Naive Question about Student Debt Forum

[dresden doll]

My parents are middle class. In Eastern Europe.

[DELG]

And I am saying you're a fucking adult who should instead pay off loans a little slower so you can support yourself, to the extent practicable. Wow.

I don't think I have a good argument for you, DELG. I think it must be a difference in our beliefs and definition of what adulthood means.

For me, being part of a family means you help each other out in situations that call for it. It makes zero sense to me to rack up extra interest payments for the sake of feeling like an "American adult" who is completely and utterly independent from their family. I'd rather pay off my debt in a shorter span of time and trust that my family will be there in the unlikely event that I get fired my first year with no savings, than rack up an extra 20K in interest because I wanted to create a huge nest egg just in case.

Agree to disagree?

You must have much wealthier parents than me, that needing to lend me several thousand dollars wouldn't mean a SEVERE hardship for them.

You seem to think middle class parents could easily swing this. Not the case.

[politics89]

I'm assuming, perhaps incorrectly, that people who go to grad school typically have family who are at least middle class. In other words, by the time you are out of law school, your parents aren't exactly struggling to make ends meet/living paycheck to paycheck.

But this is just that - an assumption. I would argue that it's not remotely true often enough to build parents in by default. It also seems to me an assumption that makes it harder for working class/poor people to end up in grad school/law school (and also makes the ones who are there feel invisible).

Especially in this economy where people can be "middle class" and still basically living paycheck to paycheck.

[LsatDork]

This thread has featured almost no comment on the fact that the OP's initial analysis of the practicality of paying off law school debt was based on the assumption that a person's gross salary is the same as his or her take home pay. This would seem to raise some possible questions about the financial sophistication of that analysis.

I'm 1st gen immigrant, most of my family barely speaks English, and my parents pay taxes in our/their home country (and also don't get federal FA or government benefits, etc... of any kind), which is why I didn't know the first thing about US taxes. A lot of things that might seem obvious to some of you guys are not to people who didn't grow up in a "mainstream American" culture. I did say I was naive about it all.

Could somebody elaborate on emergency funds? How much do you put aside for these and what sort of emergencies are you thinking about when you do?

[jbagelboy]

And I am saying you're a fucking adult who should instead pay off loans a little slower so you can support yourself, to the extent practicable. Wow.

I don't think I have a good argument for you, DELG. I think it must be a difference in our beliefs and definition of what adulthood means.

For me, being part of a family means you help each other out in situations that call for it. It makes zero sense to me to rack up extra interest payments for the sake of feeling like an "American adult" who is completely and utterly independent from their family. I'd rather pay off my debt in a shorter span of time and trust that my family will be there in the unlikely event that I get fired my first year with no savings, than rack up an extra 20K in interest because I wanted to create a huge nest egg just in case.

Agree to disagree?

You must have much wealthier parents than me, that needing to lend me several thousand dollars wouldn't mean a SEVERE hardship for them.

You seem to think middle class parents could easily swing this. Not the case.

http://www.dailymail.co.uk/news/article ... verty.html

about half of american families (much of our dwindling 'middle class') who would not be considered legally poor could not bail their adult children out of a couple thousand dollar 'crisis' without pretty severe consequences.

[billables247]

I'm assuming, perhaps incorrectly, that people who go to grad school typically have family who are at least middle class. In other words, by the time you are out of law school, your parents aren't exactly struggling to make ends meet/living paycheck to paycheck.

But this is just that - an assumption. I would argue that it's not remotely true often enough to build parents in by default. It also seems to me an assumption that makes it harder for working class/poor people to end up in grad school/law school (and also makes the ones who are there feel invisible).

Fair enough, although it would be very interesting to me to see whether this was true or not.

It makes sense to me that the typical highly educated individual comes from two moderate to highly educated parents. To be moderate or highly educated, you usually are at least middle class. It probably isn't an incorrect assumption that is indeed more difficult to make it to grad school/law school as the children of working class/poor people.Perhaps I just feel that way because everybody I know who is in grad school seems to be in that salary band i.e. just sampling bias.

I do agree that this assumption marginalizes those who are working class/poor. Again, it would be interesting to see data on this.

[DELG]

I'm assuming, perhaps incorrectly, that people who go to grad school typically have family who are at least middle class. In other words, by the time you are out of law school, your parents aren't exactly struggling to make ends meet/living paycheck to paycheck.

But this is just that - an assumption. I would argue that it's not remotely true often enough to build parents in by default. It also seems to me an assumption that makes it harder for working class/poor people to end up in grad school/law school (and also makes the ones who are there feel invisible).

Fair enough, although it would be very interesting to me to see whether this was true or not.

It makes sense to me that the typical highly educated individual comes from two moderate to highly educated parents. To be moderate or highly educated, you usually are at least middle class. It probably isn't an incorrect assumption that is indeed more difficult to make it to grad school/law school as the children of working class/poor people.Perhaps I just feel that way because everybody I know who is in grad school seems to be in that salary band i.e. just sampling bias.

I do agree that this assumption marginalizes those who are working class/poor. Again, it would be interesting to see data on this.

My mom is married to a surgeon making less than my household income. My dad, when employed, has a household income right at 6 figures. And they still couldn't bail me out without it being a huge problem for them, for even 2-3 months.

[t-14orbust]

Am I the only one around here whose parents will be asking for financial assistance while trying to pay off loans?

[DELG]

Am I the only one around here whose parents will be asking for financial assistance while trying to pay off loans?

DD and I both expressed similar concerns.

[t-14orbust]

Am I the only one around here whose parents will be asking for financial assistance while trying to pay off loans?

DD and I both expressed similar concerns.

It's cool, after I pay my debt off in 2-3 years I'll buy them a house

[de5igual]

Am I the only one around here whose parents will be asking for financial assistance while trying to pay off loans?

nope. My siblings and I are essentially my parents' retirement fund.

[dresden doll]

My parents will never ask. But it's not like I can just pretend that I don't know what the situation is like.

[t-14orbust]

Am I the only one around here whose parents will be asking for financial assistance while trying to pay off loans?

nope. My siblings and I are essentially my parents' retirement fund.

lol I always say "motivation is being your parents' retirement fund"

at least I'm not alone. models n bottlez yall

[billables247]

http://www.dailymail.co.uk/news/article ... verty.html

about half of american families (much of our dwindling 'middle class') who would not be considered legally poor could not bail their adult children out of a couple thousand dollar 'crisis' without pretty severe consequences.

Are they saying that half of ALL American families or half of all those who are not considered poor do not have the liquidity?

My reasoning was based on the assumption that law students who break into top schools/biglaw tend to come from families who are disproportionately represented within the upper middle class, meaning they are likely not poor or one paycheck away from debt.

This is again a broad assumption which makes intuitive sense to me, but could be way off base.

My mom is married to a surgeon making less than my household income. My dad, when employed, has a household income right at 6 figures. And they still couldn't bail me out without it being a huge problem for them, for even 2-3 months.

Given what I know about my parent's income, savings, and their ability to assist me in case of emergencies, this shocks me a little.

Would you mind expanding on what your estimated 2-3 month budget would be?

[billables247]

Am I the only one around here whose parents will be asking for financial assistance while trying to pay off loans?

nope. My siblings and I are essentially my parents' retirement fund.

lol I always say "motivation is being your parents' retirement fund"

at least I'm not alone. models n bottlez yall

Likewise. They've contributed quite a bit to my education and upbringing, so its only fair that I can take care of them down the road.
Also they're my parents, so that goes without saying.

[Paul Campos]

This thread has featured almost no comment on the fact that the OP's initial analysis of the practicality of paying off law school debt was based on the assumption that a person's gross salary is the same as his or her take home pay. This would seem to raise some possible questions about the financial sophistication of that analysis.

I'm 1st gen immigrant, most of my family barely speaks English, and my parents pay taxes in our/their home country (and also don't get federal FA or government benefits, etc... of any kind), which is why I didn't know the first thing about US taxes. A lot of things that might seem obvious to some of you guys are not to people who didn't grow up in a "mainstream American" culture. I did say I was naive about it all.

Could somebody elaborate on emergency funds? How much do you put aside for these and what sort of emergencies are you thinking about when you do?

I'm trying not to be harsh here, but you graduated from an American college without ever learning that taxes take a big chunk of employees' income? Anyway, since you're currently a free lance musician you should keep in mind that you're required to file a tax return and pay taxes on whatever income you earn as an independent contractor.

[Fiero85]

Again, what exactly is the harm in saying: here's a reasonable 160k gross income budget for a single adult in Manhattan with ~150k in student debt. The loan repayment line item is conservative because shit happens and some people need/want a bigger cash safety net than others. One could put more towards student loans with a more aggeessive approach, but they might be lacking emergency funds in the mean time. YMMV.

Why make a general budget that assumes near the upper bound of repayment speed? I'm all for paying back student debt asap but some people here are acting like keeping any cash reserve or enjoying any modern amenities instead of putting every last dime into student debt repayment is inherently foolish just because you have non-poor parents. That's simply not the case.

[gnomgnomuch]

Oh, I assumed that people meant they were earning a net income of 160k.

No, it's totally possible, I can break it down for you.
8, 000 for rent and metrocard
2, 000 for food (c-town or trader joe's)
400 on quality clothes for events
300 on beauty supplies
300 on phone
200 for gas, electricity, internet
150 on cheap day-to-day tops, jeans, etc...

Whatever is left on drinks, movie tickets, b-day gifts for friends, etc...

Rent - if you're lucky will look more like 15k a year, and prob higher depending on where you live, what kind of apartment you want, etc, etc.
Food - Living in NY and eating not completely terrible will cost about 60 a week (and thats conservative), it would prob look closer to 80. (sure, you could go way cheaper, as low as prob 40 bucks a week, but why the hell would anyone want to?)
Clothes - i mean, you'd assume by the time you start a big-law job, you'd have suits and ties and whatnot, but 400 is what i would say you should spend on ONE suit.
Phone -I've got a miracle plan compared to some of my friends, and I'm paying 45 a month for it.
Gas/Electricity/Internet - utilities in general (not all apartments include utilities) - LOL, no comment.
Cheap Day-to-Day stuff - toiletries, cologne, a haircut all this stuff. This adds up. FAST. You might not even realize how fast.
Metro Card - yea, an unlimited is 112 a month in NYC.
Gifts/etc - you're not buying your family/friends 20 dollar itunes gift cards anymore... you'll have to spend.

This is a relatively conservative estimate, which doesn't take into account a SO, nights out with friends, concerts, sports games, Netflix/amazon, and health insurance... a night out with your girlfriend (or hell a girl you're trying to pick up at the bar) can easily cost a couple hundred. Sure, you can skimp, but how would your SO like eating Chinese food every night, when you have the means to go out and get a nice steak.

I'm an 0L, but i live in NYC.

[LsatDork]

I have only ever gotten money back. Yeah, I guess I did, it's not harsh, why would it be, it's just the truth. People seem to keep thinking I'm getting offended. I'm really not, I'm getting great info I didn't have before, thanks a lot, please keep telling me stuff.

[gk101]

Am I the only one around here whose parents will be asking for financial assistance while trying to pay off loans?

nope. My siblings and I are essentially my parents' retirement fund.

same.

I understand reliance on family in times of severe hardship or something. I will absolutely move in and live in my parents' basement if I got fired and I am sure they would be happy to support me during that time. But for smaller emergencies like your car breaking down or having to take a last minute flight, having to ask your parent for money on a biglaw salary is absurd

[rayiner]

Even if you have upper middle class parents, it's a shitty thing to do to them. My parents bought me a BMW as a graduation present. If they have a dollar to spare, or even if they don't, I can count on them for money. But I'd be a shitty person if I didn't even budget to support myself on a six figure job!

And there's a wide range of "unexpected expenses" besides unemployment that are being ignored here. The proposed budgets exclude everything from needing to cab to a dinner date with friends because work kept you longer than you expected to having to fly to your friend's wedding and get a non-embarrassing gift.

[rayiner]

I have only ever gotten money back. Yeah, I guess I did, it's not harsh, why would it be, it's just the truth. People seem to keep thinking I'm getting offended. I'm really not, I'm getting great info I didn't have before, thanks a lot, please keep telling me stuff.

I think what people find baffling is how you can not be aware of something that's literally a cultural staple. Like, what sort of undergraduate program are you doing where nobody has ever mentioned taxes or complained about the government taking half their income?

[jbagelboy]

Even if you have upper middle class parents, it's a shitty thing to do to them. My parents bought me a BMW as a graduation present. If they have a dollar to spare, or even if they don't, I can count on them for money. But I'd be a shitty person if I didn't even budget to support myself on a six figure job!

And there's a wide range of "unexpected expenses" besides unemployment that are being ignored here. The proposed budgets exclude everything from needing to cab to a dinner date with friends because work kept you longer than you expected to having to fly to your friend's wedding and get a non-embarrassing gift.

This is a little off topic since I agree with what you've been saying here but:


Why would your parents spend $40k on a luxury car for you instead of paying down some of your debt

I don't think you are exactly the target audience here; families with that type of disposible income usually put their kids through grad school anyway so there's no conversation about paying off loans

[LsatDork]

Again, what exactly is the harm in saying: here's a reasonable 160k gross income budget for a single adult in Manhattan with ~150k in student debt. The loan repayment line item is conservative because shit happens and some people need/want a bigger cash safety net than others. One could put more towards student loans with a more aggeessive approach, but they might be lacking emergency funds in the mean time. YMMV.

Why make a general budget that assumes near the upper bound of repayment speed? I'm all for paying back student debt asap but some people here are acting like keeping any cash reserve or enjoying any modern amenities instead of putting every last dime into student debt repayment is inherently foolish just because you have non-poor parents. That's simply not the case.

I'm just confused about the logic still I think. It seems like you would be loosing a lot of money by doing that wouldn't you? It seems like 2-3 years of shitlife>>>>>loosing 100k if not more in interest rate. I just calculated that paying back a 150k in 240 months with 1k payments means loosing 77,520 in interest. It also seems very emotionally distressing to think about the fact that you are loosing so much money, and just owe such high amounts. I think it would also lower your quality of life on a much deeper level than living in a shitty apartment for 2-3 years. Also being "ascetic" for those 2-3 years, living in a tiny East Harlem apartment (4, 5 trains) and paying off the loans just allows one much greater career options and gosh, freedom. I'm just surprised to be one of a handful of people here who think it would be so so worth it.

[gnomgnomuch]

All budgeting discussions should consider worst-case scenarios.

They are dude. They're considering hitting up their parents.

In all seriousness am I the only person who, by the time they're in practice, thinks they should be helping their parents and not the other way around? My dad lost his job and part of my worst case calculation is paying his mortgage for a little while.

PLUS A BILLION.