nixy wrote:That’s fair. I think the point is, though, that if you have (say) $200k in loans, which means your annual loan payment is ~$28k on the standard 10 year payment plan), and your take home is $93k (your first year in NYC), and even if your expenses are $40k, you’re not accumulating enough savings to pay off the loans in 3 years (which was where this whole discussion started). You’re probably perfectly comfortable and can pay more than the standard payment, but if you really are trying to pay off sticker-level debt in NYC, the lifestyle that will let you do it in three years *will* be fairly extreme.
nixy wrote:That’s fair. I think the point is, though, that if you have (say) $200k in loans, which means your annual loan payment is ~$28k on the standard 10 year payment plan), and your take home is $93k (your first year in NYC), and even if your expenses are $40k, you’re not accumulating enough savings to pay off the loans in 3 years (which was where this whole discussion started). You’re probably perfectly comfortable and can pay more than the standard payment, but if you really are trying to pay off sticker-level debt in NYC, the lifestyle that will let you do it in three years *will* be fairly extreme.
I’m someone who paid around sticker for a T6 and just paid off their student loans literally today in about three years after starting big law. Not actually recommending my strategy to anyone because it was really, really hard, but wanted to share my experience.
- Borrowed $18,500 for undergrad (went to a state school with a full-tuition scholarship but still had to borrow for living expenses).
- Borrowed $200,000 for a T6 law school (parents helped a bit with living expenses but otherwise had to take out the rest in loans).
- Loan amount ballooned to around $250,000 thanks to those atrocious interest rates by the time I graduated in 2016.
- Started big law in October 2016 and paid a minimum of $5,000 per month (sometimes I paid more) and never skipped a month, and put every tax refund and bonus I received toward loans (I actually didn’t receive my first year bonus due to a slow year).
- Refinanced in the beginning of 2018 with a balance of around $180,000 after I felt more confident that I could last longer in big law and had paid down more principal.
- Maxed out my 401(k) in 2019 and put in about $5,000 my stub year, $14,500 in 2017 and $15,500 in 2018.
- Maxed out back door Roth IRA for 2018 and 2019 ($5,500 and $6,000).
- No other investments and have about $20,000 saved in cash.
- Work and live in a major CA market (not as high as NYC COL but not cheap like TX either).
Things that helped:
- Living like a monk my first couple of years. I rented a room in a house for about $900 per month until I moved in with my spouse when we got married (our families are conservative, so we couldn’t live together until then). After we moved in together to a one bedroom apartment, I still have never paid more than around $1400 for my share of the rent (we have always split rent equally).
- Spouse is also a lawyer but had zero student debt thanks to spouse’s parents. Spouse could have certainly helped with my loans, but it was important to me to pay them off myself, so every loan payment I made is truly from me alone. As mentioned above, we have always split rent equally, and split the rest of our living expenses equally too.
- We were fortunate that both our parents helped pay for our wedding (I put in only about 5%, and spouse/our parents covered the rest), and we put our wedding gifts toward our living expenses (which enabled me to max out my Roth IRA and 401(k) last year).
- Of course working in big law helped, but it hasn’t been easy. I had serious regrets the first few years when I felt like I was working around the clock but had nothing to show for it except a negative net worth. I was essentially $250,000 poorer than someone with zero assets, and I was constantly paranoid of being canned from big law prematurely. It wasn’t easy to compare myself with my non-law school friends advancing in their careers with better work/life balance and no monstrous student debt. Also a good number of my friends/classmates from my T6 had their loans completely taken care of by their parents (including my spouse), and I couldn’t help but feel jealous when I saw them raking in that big law salary without having $5,000 go out the window each month. Obviously I know many, if not most, law students take out loans just like myself, but somehow I felt like the leper in my inner circle.
- I also regretted turning down scholarships from other T14 schools. At the time I was making a decision on law schools, I was younger and more naive, and admittedly only cared about prestige. “Oh $200,000 isn’t that bad, I can easily pay that off with my big law salary!” Little did I know how hard that was... Funny story, I nearly almost struck out during OCI and didn’t get an offer until late September. I broke out in shingles due to the stress. And I ended up at a firm that had a notorious history of no-offering its summers (yay), but I scraped by.
I understand how fortunate I am compared to many other law students, but I’m still not sure if I would do it again if I could go back in time (financially speaking of course - I met my spouse in law school, who I love very dearly LOL). I’m in a much better place now as a fourth year associate in big law with no more student loans. I feel more marketable now that I’m a midlevel M&A associate. I’m hoping to go in-house next year even if that means taking a pay cut, and worst case scenario, I can always try lateraling to another firm to buy some more time if things get terrible at my current firm. This job sucks really hard often, but I’m grateful for allowing it to pay down my loans quickly. But would I do it again? This whole journey has certainly taken a physical and mental toll...
