Debt freakout. Help! Forum

[Anonymous User]

Okay, so I'm going to graduate T14 in 2016 with ~$225k debt. Currently, I'm sitting at a shade under $150k and am fortunate to not have undergrad debt. I'm setup very well for a 2LSA and will certainly convert it to an offer, but I was sitting around today and just started completely bugging out about my.

When you tack on interest, I'm probably looking at $260k on a starting salary of $160k. Even if I put half my take-home and my full bonus towards debt service (assuming a 36.25% tax rate: $56, $61, $69, $80), that's almost 4 years of paying debt. Realistically speaking, the level of belt tightening that would require isn't likely, so my actual percentage of take-home going to debt will be closer to 40%+bonus ($49, $50, $57, $67) which puts repayment at just over 4 years ($37k left for year 5). This doesn't include something like a car, which I'll probably need if I work somewhere in DC or Boston, the markets I'm looking at.

Either way, that is a very long time. Maybe my parents can slide me $20k/yr, which would help a lot, but I feel like that amount of debt, combined with the likelihood I'm out after 4 years, doesn't let me move the ball forward. I would either still be holding the bag for a large bit of money or done paying, but without anything to show for it in savings/net worth as a 30 year-old.

I'm pot committed at this point, so there is no use in feeling sorry for myself, but if anyone out there is doing this now and can talk about paying down that much debt, I'd love to hear what you have to say.

[dixiecupdrinking]

Okay, so I'm going to graduate T14 in 2016 with ~$225k debt. Currently, I'm sitting at a shade under $150k and am fortunate to not have undergrad debt. I'm setup very well for a 2LSA and will certainly convert it to an offer, but I was sitting around today and just started completely bugging out about my.

When you tack on interest, I'm probably looking at $260k on a starting salary of $160k. Even if I put half my take-home and my full bonus towards debt service (assuming a 36.25% tax rate: $56, $61, $69, $80), that's almost 4 years of paying debt. Realistically speaking, the level of belt tightening that would require isn't likely, so my actual percentage of take-home going to debt will be closer to 40%+bonus ($49, $50, $57, $67) which puts repayment at just over 4 years ($37k left for year 5). This doesn't include something like a car, which I'll probably need if I work somewhere in DC or Boston, the markets I'm looking at.

Either way, that is a very long time. Maybe my parents can slide me $20k/yr, which would help a lot, but I feel like that amount of debt, combined with the likelihood I'm out after 4 years, doesn't let me move the ball forward. I would either still be holding the bag for a large bit of money or done paying, but without anything to show for it in savings/net worth as a 30 year-old.

I'm pot committed at this point, so there is no use in feeling sorry for myself, but if anyone out there is doing this now and can talk about paying down that much debt, I'd love to hear what you have to say.

You've more or less covered it. Sucks to plow money into loans and not save a dime. That's what it takes these days. Focus on getting the job you'll need to pay it off.

[Anonymous User]

Anyone have any moral support stories of success?

[Frayed Knot]

Okay, so I'm going to graduate T14 in 2016 with ~$225k debt. Currently, I'm sitting at a shade under $150k and am fortunate to not have undergrad debt. I'm setup very well for a 2LSA and will certainly convert it to an offer, but I was sitting around today and just started completely bugging out about my.

When you tack on interest, I'm probably looking at $260k on a starting salary of $160k. Even if I put half my take-home and my full bonus towards debt service (assuming a 36.25% tax rate: $56, $61, $69, $80), that's almost 4 years of paying debt. Realistically speaking, the level of belt tightening that would require isn't likely, so my actual percentage of take-home going to debt will be closer to 40%+bonus ($49, $50, $57, $67) which puts repayment at just over 4 years ($37k left for year 5). This doesn't include something like a car, which I'll probably need if I work somewhere in DC or Boston, the markets I'm looking at.

Either way, that is a very long time. Maybe my parents can slide me $20k/yr, which would help a lot, but I feel like that amount of debt, combined with the likelihood I'm out after 4 years, doesn't let me move the ball forward. I would either still be holding the bag for a large bit of money or done paying, but without anything to show for it in savings/net worth as a 30 year-old.

I'm pot committed at this point, so there is no use in feeling sorry for myself, but if anyone out there is doing this now and can talk about paying down that much debt, I'd love to hear what you have to say.

I'm in a similar boat, and I sympathize.

One part that can make this not quite as bad as it looks is that we can probably grow our absolute spending more slowly than our salaries, so we can increase our savings rates over time. If you could live on $61,200 in year one (60% of market take-home, using your tax rates), then you can probably live on not too much more than that in years 2–5. Yeah, your spending will probably go up each year, but there's no reason it should go up in exact proportion to your salary increases. Especially if you keep the same apartment/car (and you should, if getting out of debt is a priority).

(Out of curiosity, where did you get that 36.25% number for average tax rate? That should be in the right ballpark, but it seems . . . oddly specific.)

[hurldes]

I'm in the exact situation you are in, except I'm gonna start my job this October. I can't offer any advice... just know there are others like you out there. I think if I'm out of debt in 4-5 years that will be a huge success. If I can last in biglaw for a couple more years after that, I'll be able to save a lot of money. So that's something to look forward to I guess.

[Anonymous User]

(Out of curiosity, where did you get that 36.25% number for average tax rate? That should be in the right ballpark, but it seems . . . oddly specific.)

I asked a few 2LSAs I know what their effective tax rates were this summer.