Is Paying Off Loans Fastest Always Best Idea? Forum

[guano]

Be nice if a Wharton TLSer would drop by and es'plain it all.

As a theatre artist and almost-lawyer, I can confirm the analysis in this thread is sound.

To be fair, there are enough non Wharton's TLSers who have more than sufficient knowledge - such as thesealocust

[09042014]

With new budget proposal having PAY E being extended and tax bomb being removed: PayE is good even for big law bros.

If it is available, I'm signing up.

[CG614]

Also, everyone should consider the interest rate environment we are in. 6.5% rates are historically low. But even more so, if you want to own a home some day, you should consider the benefits of locking in a 4% fixed 30 yr mortgage. Rates will move at some point, and you may save much more in the log run by getting the sweet mortgage deal than paying down your student loans as fast as possible. Just a thought. Everyone needs to assess their own risk profiles and make the best choice for themselves.

[bananapeanutbutter]

Out of curiosity how much does 160k turn into after taxes in the major markets?

[thesealocust]

Out of curiosity how much does 160k turn into after taxes in the major markets?

96 to 110 (roughly NYC vs. Texas) before factoring in the zillion complexities (pre-tax benefits and/or retirement contributions, deductible state and local income tax, etc.)

[bananapeanutbutter]

Out of curiosity how much does 160k turn into after taxes in the major markets?

96 to 110 (roughly NYC vs. Texas) before factoring in the zillion complexities (pre-tax benefits and/or retirement contributions, deductible state and local income tax, etc.)

so if one lived off of 35k per year, it would be possible to pay off 200k in debt within 4 years post graduation?

[thesealocust]

4 years is a little aggressive, especially considering the compounding that will happen as you try to pay it down. It would also imply that your money is basically going towards rent, food, transportation, and loans - you'll want to build a cushion given how unstable of a job biglaw can be, and cushion dollars won't be debt paying dollars.

Not to say it's impossible though, especially because by that 3rd year of biglaw you'll be earning a lot more than in the first year, and have had a few end of year bonuses that add up even if we aren't in boom-times any more.

In general though, it's completely feasible to work in biglaw and wind up with $50-60K per year to throw into investments or debt. More if you want to get crazy frugal about it.

And never forget how much money you save on food and transportation if you work late and get firm dinner / a car home ;_;

[bananapeanutbutter]

4 years is a little aggressive, especially considering the compounding that will happen as you try to pay it down. It would also imply that your money is basically going towards rent, food, transportation, and loans - you'll want to build a cushion given how unstable of a job biglaw can be, and cushion dollars won't be debt paying dollars.

Not to say it's impossible though, especially because by that 3rd year of biglaw you'll be earning a lot more than in the first year, and have had a few end of year bonuses that add up even if we aren't in boom-times any more.

In general though, it's completely feasible to work in biglaw and wind up with $50-60K per year to throw into investments or debt. More if you want to get crazy frugal about it.

And never forget how much money you save on food and transportation if you work late and get firm dinner / a car home ;_;

is it cool if I PM you? you have knowledge that is useful to me, and seem very normal and practical from other posts?

[thesealocust]

Sure. But I just read your PM and wasn't sure if you actually had a question