96K-48K(loans)=48K to live off of in year 1
102K-48K(loans)=54K to live off of year 2
111k-48K(loans)=63K to live off of year 3
126K-48K(loans)=78K to live off of year 4
138K-48K(loans)=90K to live off of year 5

Year 1 is rough, but if I end up working in NYC i have absolutely zero intention of living in Manhattan (prob Queens, Jersey City, etc.), so that should be plenty. This kicks the shit out of a medical residency, so I'm pretty happy with that debt/spending outlook.


Are the raises you built in pretty standard for biglaw?

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dingbat
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Re: BigLaw and Loan Payments

Postby dingbat » Thu Apr 05, 2012 3:56 pm

Mr. Somebody wrote:Do most biglaw associates in NYC get a car?

No one in NY gets a car

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bk1
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Re: BigLaw and Loan Payments

Postby bk1 » Thu Apr 05, 2012 4:00 pm

ganggreen wrote:Are the raises you built in pretty standard for biglaw?


Raises/bonuses are lockstep and standard for the most part (check ATL's coverage of them). I know some firms have frozen salaries for a year or two, but I think that was rare.

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Mr. Somebody
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Re: BigLaw and Loan Payments

Postby Mr. Somebody » Thu Apr 05, 2012 4:17 pm

What are the pros/cons of living outside of Manhattan vs living in Manhattan, and how much can you save doing that?

As you can tell by my car question I've never lived in new york...

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dingbat
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Re: BigLaw and Loan Payments

Postby dingbat » Thu Apr 05, 2012 4:25 pm

Mr. Somebody wrote:What are the pros/cons of living outside of Manhattan vs living in Manhattan, and how much can you save doing that?

As you can tell by my car question I've never lived in new york...

If you're working biglaw hours, being able to take a taxi and in $20 and 20 minutes you're home is invaluable.

There are a lot of pros and cons, partly depending on where in Manhattan vs where outside.
If you're starting a biglaw job, just move to Manhattan, it's easier that way.
Plus, the NY lifestyle should really be experienced before deciding if you want out

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sunynp
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Re: BigLaw and Loan Payments

Postby sunynp » Thu Apr 05, 2012 4:31 pm

This thread might be useful.


viewtopic.php?f=23&t=163197

Renzo
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Re: BigLaw and Loan Payments

Postby Renzo » Thu Apr 05, 2012 9:08 pm

sunynp wrote:How do you manage this? I would sincerely appreciate this advice.


I live in one of desirable parts of Brooklyn, which is not cheap but cheaper than equally fun neighborhoods in Manhattan. Rent, cable, insurance internet, gas and electric on a smallish 2 bedroom in a brownstone with a yard comes to about $2600/month. We spend about $600/mo on groceries, another $250 eating out, and my booze bill is about $250/month, for a total of about $1100/month.

Community rec. center membership for the family, art classes for kids, etc., is another $150 ish/month. Cell phones for all are about $160. Netflix, iTunes purchases, movie rentals, occasional trips to the zoo, etc. is generally less than $100/mo. Pad that out by another $100/mo to account for my infrequent concerts or museum visits. So the running total is about $4200/mo

Clothing is hard to figure, because it tends to be many hundreds one month, nothing the next. I have a good professional wardrobe, so my needs are minimal, but I also have to clothe a child. So, with some reservation, I would estimate that clothing & laundry is about $300/mo on average. Gets us to $4500/mo

If I bundle up all the personal care stuff like pharmacy purchases, haircuts, and medical expenses, again it tends to be boom and bust, but averages out to about $800/month.

That gets us to $5100/mo, or annual spending of about $61,000. Non-budget items like cheap vacations, christmas, and the fact that I insisted on going to the Chef's Table at Brooklyn Fare for my birthday, and we're up at about $70k a year in annual spending.




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