How much money saved before you'd bounce from biglaw? Forum

[nixy]

People who are struggling to save up 200k by their 3rd year bonus likely are paying for a 1BR in NYC/SF and living alone, eat out a lot, and/or have an SO/family member they are supporting, and have over 100k loans.

If you're a single person, have a roommate (even in NYC/SF), temper your eating out/general spending, 200k is doable by end of 3rd year.

If you're a dual income household, the sky is the limit.

For the “easier to save” route, don’t forget “have no/few loans to pay off,” though. As written, your post seems to imply that saving more money is about personal lifestyle choices when the loan part isn’t (or at any rate, the choice to take out big loans was made long ago and can’t be altered). I agree the lifestyle choices make a difference in savings rate, but they’re not the whole story.

[Anonymous User]

I took home about $165k in 2019 after taxes/401(k) as a 2nd year and I sent about $70k of that to a student loan. I know there is a school of thought to pay minimums on loans now and send the rest to Vanguard to buy VTI, but I just want that debt gone. I don't think it's irresponsible at all for me to do so. I did not exactly live cheaply on the remaining 8k/month though - I can do better there in 2020.

[Usernameavailable]

I took home about $165k in 2019 after taxes/401(k) as a 2nd year and I sent about $70k of that to a student loan. I know there is a school of thought to pay minimums on loans now and send the rest to Vanguard to buy VTI, but I just want that debt gone. I don't think it's irresponsible at all for me to do so. I did not exactly live cheaply on the remaining 8k/month though - I can do better there in 2020.

How did you take home 165 after 401k and taxes as a 2nd year? Even in Texas with no extra taxes, all the calculators I've tried have no more than 150 take home on market salary and bonus.

[nealric]

I took home about $165k in 2019 after taxes/401(k) as a 2nd year and I sent about $70k of that to a student loan. I know there is a school of thought to pay minimums on loans now and send the rest to Vanguard to buy VTI, but I just want that debt gone. I don't think it's irresponsible at all for me to do so. I did not exactly live cheaply on the remaining 8k/month though - I can do better there in 2020.

How did you take home 165 after 401k and taxes as a 2nd year? Even in Texas with no extra taxes, all the calculators I've tried have no more than 150 take home on market salary and bonus.

Married with a non-working or lower income spouse might be able to get there.

[Neff]

As others have pointed out, there are so many personal factors at play here, but nevertheless all of these data points are useful. I cannot emphasize the importance of financial discipline in biglaw -- the only ones who don't need a budget are those who love grinding hours and want to do it for the rest of their lives. For everyone else, you must realize that biglaw may be your ticket to financial freedom in a relatively short amount of time -- but consider:

I went from negative 80-90k net worth out of law school in September 2015 to just north of $400k net worth as of today. I practiced something that might be considered "fatFIRE" on Reddit (i.e. quite disciplined but not extreme -- as I am now married with one child and a non-working spouse). I think a $500k differential swing in 4 1/2 years was realistic given the market conditions since 2015. The main contributing factors were (ranked in order of significance):

(1) Low debt interest payments due to manageable student debt(~70k)
(2) Living in a no income tax state
(3) Living in low COL city ($4000 total all-in monthly expenses for my juniors years)
(4) Homeowner currently paying roughly $2300 a month in mortgage interest + property tax + utilities (excluding principal portion of mortgage)
(5) Disinterest in shopping/consumerism/cars/jewelry, etc.
(6) Always maxing out tax-advantage savings accounts: 401(k), back-door IRA, 529
(7) Investments in non-tax advantaged index funds
(8) Not having a child until my fourth year

As you can see, if you graduated from a T14 with >$150k debt into NYC biglaw, points 1, 2, 3, 4 above are automatically unattainable -- which makes savings that much more difficult. This is why, IMO, leaving NYC for a market-paying biglaw job in a low COL, no income tax state is THE most beneficial financial decision one could possibly make.

[AVBucks4239]

I've never been in big law, so take my opinion for what it's worth.

Most importantly, nothing is worth your mental health. If you hate a job then fucking leave it as soon as you are able, numbers on a spreadsheet be damned. And I'm saying that as the author of the personal finance thread that has over 171,000 views on here.

In all honesty, your loans are an incredibly amorphous debt. I've had years where I've paid $2,500 towards them, all the way to last year, when I paid $60,000 towards them. You can leave big law and get your payments to $0 pretty easily -- and these are qualifying payments! -- for an extended period of time under PAYE/IBR/REPAYE. So don't let these dictate your life.

Kind of on that note, my general experience (both personal and observed) is that the worst case scenario is never even remotely close to as bad as you think it will be. As long as you are competent, reasonably social, and not of the opinion that a whole host of jobs are beneath you, you will be fine. The idea that you will be earning zero income for an extended period of time is just not realistic.

I honestly can't think of one lawyer friend or friend from law school who hasn't at least found something. Yes, sometimes they had to go work in insurance defense or doing SSI for 18 months, but it's always worked out for everyone I know.

So, I'd save about six months of my monthly expenses. The lower the expenses then the less money you need. This is partly why you should be looking for jobs in LCOL areas as well, but I'm not going to fight the NYC/DC/SF machine on here, so I'll just leave it at that.

I didn't leave big law, but I did leave a firm job and start my own practice with about $20,000 in the bank. Things worked out more than fine.

[PeanutsNJam]

People who are struggling to save up 200k by their 3rd year bonus likely are paying for a 1BR in NYC/SF and living alone, eat out a lot, and/or have an SO/family member they are supporting, and have over 100k loans.

If you're a single person, have a roommate (even in NYC/SF), temper your eating out/general spending, 200k is doable by end of 3rd year.

If you're a dual income household, the sky is the limit.

For the “easier to save” route, don’t forget “have no/few loans to pay off,” though. As written, your post seems to imply that saving more money is about personal lifestyle choices when the loan part isn’t (or at any rate, the choice to take out big loans was made long ago and can’t be altered). I agree the lifestyle choices make a difference in savings rate, but they’re not the whole story.

Having an so/family member to support is also not a personal lifestyle choice, so I'm definitely not blaming a person's savings level on poor lifestyle choices. Often times, an SO/spouse's lifestyle choices are out of one's control as well.

[ClubberLang]

As others have pointed out, there are so many personal factors at play here, but nevertheless all of these data points are useful. I cannot emphasize the importance of financial discipline in biglaw -- the only ones who don't need a budget are those who love grinding hours and want to do it for the rest of their lives. For everyone else, you must realize that biglaw may be your ticket to financial freedom in a relatively short amount of time -- but consider:

I went from negative 80-90k net worth out of law school in September 2015 to just north of $400k net worth as of today. I practiced something that might be considered "fatFIRE" on Reddit (i.e. quite disciplined but not extreme -- as I am now married with one child and a non-working spouse). I think a $500k differential swing in 4 1/2 years was realistic given the market conditions since 2015. The main contributing factors were (ranked in order of significance):

(1) Low debt interest payments due to manageable student debt(~70k)
(2) Living in a no income tax state
(3) Living in low COL city ($4000 total all-in monthly expenses for my juniors years)
(4) Homeowner currently paying roughly $2300 a month in mortgage interest + property tax + utilities (excluding principal portion of mortgage)
(5) Disinterest in shopping/consumerism/cars/jewelry, etc.
(6) Always maxing out tax-advantage savings accounts: 401(k), back-door IRA, 529
(7) Investments in non-tax advantaged index funds
(8) Not having a child until my fourth year

As you can see, if you graduated from a T14 with >$150k debt into NYC biglaw, points 1, 2, 3, 4 above are automatically unattainable -- which makes savings that much more difficult. This is why, IMO, leaving NYC for a market-paying biglaw job in a low COL, no income tax state is THE most beneficial financial decision one could possibly make.

[Personal attack redacted] Nobody cares about how much you have in your retirement accounts, and OP shouldn't factor illiquid net worth into deciding when it is financially prudent to leave biglaw.

[Neff]

As others have pointed out, there are so many personal factors at play here, but nevertheless all of these data points are useful. I cannot emphasize the importance of financial discipline in biglaw -- the only ones who don't need a budget are those who love grinding hours and want to do it for the rest of their lives. For everyone else, you must realize that biglaw may be your ticket to financial freedom in a relatively short amount of time -- but consider:

I went from negative 80-90k net worth out of law school in September 2015 to just north of $400k net worth as of today. I practiced something that might be considered "fatFIRE" on Reddit (i.e. quite disciplined but not extreme -- as I am now married with one child and a non-working spouse). I think a $500k differential swing in 4 1/2 years was realistic given the market conditions since 2015. The main contributing factors were (ranked in order of significance):

(1) Low debt interest payments due to manageable student debt(~70k)
(2) Living in a no income tax state
(3) Living in low COL city ($4000 total all-in monthly expenses for my juniors years)
(4) Homeowner currently paying roughly $2300 a month in mortgage interest + property tax + utilities (excluding principal portion of mortgage)
(5) Disinterest in shopping/consumerism/cars/jewelry, etc.
(6) Always maxing out tax-advantage savings accounts: 401(k), back-door IRA, 529
(7) Investments in non-tax advantaged index funds
(8) Not having a child until my fourth year

As you can see, if you graduated from a T14 with >$150k debt into NYC biglaw, points 1, 2, 3, 4 above are automatically unattainable -- which makes savings that much more difficult. This is why, IMO, leaving NYC for a market-paying biglaw job in a low COL, no income tax state is THE most beneficial financial decision one could possibly make.

[Personal attack redacted] Nobody cares about how much you have in your retirement accounts, and OP shouldn't factor illiquid net worth into deciding when it is financially prudent to leave biglaw.

I didn’t say anything about basing the decision to leave biglaw on illiquid net worth.

[PeanutsNJam]

I agree that, when it comes to retiring from biglaw, the only things that would matter to me are non-retirement liquid assets and my monthly expenses. Home ownership can factor into the "monthly expenses" part if you have a set mortgage where the only increase over the next X years of your mortgage is property tax and maybe HoA fees. I'd feel more comfortable leaving biglaw with a more concrete projection of my monthly living expenses, which home ownership provides.

[The Avatar]

So no one here is in Biglaw because they enjoy it and see a long term future in it?

A lot of private practice lawyers have reached out to me about making the switch to government? As a federal government lawyer, I probably make a quarter of what people here make. So why do they want to leave Biglaw? I've been thinking about moving to private practice but my office is bombarded with job applications from Biglaw lawyers. What's the deal?

[dabigchina]

So no one here is in Biglaw because they enjoy it and see a long term future in it?

A lot of private practice lawyers have reached out to me about making the switch to government? As a federal government lawyer, I probably make a quarter of what people here make. So why do they want to leave Biglaw? I've been thinking about moving to private practice but my office is bombarded with job applications from Biglaw lawyers. What's the deal?

You make a lot of money, but it's by no means easy money. The fact that so many biglawyers, who have presumably been high achievers and hard workers from kindergarten through law school, are trying to take a 75% pay cut should tell you how painful it is.

[nixy]

So no one here is in Biglaw because they enjoy it and see a long term future in it?

A lot of private practice lawyers have reached out to me about making the switch to government? As a federal government lawyer, I probably make a quarter of what people here make. So why do they want to leave Biglaw? I've been thinking about moving to private practice but my office is bombarded with job applications from Biglaw lawyers. What's the deal?

Big law is incredibly hard to sustain long term. You work long hours, at the whim of others, always on-call, and very very few people make partner. Of course people want to leave.

[PeanutsNJam]

I actually like my job and somewhat plan to stay as long as I can, but it really sucks that I only have time for a handful of the following in a given week and I have to pick and choose:

- Social, such as meeting with friends, seeing family
- Going out, like having dinner with my spouse, attending a show, watching a movie (I still haven't seen the last Star Wars movie, and though I hear it sucks, I'm a huge Star Wars fan and want to see it anyway)
- Watching a TV show
- Playing video games
- Doing chores (this counts as like at least 2 since there are many chores, and I've already discounted what I can reasonably expect my spouse to accomplish)
- Run errands
- Sleep
- Exercise

Basically, pick 4.

Plus, you're always on call and there's a constant, low simmer of anxiety, which only increases as your responsibilities increase.

I work for great people, in an interesting practice group, and I get along with everyone around me, so as far as biglaw working environment, I don't think I can possibly have it better, and even then I feel like I'm treading water with this job at times. Throw in a nightmare partner and a few tyrannical mid-levels and I can easily imagine wanting to jump ship asap.

[papermateflair]

I actually like my job and somewhat plan to stay as long as I can, but it really sucks that I only have time for a handful of the following in a given week and I have to pick and choose:

- Social, such as meeting with friends, seeing family
- Going out, like having dinner with my spouse, attending a show, watching a movie (I still haven't seen the last Star Wars movie, and though I hear it sucks, I'm a huge Star Wars fan and want to see it anyway)
- Watching a TV show
- Playing video games
- Doing chores (this counts as like at least 2 since there are many chores, and I've already discounted what I can reasonably expect my spouse to accomplish)
- Run errands
- Sleep
- Exercise

Basically, pick 4.

Plus, you're always on call and there's a constant, low simmer of anxiety, which only increases as your responsibilities increase.

I work for great people, in an interesting practice group, and I get along with everyone around me, so as far as biglaw working environment, I don't think I can possibly have it better, and even then I feel like I'm treading water with this job at times. Throw in a nightmare partner and a few tyrannical mid-levels and I can easily imagine wanting to jump ship asap.

I think this is a very smart take. I enjoy my biglaw job and I'm not planning to quit any time soon, but I understand why other people do - particularly in practice areas where the intensity is ratcheted up to 150% all the time, or when people have families (being single/no kids makes big law a lot easier). But I genuinely only have time to pursue 3 or 4 of the things on this list - and one of the items I prioritize (exercise) basically requires that sleep be optimized as well. Wasn't there some study out there that found that once your basic needs are provided for (shelter, food, enough money to save for a rainy day, etc.) that extra money only made people marginally happier? I am not happier as a senior associate now that I'm making over twice what I made as a junior (or if I am, it's not because of the money). At some point, many people genuinely feel like they have enough, and more money doesn't make it better, so if you can get more of the things you enjoy out of life, then why continue to grind out big law just for the $?

[Anonymous User]

I'm class of 2013 and I'm pretty much at the point of bouncing. All loans will be paid off in the next 5 months (including car loan). Have about $200,000 in liquid savings and $175,000 in retirement accounts and my wife and I own a home in a LCOL city (the bank owns it) that we should be able to rent out if we ever decide to move somewhere else. I started out with $260,000 in student loans and didn't start making big chunks in payments until December 2014 when I was at my first big law firm in NYC, so I think I've done pretty well considering the balanced approach taken towards saving and debt payments.

It's strange cause even though I'm financially in the best spot I've been in and I am generally successful at my job and well liked, my mental health has been in the absolute gutter, which I attribute mostly to being a corporate lawyer. The job really sucks the life out of you and I'm pretty sad that I've spent so much time doing this in what should be the prime of my life. The money is great, which I why I stuck it out, but I'm pretty much ready to be done.

[ohsaycanyousee]

The job really sucks the life out of you and I'm pretty sad that I've spent so much time doing this in what should be the prime of my life.

This is my greatest fear. The regret of slaving away in my 20s/30s and then realizing that the resulting nest egg that I can enjoy when I retire at 60 was not worth the sacrifice of wasting my prime years. I'm sure someone will argue that I'm being ageist, but a year in the life of a 80 year old is not worth the same as a year in the life of a 30 year old.

[ohsaycanyousee]

I think about this constantly. To start transitioning into a new gig - 300K. This is my cushion for what I consider a worst-case scenario - find a new gig, get laid off within 6 months, and a one year recession tanks the stock market (most of my money is in index funds, so I do not want to be burning through that to cover expenses at the same time as the market is at a low).

To just bounce without a new gig lined up - 500K, to incorporate the risk I'm viewed as not employable were I to quit without a job plus my desire to do some traveling for a few months.

Somewhere in between that right now, so I am actively looking. Either way, I would not buy a house if I was thinking of leaving.

What is your breakdown between investments and cash (whether in a HYSA or other liquid vehicle)?

I have a year's expenses cash on hand, everything else is in a mix of ETFs/bonds. If I were to leave without a job lined up, I'd probably try to have at least 1.5-2 years expenses cash plus a nice little vacation fund.

Wow, that's a lot of cash on hand. You've got a pretty conservative asset allocation.

[64Fl]

I feel like these threads are useless and devolve into implicit dick measuring contests. Everyone just lists how fat their bank account is, and nobody ever offers any useful considerations (because there are really no non-obvious ones to consider). Your income will likely either drop or stagnate from wherever you are in biglaw. Plan accordingly. After you've accomplished your plan, leave. There is no formula to doing it the right way, so strangers telling you how thicc their wallets are isn't going to help you. It's all based on YOUR comfort level, nothing else.

[Anonymous User]

One caveat to the very first post on this thread: just because you save up for a downpayment does not mean you can actually afford a house in HCOL areas.

I'm a fifth year in DC with over $500k in stocks/savings at the moment. I'm still not sure I can comfortably buy a place I would actually like, since even after shelling out $150k+ in downpayment, I'd still be looking at $3,500 monthly payments (including property taxes) on a thirty-year mortgage for any place I would actually want to live in the city. Those payments could be a burden if I were to flip into a $100k government job tomorrow. It makes me think I need to do one or two more years of biglaw if I want to actually settle down here.

[Anonymous User]

I shelled out 180k in downpayment buying in NYC, with an additional 30k in closing costs and other costs associated with moving into a new place (moving costs, new furniture, minor adjustments and renovations, appliances), with a total monthly payment of 4k, and my home has relatively very low association fees. Property taxes are insane. My property tax escrow payment is higher than what it would cost to rent the same unit in a low COL area.

The handcuffs are real.

That said I'm not saving for anything anymore really, I guess kid(s)' college, eventually? So I'm prepared to take a paycut so long as I can keep maxing my 401k and cover my monthly expenses, and hopefully with a bit left over to pad out savings/taxable investments, but I'm going to be okay not investing 3k+/month in a few years.

[Anonymous User]

One caveat to the very first post on this thread: just because you save up for a downpayment does not mean you can actually afford a house in HCOL areas.

I'm a fifth year in DC with over $500k in stocks/savings at the moment. I'm still not sure I can comfortably buy a place I would actually like, since even after shelling out $150k+ in downpayment, I'd still be looking at $3,500 monthly payments (including property taxes) on a thirty-year mortgage for any place I would actually want to live in the city. Those payments could be a burden if I were to flip into a $100k government job tomorrow. It makes me think I need to do one or two more years of biglaw if I want to actually settle down here.

It is preposterous licensed professionals get priced out to this extent. Three years of graduate school and buying a decent, non-ostentatious home seems out of reach despite the countless hours studying and sitting at a desk.

[AVBucks4239]

Re the last two posts, I think it's worth it for big law lawyers to look into "geographic arbitrage." This is normally a retirement concept -- you look for nice areas with LCOL so your money goes further.

Conversely, I think you should use it at the beginning of your career. Go somewhere (SF/NYC/DC) where you can make bonkers, save, and then move to a LCOL area.

The post about paying $180,000 down for a property in NYC made my head want to explode. For reference, my wife and I just bought a move-in ready 3,100 square foot colonial for $285,000 outside Cleveland. Rates are so good we just put 5% down ($14,250) and PMI is only $63/month.

[nealric]

One caveat to the very first post on this thread: just because you save up for a downpayment does not mean you can actually afford a house in HCOL areas.

I'm a fifth year in DC with over $500k in stocks/savings at the moment. I'm still not sure I can comfortably buy a place I would actually like, since even after shelling out $150k+ in downpayment, I'd still be looking at $3,500 monthly payments (including property taxes) on a thirty-year mortgage for any place I would actually want to live in the city. Those payments could be a burden if I were to flip into a $100k government job tomorrow. It makes me think I need to do one or two more years of biglaw if I want to actually settle down here.

It is preposterous licensed professionals get priced out to this extent. Three years of graduate school and buying a decent, non-ostentatious home seems out of reach despite the countless hours studying and sitting at a desk.

It's because in cities like NYC and DC, you aren't just competing against professionals. You are competing against global wealth. Regular wage earners can't compete with oligarchs. In smaller cities, you are only competing against other professionals, and prices are in line with that.

[Anonymous User]

One caveat to the very first post on this thread: just because you save up for a downpayment does not mean you can actually afford a house in HCOL areas.

I'm a fifth year in DC with over $500k in stocks/savings at the moment. I'm still not sure I can comfortably buy a place I would actually like, since even after shelling out $150k+ in downpayment, I'd still be looking at $3,500 monthly payments (including property taxes) on a thirty-year mortgage for any place I would actually want to live in the city. Those payments could be a burden if I were to flip into a $100k government job tomorrow. It makes me think I need to do one or two more years of biglaw if I want to actually settle down here.

It is preposterous licensed professionals get priced out to this extent. Three years of graduate school and buying a decent, non-ostentatious home seems out of reach despite the countless hours studying and sitting at a desk.

It's because in cities like NYC and DC, you aren't just competing against professionals. You are competing against global wealth. Regular wage earners can't compete with oligarchs. In smaller cities, you are only competing against other professionals, and prices are in line with that.

Yes, and it is unacceptable our government allows this. Not all attorneys can just move to Cleveland. Many have families or other obligations that make that arbitrage possible (though I agree more should consider it if possible). And to the prior poster, yes property taxes are other municipal costs of doing business are an outrage. This is why the term “wagie” came into vogue.