Sticker

A forum for applicants and admitted students to ask law students and graduates about law school and the practice of law.
User avatar
PunkedbyReality
Posts: 72
Joined: Fri Jan 04, 2013 4:59 pm

Sticker

Postby PunkedbyReality » Tue Jul 23, 2013 11:20 pm

Is it plausible to work in BigLaw and contribute 60K per year towards debt while living and working in NYC? If this is the case, by some of my crude reckoning, it would take 6 years to pay off 280K of debt (sticker price) and be out from under it. Does this sound reasonable?

User avatar
Br3v
Posts: 4174
Joined: Mon Jun 13, 2011 7:18 pm

Re: Sticker

Postby Br3v » Tue Jul 23, 2013 11:25 pm

PunkedbyReality wrote:Is it plausible to work in BigLaw and contribute 60K per year towards debt while living and working in NYC? If this is the case, by some of my crude reckoning, it would take 6 years to pay off 280K of debt (sticker price) and be out from under it. Does this sound reasonable?

-Rough Figures-

Say you get NYC biglaw market @ 160

I think take home after tax is ~100
Putting 60 a year towards loans gives you 40 to live on.

Having a SO who would contribute income would be a huge help.

User avatar
Lincoln
Posts: 1032
Joined: Tue Nov 03, 2009 11:27 pm

Re: Sticker

Postby Lincoln » Tue Jul 23, 2013 11:27 pm

PunkedbyReality wrote:Is it plausible to work in BigLaw and contribute 60K per year towards debt while living and working in NYC? If this is the case, by some of my crude reckoning, it would take 6 years to pay off 280K of debt (sticker price) and be out from under it. Does this sound reasonable?


No. Your after-tax income in NYC (assuming you live in the city and have no dependents) is about $92k. That means you'd live off $32k. Some people certainly do it, but unless you have connections to absurdly cheap housing it's very difficult for a variety of reasons that have been discussed ad nauseum elsewhere on these boards, but that basically boil down to lack of time to do things in the cheapest possible way.

User avatar
jbagelboy
Posts: 9651
Joined: Thu Nov 29, 2012 7:57 pm

Re: Sticker

Postby jbagelboy » Wed Jul 24, 2013 12:16 am

Wutt.. After tax income in NYC is like $110,00. And thats just the first year, without bonus. Biglaw salaries increase up to $200K by year 5 with more and more substantial bonuses. So your only dealing with a 40-45K lifestyle for a year at most. And thats perfectly reasonable, you just arent models n bottles yet, which you should expect based on THE MASSIVE DEBT YOU ACCRUED.

Married will keep even more, got a kid you're keeping like 77-80%

User avatar
Monochromatic Oeuvre
Posts: 1929
Joined: Fri May 10, 2013 9:40 pm

Re: Sticker

Postby Monochromatic Oeuvre » Wed Jul 24, 2013 1:09 am

Taking home $92k on a first-year salary, even sans bonus, is presuming an effective rate of 42.5%. That seems excessively high to me. I think NYC first-years are paying a rate closer to around 37%.

$5k/month is an aggressive repayment schedule, but it is possible if you accept that you will be living what amounts to a lower-middle-class lifestyle in NYC during at least your first year and possibly the next few as well.

User avatar
StillIll
Posts: 186
Joined: Sun Dec 02, 2012 9:49 pm

Re: Sticker

Postby StillIll » Wed Jul 24, 2013 1:36 am

Have you done any research into the PAYE program? I've been reading through articles and older threads here, and there's still much about I don't quite understand yet. But it seems to me that you may be able to pay off that debt over a longer span of time, while having much smaller monthly payments, and also while being able to invest the money you make into 401ks, and getting a return on it.

There are obviously catches and much more to the program, which I'd love to become more educated about.

Anyone more seasoned on the PAYE willing to share some thoughts?

Of course I'm also sure there are peeps who will suggest a quick payoff is the way to go (if you're on a BL salary). This is a debate / discussion I'd love to see rekindled.

User avatar
Lincoln
Posts: 1032
Joined: Tue Nov 03, 2009 11:27 pm

Re: Sticker

Postby Lincoln » Wed Jul 24, 2013 2:08 am

It seems I was a little off, but since this is basically my life starting this fall, I've done some research.

Let's assume $160,000 annual salary plus $7,500 bonus for a first-year associate. You then have to pay health, dental, and vision insurance (which I guess you could skip, but that seems inadvisable) = $3,450. So that leaves $164,050 in pre-tax income (assuming you put nothing into a 401(k) or have any other above-the line deductions).

According to this, a single person living in NYC with one W-4 allowance will have $95,849.50 per year after tax (total effective tax rate: 43.6%). If you pay $60,000 toward your debt, that leaves you $36,000. Now, that's doable, and I've done it, but it won't be easy, and it certainly won't be fun. A lot of cheap options that are available to students and people with low incomes are closed off to you. With rent, food, commuting, dry cleaning, and maybe gym membership (the cheapest option through my firm is $435), it's kind of a tight squeeze.

User avatar
sinfiery
Posts: 3308
Joined: Thu Jul 14, 2011 2:55 am

Re: Sticker

Postby sinfiery » Wed Jul 24, 2013 2:17 am

The upside to having no money is you'll be working all the time anyways!



That 96k figure is correct for NYC. The bonuses help too, a solid 5-10k after tax amount you can presumably put all to either QOL or debt



It's not easy, but I think its not really a choice given employment security.

User avatar
IAFG
Posts: 6665
Joined: Mon Jun 15, 2009 1:26 pm

Re: Sticker

Postby IAFG » Wed Jul 24, 2013 2:21 am

Live in a Westchester studio and it should be feasible.

User avatar
PunkedbyReality
Posts: 72
Joined: Fri Jan 04, 2013 4:59 pm

Re: Sticker

Postby PunkedbyReality » Wed Jul 24, 2013 6:31 am

The effective tax rate was my main question. This is a bit higher than I thought. Based on what I've heard from friends in NYC, 36K to live off of per year is scraping by.

Hoping for some pleasantly surprising aid at this point.... :|

User avatar
Tiago Splitter
Posts: 15524
Joined: Tue Jun 28, 2011 1:20 am

Re: Sticker

Postby Tiago Splitter » Wed Jul 24, 2013 9:39 am

Fortunately there are raises, so while 60K is a little aggressive in year one you can do more than that by year 4 (if not sooner.) This means you need to stick around BigLaw for a while though. Also, get a wife.

User avatar
Devlin
Posts: 528
Joined: Sat Feb 02, 2013 8:34 pm

Re: Sticker

Postby Devlin » Wed Jul 24, 2013 11:43 am

Live in Texas and profit.

User avatar
guano
Posts: 2268
Joined: Mon Feb 18, 2013 9:49 am

Re: Sticker

Postby guano » Wed Jul 24, 2013 11:49 am

PunkedbyReality wrote:The effective tax rate was my main question. This is a bit higher than I thought. Based on what I've heard from friends in NYC, 36K to live off of per year is scraping by.

Hoping for some pleasantly surprising aid at this point.... :|

I've lived off halt that, and off double that. $36k is more than subsistence living, but, it's harsh.
Also keep in mind that you need to take a vacation from time to time to maintain your sanity

User avatar
jingosaur
Posts: 2223
Joined: Fri Jan 04, 2013 10:33 am

Re: Sticker

Postby jingosaur » Wed Jul 24, 2013 1:06 pm

PunkedbyReality wrote:The effective tax rate was my main question. This is a bit higher than I thought. Based on what I've heard from friends in NYC, 36K to live off of per year is scraping by.

Hoping for some pleasantly surprising aid at this point.... :|


Now that I realize you're the poster of the Texas scholly vs. NYU sticker thread, I think Texas is best for you because you're at least considering BigLaw and almost all people with PI tendencies will eventually abandon those dreams for the money.

I live a fairly modest lifestyle for a working professional in Manhattan and I can say that 36k a year in COL is borderline for Manhattan. At 3k a month, you have to pay:

$1500+ a month in rent unless you live outside of Manhattan (not recommended with the hours you'll have) or have a lot of roommates (I do this and have paid $1200 to $1300 in rent in Manhattan).

A $1000-$1500 a month personal expenses bill. This sounds high, but you'll be going out and drinking a lot and this is a very expensive activity in NYC. Getting dinner paid for by working late will probably take a significant chunk out of the credit card bill if you work late about 20 days a month.

The good thing is, you'll have plenty of extra income in case you have any expenses beyond normal day-to-day stuff (nice clothes, furniture, new video game system, etc.). You can always pay the minimum for one month and get ahead on your personal expenses. Also the whole bonuses/raises thing mentioned ITT is true.

Edit: Fixed because I said "credit card bill" instead of "personal expenses". Since I don't have a car and I live in an apartment with utilities included, literally all of my expenses are put on a credit card..
Last edited by jingosaur on Wed Jul 24, 2013 3:13 pm, edited 1 time in total.

User avatar
guano
Posts: 2268
Joined: Mon Feb 18, 2013 9:49 am

Re: Sticker

Postby guano » Wed Jul 24, 2013 1:25 pm

goldbh7 wrote:A $1000-$1500 a month credit card bill.

Do not listen to anything else this person says ever again

User avatar
jingosaur
Posts: 2223
Joined: Fri Jan 04, 2013 10:33 am

Re: Sticker

Postby jingosaur » Wed Jul 24, 2013 1:46 pm

guano wrote:
goldbh7 wrote:A $1000-$1500 a month credit card bill.

Do not listen to anything else this person says ever again


What's wrong with that range considering I charge literally everything?

User avatar
Cobretti
Posts: 2560
Joined: Tue Aug 21, 2012 12:45 am

Re: Sticker

Postby Cobretti » Wed Jul 24, 2013 1:55 pm

Tiago Splitter wrote:Fortunately there are raises, so while 60K is a little aggressive in year one you can do more than that by year 4 (if not sooner.) This means you need to stick around BigLaw for a while though. Also, get a wife.

LOL
ya, great plan to save money

User avatar
guano
Posts: 2268
Joined: Mon Feb 18, 2013 9:49 am

Re: Sticker

Postby guano » Wed Jul 24, 2013 2:59 pm

goldbh7 wrote:
guano wrote:
goldbh7 wrote:A $1000-$1500 a month credit card bill.

Do not listen to anything else this person says ever again


What's wrong with that range considering I charge literally everything?

It's the wording.
That being days, the range for "everything else" is fine, but a but more detail might be nice

User avatar
PunkedbyReality
Posts: 72
Joined: Fri Jan 04, 2013 4:59 pm

Re: Sticker

Postby PunkedbyReality » Wed Jul 24, 2013 8:59 pm

goldbh7 wrote:
PunkedbyReality wrote:The effective tax rate was my main question. This is a bit higher than I thought. Based on what I've heard from friends in NYC, 36K to live off of per year is scraping by.

Hoping for some pleasantly surprising aid at this point.... :|


Now that I realize you're the poster of the Texas scholly vs. NYU sticker thread, I think Texas is best for you because you're at least considering BigLaw and almost all people with PI tendencies will eventually abandon those dreams for the money.

I live a fairly modest lifestyle for a working professional in Manhattan and I can say that 36k a year in COL is borderline for Manhattan. At 3k a month, you have to pay:

$1500+ a month in rent unless you live outside of Manhattan (not recommended with the hours you'll have) or have a lot of roommates (I do this and have paid $1200 to $1300 in rent in Manhattan).

A $1000-$1500 a month personal expenses bill. This sounds high, but you'll be going out and drinking a lot and this is a very expensive activity in NYC. Getting dinner paid for by working late will probably take a significant chunk out of the credit card bill if you work late about 20 days a month.

The good thing is, you'll have plenty of extra income in case you have any expenses beyond normal day-to-day stuff (nice clothes, furniture, new video game system, etc.). You can always pay the minimum for one month and get ahead on your personal expenses. Also the whole bonuses/raises thing mentioned ITT is true.

Edit: Fixed because I said "credit card bill" instead of "personal expenses". Since I don't have a car and I live in an apartment with utilities included, literally all of my expenses are put on a credit card..


At this point, I'm really just trying to figure out financial aid information. I can't wrap my head around 280k of debt. But what you've said about expenses is helpful. Thank you.

User avatar
ManoftheHour
Posts: 3402
Joined: Tue Jan 22, 2013 6:03 pm

Re: Sticker

Postby ManoftheHour » Wed Jul 24, 2013 9:06 pm

goldbh7 wrote:
guano wrote:
goldbh7 wrote:A $1000-$1500 a month credit card bill.

Do not listen to anything else this person says ever again


What's wrong with that range considering I charge literally everything?


Who doesn't charge literally everything to their credit cards these days? I feel like if you're not doing it, you're losing money because of all the rewards you could be earning. For starters, with Chase Freedom, you'd get 5% off stuff like gas and groceries. You also get 1% off literally everything else that you don't get 5% off of. There are also cards that you can rack up points to earn free flights/hotels. I wish I could pay rent with my credit card.

With credit cards, you can keep track of literally everything that you buy.

At the end of every month, pay off your balance completely and you'll never have to pay a dime in interest.

F@#$ cash.




Return to “Ask a Law Student / Graduate”

Who is online

Users browsing this forum: No registered users and 2 guests