How the Heck Do You Pay Back Sticker? Forum

[NYstate]

I'm not sure where we are in this anymore. My point was to make a budget that has flexibility as you are more likely to stick to it. I'm not advocating a spendthrift life.

The other point about living like you have a negative net worth: people going on PAYE and IBR are going to have two decades of debt. I think they will be budgeting based on payments not on net worth.

[muskies970]

Exactly, I fell into this exact same trap when I first started reading all the WARNINGS on this site about the UNBEARABLE debt. COncession, no one going to a TT, TTT, or TTTT should be taking out that much debt, but I also don't think they should be going to lawschool at all. However for a T14-T50 degree that much debt will only burden you for 3-10 years and then you'll have a great lifestyle for the average American which big picture is better than 90% of the world.

Everyone here is way too short sighted and can only think 3-5 years out, it's worse than congress passing short term budgets, law school should be viewed as a lifelong investment for a professional career that will give you a great chance at living a great life.

I wish people would stop spreading unneccesary fear, and keep it more realistic, on this forum. I almost fell intot he trap of turning down a T14 for ~100k in debt because I thought it would be unbearable until I did the math myself.

There is so much wrong with this that I can't believe this isn't a flame. Did you just stroll out of a time machine from 2004?

Every point, I agree with.

thank you. just trying to help put things in a fair perspective. Not telling people they ever should take out 200k+ in debt. just that it is feasible with a comfortable lifestyle in the short term from a T14 and then a great lifestyle long term.

[Birdnals]

I'm not sure where we are in this anymore. My point was to make a budget that has flexibility as you are more likely to stick to it. I'm not advocating a spendthrift life.

The other point about living like you have a negative net worth: people going on PAYE and IBR are going to have two decades of debt. I think they will be budgeting based on payments not on net worth.

I believe IBR is only exactly 1 decade of debt, unless you are suggesting the tax at the end will need financing?

[twenty]

I'm not sure where we are in this anymore. My point was to make a budget that has flexibility as you are more likely to stick to it. I'm not advocating a spendthrift life.

The other point about living like you have a negative net worth: people going on PAYE and IBR are going to have two decades of debt. I think they will be budgeting based on payments not on net worth.

I believe IBR is only exactly 1 decade of debt, unless you are suggesting the tax at the end will need financing?

Nope. IBR is actually 2.5 decades. PAYE is 2 decades.

[NYstate]

I'm not sure where we are in this anymore. My point was to make a budget that has flexibility as you are more likely to stick to it. I'm not advocating a spendthrift life.

The other point about living like you have a negative net worth: people going on PAYE and IBR are going to have two decades of debt. I think they will be budgeting based on payments not on net worth.

I believe IBR is only exactly 1 decade of debt, unless you are suggesting the tax at the end will need financing?

Sorry. I thought it was 20 years? Is that PAYE? I thought ten years was the standard debt repayment plan.

[A. Nony Mouse]

IIRC IBR is 25 years, PAYE is 20, standard payment plan is 10 (of course, you can do a longer plan without being on IBR/PAYE, too), and PSLF is 10. Of course, PSLF has no tax bomb.

[Borhas]

IBR includes payments that are 15% of income that is above 150% of poverty level

PAYE includes payments that are 10% of income that is above 150% of poverty level

All IBR loans w/ 25 years of on time payments qualify for forgiveness (tax bomb)

All PAYE loans w/ 20 years of on time payments qualify for forgiveness (tax bomb)

You qualify for PAYE if you have no federal loans before October 2007 (or something like that)

Either IBR or PAYE loans w/ 10 years of on time payments while working for the government or a qualifying non-profit qualify for forgiveness (no tax bomb)

[suzige]

tag for later

[A. Nony Mouse]

IBR includes payments that are 15% of income that is above 150% of poverty level

PAYE includes payments that are 15% of income that is above 150% of poverty level

All IBR loans w/ 25 years of on time payments qualify for forgiveness (tax bomb)

All PAYE loans w/ 20 years of on time payments qualify for forgiveness (tax bomb)

Either IBR or PAYE loans w/ 10 years of on time payments while working for the government or a qualifying non-profit qualify for forgiveness (no tax bomb)

Yes, that's much clearer than how I put it, thanks.

(Also - for PSLF it's 120 payments total, they don't have to be consecutive. So if you spend 3 years in a job that doesn't qualify, you could still get forgiveness after 13 years.)

[dixiecupdrinking]

Normal, middle class people can't afford 2K/month rent payments in the (second) most expensive city in the county. That's why all the middle class people live in the outer neighborhoods. People ITT have a strange notion of what it means to be middle class. The idea that you can make $3000 a month in debt repayment and still live in Manhattan is just insane by "middle-class" standards.

This didn't get enough attention because it's precisely right. You all, biglaw associates included, need to adjust your standards for what constitutes middle class if you're living in NYC. I have known many, many people living on $30-50k pre-tax in NYC and they all have pretty nice lives. They just don't feel entitled to live by themselves in Manhattan. There is nowhere below 96th Street where that is a "normal middle-class life," it is an immense luxury, especially, as timbs points out, when you're six figures deep in debt. You can wave your hands and say "but that's what it takes to have a life worth living," and that's fine—because you are in fact extremely well-off if you have a biglaw job, and can afford it—but recognize that means 1) you're making a choice, which has consequences, one of which might be not paying debt off ASAP, and 2) you're saying that you wouldn't find it worth living the life that 90% of people in NYC live, which again is fine but is basically the definition of elitist.

[Borhas]

IBR includes payments that are 15% of income that is above 150% of poverty level

PAYE includes payments that are 15% of income that is above 150% of poverty level

All IBR loans w/ 25 years of on time payments qualify for forgiveness (tax bomb)

All PAYE loans w/ 20 years of on time payments qualify for forgiveness (tax bomb)

Either IBR or PAYE loans w/ 10 years of on time payments while working for the government or a qualifying non-profit qualify for forgiveness (no tax bomb)

Yes, that's much clearer than how I put it, thanks.

(Also - for PSLF it's 120 payments total, they don't have to be consecutive. So if you spend 3 years in a job that doesn't qualify, you could still get forgiveness after 13 years.)

oh yeah PAYE is 10% instead of 15%

woops

[Borhas]

Normal, middle class people can't afford 2K/month rent payments in the (second) most expensive city in the county. That's why all the middle class people live in the outer neighborhoods. People ITT have a strange notion of what it means to be middle class. The idea that you can make $3000 a month in debt repayment and still live in Manhattan is just insane by "middle-class" standards.

This didn't get enough attention because it's precisely right. You all, biglaw associates included, need to adjust your standards for what constitutes middle class if you're living in NYC. I have known many, many people living on $30-50k pre-tax in NYC and they all have pretty nice lives. They just don't feel entitled to live by themselves in Manhattan. There is nowhere below 96th Street where that is a "normal middle-class life," it is an immense luxury, especially, as timbs points out, when you're six figures deep in debt. You can wave your hands and say "but that's what it takes to have a life worth living," and that's fine—because you are in fact extremely well-off if you have a biglaw job, and can afford it—but recognize that means 1) you're making a choice, which has consequences, one of which might be not paying debt off ASAP, and 2) you're saying that you wouldn't find it worth living the life that 90% of people in NYC live, which again is fine but is basically the definition of elitist.

could a Big Law in NYC associate realistically have the time in the day to commute from the outer areas into Manhattan?

I do think that people have skewed perspectives, but I also think the oppressive hours necessitate expenses that would be luxuries for other people

[IAFG]

could a Big Law in NYC associate realistically have the time in the day to commute from the outer areas into Manhattan?

I do think that people have skewed perspectives, but I also think the oppressive hours necessitate expenses that would be luxuries for other people

It takes what, 25 min to get from Pelham to GCT? The real problem is that Metro North/PATH don't run as late as biglaw associates realistically need them to.

[dixiecupdrinking]

Normal, middle class people can't afford 2K/month rent payments in the (second) most expensive city in the county. That's why all the middle class people live in the outer neighborhoods. People ITT have a strange notion of what it means to be middle class. The idea that you can make $3000 a month in debt repayment and still live in Manhattan is just insane by "middle-class" standards.

This didn't get enough attention because it's precisely right. You all, biglaw associates included, need to adjust your standards for what constitutes middle class if you're living in NYC. I have known many, many people living on $30-50k pre-tax in NYC and they all have pretty nice lives. They just don't feel entitled to live by themselves in Manhattan. There is nowhere below 96th Street where that is a "normal middle-class life," it is an immense luxury, especially, as timbs points out, when you're six figures deep in debt. You can wave your hands and say "but that's what it takes to have a life worth living," and that's fine—because you are in fact extremely well-off if you have a biglaw job, and can afford it—but recognize that means 1) you're making a choice, which has consequences, one of which might be not paying debt off ASAP, and 2) you're saying that you wouldn't find it worth living the life that 90% of people in NYC live, which again is fine but is basically the definition of elitist.

could a Big Law in NYC associate realistically have the time in the day to commute from the outer areas into Manhattan?

I do think that people have skewed perspectives, but I also think the oppressive hours necessitate expenses that would be luxuries for other people

Honestly if you have to go from the UWS to the east side of midtown it basically takes just as long as getting there from Astoria. I know lots of people who work biglaw, and biglaw-type hours, and live in Brooklyn. It's completely realistic, it just isn't viewed as an option, particularly by a lot of people who move to NYC for the first time after graduating from law school and don't really understand the lay of the land, and how privileged they actually are to even have the options they're considering.

ETA: I don't want to belittle your point, because you're right that there is some degree to which the demands of the job may make it more worthwhile for associates to pay to live closer. I guess my point is, regardless of whether you feel like you "have" to do it, the fact that having the means to make that decision is an immense privilege, even if it means you can "only" pay back $3000 a month of your loans.

[Borhas]

Normal, middle class people can't afford 2K/month rent payments in the (second) most expensive city in the county. That's why all the middle class people live in the outer neighborhoods. People ITT have a strange notion of what it means to be middle class. The idea that you can make $3000 a month in debt repayment and still live in Manhattan is just insane by "middle-class" standards.

This didn't get enough attention because it's precisely right. You all, biglaw associates included, need to adjust your standards for what constitutes middle class if you're living in NYC. I have known many, many people living on $30-50k pre-tax in NYC and they all have pretty nice lives. They just don't feel entitled to live by themselves in Manhattan. There is nowhere below 96th Street where that is a "normal middle-class life," it is an immense luxury, especially, as timbs points out, when you're six figures deep in debt. You can wave your hands and say "but that's what it takes to have a life worth living," and that's fine—because you are in fact extremely well-off if you have a biglaw job, and can afford it—but recognize that means 1) you're making a choice, which has consequences, one of which might be not paying debt off ASAP, and 2) you're saying that you wouldn't find it worth living the life that 90% of people in NYC live, which again is fine but is basically the definition of elitist.

could a Big Law in NYC associate realistically have the time in the day to commute from the outer areas into Manhattan?

I do think that people have skewed perspectives, but I also think the oppressive hours necessitate expenses that would be luxuries for other people

Honestly if you have to go from the UWS to the east side of midtown it basically takes just as long as getting there from Astoria. I know lots of people who work biglaw, and biglaw-type hours, and live in Brooklyn. It's completely realistic, it just isn't viewed as an option, particularly by a lot of people who move to NYC for the first time after graduating from law school and don't really understand the lay of the land, and how privileged they actually are to even have the options they're considering.

fair enough, I've never been to NYC so I have no idea

[Rahviveh]

The other point about living like you have a negative net worth: people going on PAYE and IBR are going to have two decades of debt. I think they will be budgeting based on payments not on net worth.

Isn't that the point of IBR? To make your payments more manageable and budget based on those lower payments. If you budget based off net worth than there's no point in going on IBR in the first place

Of course the smart thing to do while on IBR is to save a big chunk of your take home.

[Monochromatic Oeuvre]

could a Big Law in NYC associate realistically have the time in the day to commute from the outer areas into Manhattan?

I do think that people have skewed perspectives, but I also think the oppressive hours necessitate expenses that would be luxuries for other people

I give a pass to Wachtell associates, who are apparently so overworked that "Should I sleep tonight?" is an actual dilemma. But when you make $250k after your bonus, you sort of lose the right to complain.

Everyone else can manage a 45-minute commute.

[jrsbaseball5]

IIRC IBR is 25 years, PAYE is 20, standard payment plan is 10 (of course, you can do a longer plan without being on IBR/PAYE, too), and PSLF is 10. Of course, PSLF has no tax bomb.

I'm going to ask a really stupid question because I have seen this mentioned a lot, but have never found an explanation for what it is. What is the tax bomb associated with PAYE and IBR?

[IAFG]

Yeah, just do Brooklyn bro. (LinkRemoved)

[Tiago Splitter]

IIRC IBR is 25 years, PAYE is 20, standard payment plan is 10 (of course, you can do a longer plan without being on IBR/PAYE, too), and PSLF is 10. Of course, PSLF has no tax bomb.

I'm going to ask a really stupid question because I have seen this mentioned a lot, but have never found an explanation for what it is. What is the tax bomb associated with PAYE and IBR?

Forgiven debt is taxable. There is a waiver for this with debt forgiven under the 10 year Public Service Loan Forgiveness, but not under IBR/PAYE. So unless you work for a non-profit or government org. the amount of debt forgiven will be subject to income tax as ordinary income, at least under current rules.

[FlightoftheEarls]

Bro, you're living a pretty luxurious lifestyle for your first year out of law school. Just saying

75k a year after taxes after 10k in your 401k and after loan payments, man that's a hard lifestyle I can see how you just barely scrape by I don't know how all those ppl living on NYC on only 50k a year salary pretax do it. Maybe if you didn't go to all five weddings and cut back from going out EVERY weekend for your social life to every other week and were somewhat thrifty buying only one or two suits and some discount clothes you could put more towards your loans...

If anything you're the perfect example of someone sounding overly entitled and proof of how awesome a big law job can be. I have plenty of hardworking friends fresh out of college/ grad schools who would kill for that kind of money.

Well, the past few pages of this thread have been quite the entertaining read. I'm not going to go back and forth with you on the minute details of my finances, but I suppose I will offer two responses:

1.) At no point in my breakdown of what living on a first year's biglaw salary is actually like was I even close to complaining. To the contrary, I consider myself one of the lucky few in biglaw who legitimately enjoys going in to work. I find the vast majority of matters I've been staffed on to be incredibly intellectually stimulating (even as a first year), and no part of me is taking that, nor the compensation that I get paid for that, for granted. My entire point was to illustrate that while plans of paying $4k/month straight out of the gate sound simple, the reality of life as a first-year associate in NYC makes it more difficult than that. I know it's fun to get worked into a tizzy on here and start slamming people trying to provide a little perspective based on their real-world experiences, but I would urge you to slow your roll a little bit.

2.) I've been called a lot of things in my life, but "entitled" has never once been one of them. While I have very little interest in justifying the financial decisions I make, I think it should suffice to say that I don't live in a super fancy/expensive area in NYC, I don't treat weekends like they're an occasion for bottle service (although I have plenty of friends who do), and I don't buy particularly expensive or fancy clothing. To the contrary, I actually share a bedroom above the 96th street cutoff that was mentioned earlier in this thread, I've prioritized saving significant amounts of my discretionary income at the outset instead of throwing it all towards my debt because the concept of aggressively paying off an extra $15k of debt as a first year and having no nest egg comes across to me as incredibly naive and stupid, and I realistically go out to dinner or drinks with my SO/friends maybe 2-3 times per month. I've also made it a goal to begin contributing to my 401k for retirement from the outset because that's something far too many people make excuses for not doing until it's way too late to have started, and I believe it's important to get yourself into smart financial habits. I also have slightly lower loan payments than many of my peers (and than people considering taking on sticker in this thread) because, instead of paying sticker to go to a more "prestigious" school, I opted for a healthy scholarship at Michigan because it was just as strong of a school for my goals and I didn't, and still continue to not, give a single fuck about that extra bit of "prestige". All in all, I'm not entirely sure how you came to the conclusion that I am in any way "entitled" given that I don't think the world owes me a damn thing, but you're more than welcome to that opinion.

I'm incredibly lucky to be able to not have to be concerned about making ends meet on the day to day. I'm lucky to be in the field I am in, at the firm I'm at, and with the colleagues I get to work along side of. When you have two-week spans where you literally do not get to have a real conversation with your SO because you're home between 2-4 a.m. every night and she's already asleep and gone to work when you wake up at 8:00 the next morning, it really helps to be doing something that you enjoy. And, of course, it certainly helps knowing that the compensation I'm making is helping to pay down the loans I've taken.

I'm not going to respond to this thread any further, as I think I've made the point I wanted to make: landing biglaw is a huge help financially, but pretending that it's easy to pay $4k/month in loan repayments as a first year means both (i) living incredibly frugally without any of the things that help you get by when you literally don't have time to do your laundry and (ii) working in an industry where forced attrition happens without making any provisions to cover your ass if (or more realistically, when) you get shown the door. If you're so confident that you can do both of those if you land biglaw, then all the more power to you.

I wish you the best of luck.

[Borhas]

Yeah, just do Brooklyn bro. (LinkRemoved)

wow, that is like straight of Being John Malkovich

so happy I never had to ever enter NYC

[HawkeyeGirl]

could a Big Law in NYC associate realistically have the time in the day to commute from the outer areas into Manhattan?

I do think that people have skewed perspectives, but I also think the oppressive hours necessitate expenses that would be luxuries for other people

It takes what, 25 min to get from Pelham to GCT? The real problem is that Metro North/PATH don't run as late as biglaw associates realistically need them to.

Correct me if I'm wrong, but if you're working late/past public transit hours, won't firms pay for a car to take you home? I thought that was pretty standard, but maybe just in my current industry. My current firm pays fo ra car for me if I work past 9PM.

[IAFG]

could a Big Law in NYC associate realistically have the time in the day to commute from the outer areas into Manhattan?

I do think that people have skewed perspectives, but I also think the oppressive hours necessitate expenses that would be luxuries for other people

It takes what, 25 min to get from Pelham to GCT? The real problem is that Metro North/PATH don't run as late as biglaw associates realistically need them to.

Correct me if I'm wrong, but if you're working late/past public transit hours, won't firms pay for a car to take you home? I thought that was pretty standard, but maybe just in my current industry. My current firm pays fo ra car for me if I work past 9PM.

Apparently they will. For some reason I assumed this was only for Manhattan. I stand corrected.

[dw3]

Manhattan BIGLAW