Naive Question about Student Debt Forum

[dresden doll]

There are buildings that offer that amenity and it's very convenient. But, as I know, you pay through the nose for it.

[WheatThins]

Just here to say that those of you eating tons of eggs because it's cheap and "healthy" are nuts. Eggs are not healthy, especially in large quantities. Jesus.

[suzige]

Shared Bathroom

Nevermind

lmao my husband just said the exact same thing

[dresden doll]

Just here to say that those of you eating tons of eggs because it's cheap and "healthy" are nuts. Eggs are not healthy, especially in large quantities. Jesus.

Are three eggs a day likely to kill anyone?

[billables247]

These budget threads are always really interesting to me. Somehow, I keep getting that it is possible to throw roughly 50K into repayment and still live reasonably. Granted, the expenses numbers I'm using are from my own experience living in SF, but hopefully since its also a major (read: expensive) city, it shouldn't be too far off from viable, non-Manhattan parts of New York:

Gross Pay (Salary + Bonus) $170,000
Federal Withholding $40,146
Social Security $10,540
Medicare $2,465
New York $11,210
Net Pay $105,639


Rent $21,600
Food $7,200
Gas/Electric, Water/Trash $360
Internet, Phone $1,800
Transportation $1,200
Airfare $1,200
Health Insurance $6,000
Gym $600
Repayment $50,000
Remaining $15,679

You can move around money allocations - expense more food to the company for late nights, pay more/less than $1800/month, get cheaper internet/phone service, etc...
You won't be saving too much, but I think that it's not unreasonable for us to rely on family as "insurance" in case of a catastrophic event (sudden unemployment, medical expenses, etc) or borrow money from parents to tide over bad months.

Unless there is something glaringly wrong with my estimate, you could potentially pay off 150K in 2-3 years (accounting for salary/bonus increases) and live a reasonable lifestyle.

[ymmv]

Just here to say that those of you eating tons of eggs because it's cheap and "healthy" are nuts. Eggs are not healthy, especially in large quantities. Jesus.

Bullshit. Where the fuck are you getting your misinformation? A 1992 nutritional magazine?

Eggs are an excellent source of high-amino acid count protein, omega-3 fatty acids, half a dozen vitamins, and a host of other difficult-to-find nutrients. Yes, they are high in cholesterol, but there is little if any good evidence that dietary cholesterol adversely affects your blood cholesterol more than foods low in cholesterol, and in any case this is unlikely to outweigh the myriad health benefits of eating eggs.

[rayiner]

Just here to say that those of you eating tons of eggs because it's cheap and "healthy" are nuts. Eggs are not healthy, especially in large quantities. Jesus.

Eggs are very healthy. The medical community has acknowledged that dietary cholesterol is flame.

[A. Nony Mouse]

These budget threads are always really interesting to me. Somehow, I keep getting that it is possible to throw roughly 50K into repayment and still live reasonably. Granted, the expenses numbers I'm using are from my own experience living in SF, but hopefully since its also a major (read: expensive) city, it shouldn't be too far off from viable, non-Manhattan parts of New York:

Gross Pay (Salary + Bonus) $170,000
Federal Withholding $40,146
Social Security $10,540
Medicare $2,465
New York $11,210
Net Pay $105,639


Rent $21,600
Food $7,200
Gas/Electric, Water/Trash $360
Internet, Phone $1,800
Transportation $1,200
Airfare $1,200
Health Insurance $6,000
Gym $600
Repayment $50,000
Remaining $15,679

You can move around money allocations - expense more food to the company for late nights, pay more/less than $1800/month, get cheaper internet/phone service, etc...
You won't be saving too much, but I think that it's not unreasonable for us to rely on family as "insurance" in case of a catastrophic event (sudden unemployment, medical expenses, etc) or borrow money from parents to tide over bad months.

Unless there is something glaringly wrong with my estimate, you could potentially pay off 150K in 2-3 years (accounting for salary/bonus increases) and live a reasonable lifestyle.

Not everybody can rely on parents as insurance, of course.

[rayiner]

These budget threads are always really interesting to me. Somehow, I keep getting that it is possible to throw roughly 50K into repayment and still live reasonably. Granted, the expenses numbers I'm using are from my own experience living in SF, but hopefully since its also a major (read: expensive) city, it shouldn't be too far off from viable, non-Manhattan parts of New York:

Gross Pay (Salary + Bonus) $170,000
Federal Withholding $40,146
Social Security $10,540
Medicare $2,465
New York $11,210
Net Pay $105,639


Rent $21,600
Food $7,200
Gas/Electric, Water/Trash $360
Internet, Phone $1,800
Transportation $1,200
Airfare $1,200
Health Insurance $6,000
Gym $600
Repayment $50,000
Remaining $15,679

You can move around money allocations - expense more food to the company for late nights, pay more/less than $1800/month, get cheaper internet/phone service, etc...
You won't be saving too much, but I think that it's not unreasonable for us to rely on family as "insurance" in case of a catastrophic event (sudden unemployment, medical expenses, etc) or borrow money from parents to tide over bad months.

Unless there is something glaringly wrong with my estimate, you could potentially pay off 150K in 2-3 years (accounting for salary/bonus increases) and live a reasonable lifestyle.

You're off by $6k on the take home (forgot NYC city tax). And your repayment has to be $56k per year to pay off $150k in three years. That error more than wipes out the $30k salary increase and bonus you'll get second and third years. You can do 3 years on your budget, but it'll take a full three years, not 2-3. And your estimated margin will be eaten up by: $7,500 of bar advance repayment, clothes, shoes, gifts, cabs, etc. That extra $15k will go to expenses, not repayment. BTW: your electric/gas is way too low. NYC has winter and summer. My utilities, sans internet, ran $100+ per month in Westchester. A lot of these shitty apartments you can get for cheap in NYC have really inefficient noncentral air.

But on the whole, $150k in three full years, unlike $150k in two, isn't totally unrealistic. But think about it: having only $150k means you got a big scholarshio. It's good to keep in mind that your budget is just about what someone can afford just to make 10-year plan payments on what sticker debt amounts to these days.

As for leaning on parents: it's shitty to run to your parents for money when you have a real job. Also, after three years you leave big law, and even with zero debt you want some savings on hand for the long bouts of unemployment that await.

[gk101]

These budget threads are always really interesting to me. Somehow, I keep getting that it is possible to throw roughly 50K into repayment and still live reasonably. Granted, the expenses numbers I'm using are from my own experience living in SF, but hopefully since its also a major (read: expensive) city, it shouldn't be too far off from viable, non-Manhattan parts of New York:

Gross Pay (Salary + Bonus) $170,000
Federal Withholding $40,146
Social Security $10,540
Medicare $2,465
New York $11,210
Net Pay $105,639


Rent $21,600
Food $7,200
Gas/Electric, Water/Trash $360
Internet, Phone $1,800
Transportation $1,200
Airfare $1,200
Health Insurance $6,000
Gym $600
Repayment $50,000
Remaining $15,679

You can move around money allocations - expense more food to the company for late nights, pay more/less than $1800/month, get cheaper internet/phone service, etc...
You won't be saving too much, but I think that it's not unreasonable for us to rely on family as "insurance" in case of a catastrophic event (sudden unemployment, medical expenses, etc) or borrow money from parents to tide over bad months.

Unless there is something glaringly wrong with my estimate, you could potentially pay off 150K in 2-3 years (accounting for salary/bonus increases) and live a reasonable lifestyle.

You are forgetting about the 7.9% interest rate. By the time you make your first payment, you will have accumulated roughly 10k in interest alone. I get that debt is bad and everyone should jump to pay them off as soon as possible but not saving anything for 2-3 years and counting on maintaining employment in biglaw for those 3 years and beyond is not a smart strategy. You should have some emergency savings and probably some investments in things like Roth IRA or 401k.

[jingosaur]

I'm sorry I have to post this for the lols

http://streeteasy.com/building/343-west ... anhattan/8

what a great, affordable, livable city

I bet that apartment isn't even real. A broker probably just uses as bait and when you inquire about it, they tell you about all of the great Manhattan apartments that they have for $1200 to $1400 from 135th street on north.

[ikethegremlin]

What it comes down to, essentially, is that yes - if you graduate law school with 150k in debt, and you take a job in NY paying 160k a year + bonus, then it's probably possible to pay off all your debt in 3 years.

BUT

You will have lived for 3 years with very, very little margin for unexpected costs. And there are always unexpected costs.
You will have lived for 3 years doing an exhausting, time consuming job in an exhausting city on a budget that doesn't allow you much room at all for the little things that make that job a little easier. Let's say your office is in midtown - if it were me, I'd want to live 5 minutes walk and save myself some time by eliminating commute. 1800 doesn't get you much in midtown at all. Gets you something, but not a place that's going to lift your spirits every evening after a 12 hour day at work.
You will have had to be disciplined as fuck about where you go out to eat/drink, which isn't easy when you're in a community of people with a lot of disposable income.
You aren't going to have taken many nice vacations.
You're probably so burned out at this point that you're more likely to quit biglaw than you would have if you'd decided to take a less dramatic route, and allowed yourself some money for luxuries.

This is why if I am fortunate enough to have options, I'd rather take my first job in somewhere with a normal cost of living. You look at those calculators and there's some crazy results. For instance, 60k in Dallas goes as far as 160k in NY, according to the data. Yeah, you're living in Dallas but there it would actually be reasonable to pay off your loans in 2/3 years. Even LA or DC is a big difference. And I love NY, I've been here for 4 years now, but I'm trying to be realistic with myself.

[09042014]

Another thing to consider is that cost of living is slowly rising but big law salaries aren't rising to match. After three years of school that 160k isn't 160k anymore.

Also, are you really going to have 150 of debt. Is that factoring in tuition hikes, interest on the loans. If not you are looking at over 180k.

[AllTheLawz]

This is why if I am fortunate enough to have options, I'd rather take my first job in somewhere with a normal cost of living. You look at those calculators and there's some crazy results. For instance, 60k in Dallas goes as far as 160k in NY, according to the data. Yeah, you're living in Dallas but there it would actually be reasonable to pay off your loans in 2/3 years. Even LA or DC is a big difference. And I love NY, I've been here for 4 years now, but I'm trying to be realistic with myself.

You gotta be careful about being disciplined in those medium cost of living cities though, as I'm learning. A nice luxury building (security, pool, fitness, parking, A/C, washer/dryer, all that good stuff) 850 sq ft 1br in the urban parts of ATL/DAL/HOU run about $1300-1400/mo. In those same buildings, a 1200 soft 2br runs about 1600-1750/mo. Obviously huge savings if you got a roommate, no one ever does. Add in cost of car ownership (~$600 for leasing a new car including insurance and gas) and your expenses can run up quickly.

In my case, choosing between NYC/DC and a lower COL city pretty much did nothing to my loan repayment schedule. This is partially because I am a big believer in having an expense reserve and saving at least 10-15% of gross income but mostly because, like most people, I just chose to live a lot better than the minimum in a lower COL city.

TL;DR - In my experience, the realized difference in COL between a medium cost of living city like Dallas and NYC doesn't work out to be as crazy as the calculators say. To a certain degree, most people adjust their lifestyle upwards in a way that negates a portion of the calculated COL difference.

[jingosaur]

There's really no such thing as making "enough" unless you're making well into the millions.

[billables247]

You're off by $6k on the take home (forgot NYC city tax). And your repayment has to be $56k per year to pay off $150k in three years. That error more than wipes out the $30k salary increase and bonus you'll get second and third years. You can do 3 years on your budget, but it'll take a full three years, not 2-3. And your estimated margin will be eaten up by: $7,500 of bar advance repayment, clothes, shoes, gifts, cabs, etc. That extra $15k will go to expenses, not repayment. BTW: your electric/gas is way too low. NYC has winter and summer. My utilities, sans internet, ran $100+ per month in Westchester. A lot of these shitty apartments you can get for cheap in NYC have really inefficient noncentral air.

But on the whole, $150k in three full years, unlike $150k in two, isn't totally unrealistic. But think about it: having only $150k means you got a big scholarshio. It's good to keep in mind that your budget is just about what someone can afford just to make 10-year plan payments on what sticker debt amounts to these days.

I think the critiques you guys made are reasonable. I used a lot of SF expense calculations in my estimates, which would explain the super low energy bills (no winter/heating ).

I would push back on the following:

And your estimated margin will be eaten up by: $7,500 of bar advance repayment, clothes, shoes, gifts, cabs, etc. That extra $15k will go to expenses, not repayment.

I don't think $15K per year over 2-3 years will be eaten up by these items. If you pay off your bar advance in the first year or with summer associate savings, and purchase reasonable clothing (you can definitely build an entire business wardrobe for under $2K, and this is assuming you had nothing to begin with), you'll still have a good chunk of that money. Cabs for the most part can be expensed to the company when you work late (and usually that's when you'll need them), as can food most days. Gifts are the definition of discretionary spending, so you shouldn't be spending more than $1-2K a year to be honest.

I would agree that that 15K would go into Expenses, and I should have labeled it such. However, this 15K is more "spending money" than hard expenses. You could penny-pinch and throw a good portion of this amount back into your repayment, but its unlikely and probably not advised for your sanity.

Not everybody can rely on parents as insurance, of course.

As for leaning on parents: it's shitty to run to your parents for money when you have a real job. Also, after three years you leave big law, and even with zero debt you want some savings on hand for the long bouts of unemployment that await.

Without any source to back it up, I'd still guesstimate that at least half of the people who pursue higher education come from middle to upper-middle class backgrounds. I understand that there is a culture of independence in the US that makes it "shameful" to be linked financially to your parents once you turn 18; however, in the context of having a financial fallback, we have to rethink the logic behind said shame.

I'm a little puzzled that there's such a strong opposition to family as a source of "insurance" given catastrophic circumstances. Of course I'm not arguing that you have your mom and dad pay for your apartment, but if you were suddenly unemployed, it makes sense that you should be able to ask your parents for a loan to tide you over until you get back on your feet. Similarly, I'm sure you wouldn't say no to helping your parents out if you had the means to do so and they were suddenly unemployed. To an extent it goes both ways - my money is my family's and my family's is mine.

While I'm not an accountant or personal finance expert, it makes sense to me to set aside little in terms of savings/retirement contributions in the early years to pay back the bulk of your debt, especially if you are willing to consider your parents as a safety net should something crazy happen.

[09042014]

I'm all for family helping family and family living with family. But having your parents pick up the tab for your clothes, cell phones, air fair when you make 160k a year is crrrrraaaaazzzzy.

[A. Nony Mouse]

I recognize that a lot of people (me included) can rely on family and I'm not blaming anyone who does that. My beef is with someone who, when presenting a hypothetical budget designed to pay off loans, assumes anyone else has parents who can help. You can't assume that for other people, especially since the people who take out the most loans probably have the least family support (barring need-based aid).

[rayiner]

I'm all for family helping family and family living with family. But having your parents pick up the tab for your clothes, cell phones, air fair when you make 160k a year is crrrrraaaaazzzzy.

Right. We're not saying "what happens if you have to have your leg amputated and go on short term disability." We mean: when you flame out of big law after three years and want to take a month off before your next job, you should have some cash saved up. Your budget shouldn't exclude getting work clothes, work appropriate shoes, a briefcase, furniture, household essentials (plates, spoons, etc), airfare, Christmas, birthday, and wedding gifts, parking tickets, new tires, new brakes, etc.

[billables247]

I recognize that a lot of people (me included) can rely on family and I'm not blaming anyone who does that. My beef is with someone who, when presenting a hypothetical budget designed to pay off loans, assumes anyone else has parents who can help. You can't assume that for other people, especially since the people who take out the most loans probably have the least family support (barring need-based aid).

Yup, it shouldn't be an assumption that we can rely on family. However, it shouldn't be dismissed either.

People are too quick to make overly conservative budgets that don't even consider an alternative source of funding/insurance to which many have access. It is worthwhile to at least note it within budgets, if for nothing else but as a caveat.

[A. Nony Mouse]

Individuals can/should consider their own family circumstances and whether getting money from family makes sense. But I still don't think that should come into general discussions about how quickly a hypothetical person should be able to pay off loans.

[dresden doll]

Individuals can/should consider their own family circumstances and whether getting money from family makes sense. But I still don't think that should come into general discussions about how quickly a hypothetical person should be able to pay off loans.

As someone who can't borrow from parents, I completely agree.

[09042014]

This thread is a stunning indictment of millennials.

[DELG]

This thread is a stunning indictment of millennials.

Don't any of you have any money?

[09042014]

Dry cleaning? Doesn't your mom do yours for you?