Naive Question about Student Debt Forum

[jingosaur]

Poll request: Would you live in a medium security prison for 2 and a half years after law school if it meant that your law school debt would be paid off once you get out?

[DELG]

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.

How are you going to do that, even if they had an emergency, you have no savings

[t-14orbust]

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.

What they're saying is that this is not a realistic goal, if at all possible.

[ScottRiqui]

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.

I'm ashamed to admit that this bothers me way more than anything else you've said ITT.

[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.

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

My point is that even if we accept billables247's assumption that people in law school have middle class or upper middle class parents, that doesn't mean it's okay to set a budget that assumes that they'll continue to help you out when you're in your late 20's and working a six-figure job.

And to be fair, the car was a gift after college, before I contemplated law school.

[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.

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?

Yeah, I guess those are not things my friends and I ever talk about. As I mentioned I went to art school. The only academic classes I took (as in not purely about art) where abstract German philosophy classes.

[ikethegremlin]

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.

Have you ever had a job? Not an internship, where you're only there 2 days a week, but a real life every day job? I've had shit jobs and I've had great jobs. The one constant was that at the end of a hard day, every thing that bugs you about your life is magnified 10x. I interned at Conde Nast, for example. Long days. Nothing on biglaw, but long - 10 hours, 12 sometimes. Following that up with an hour on the subway very quickly became the most miserable part of my day. Trying to find a time to go grocery shopping when you can't bulk it all at once on the weekends was bad enough with 3 days of interning and 2 of full time college, I can't even imagine what it's like to be in the office 6 days a week and still have all the regular little household tasks that take up all your free time - laundry, dishes, groceries, taking out the trash, etc etc.

Being an ascetic is fine when you are a student. If you can do it as a junior associate then more power to you. But I think you're a lot more likely to go insane trying than you are to end up saving any money.

[billables247]

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.

I can see your point. I'm not saying to budget nothing, but I'm just advocating for saving less if you have family who can support you in an emergency.

The chances of you getting fired in the first three years before you can pay off your loans (under the aggressive repayment approach), and having to rely on your parents at all seems to be outweighed by the 100% chance you're gonna have to pay 20K more in interest due to a slow and methodical repayment approach.

In other words, there is a very good chance you will never have to ask your parents for a dime, but you still have them as insurance if you do.

Unexpected "lifestyle" expenses aren't negligible, but I think people overstate them around here. Transportation and food budget can be heavily subsidized by expensing to your work if you're being kept late, and the few gifts you have to give every year don't have to all be ipads. You're not spending 15K a year on travel, expensive meals, and gifts

How are you going to do that, even if they had an emergency, you have no savings

I'm talking about retirement down the road. Once you pay off your loans, you can save as much as you would like without compounding interest on your back.

Of course, if there was a catastrophic family emergency during my repayment period, I would reconsider my loan payment plan to support them.

[NYSprague]

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.

What they're saying is that this is not a realistic goal, if at all possible.

You are underestimating debt level at $150,000.
You don't want biglaw so I'm not even sure why you began this discussion.
If you keep living and acting like a poor person when you have a high income, people will think you are weird and you won't fit in at your firm at all.

[Paul Campos]

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.

Assuming a 6.8% interest rate (law school loans are 6.2% and 7.2% this year) you would actually pay $125,000 in interest over 240 months.

A couple of points:

(1) It's psychologically much more difficult to not spend money you have than to not spend money you don't have. Living like a poor student when you're a poor student is way easier than living like a poor student when your take home is $8K or $9K per month.

(2) Living like a poor student when your income is in the 97th percentile of individual income will, as a practical matter, require you to violate a lot of cultural norms regarding what's considered appropriate behavior. Doing so has serious costs.

[billables247]

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[09042014]

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

My point is that even if we accept billables247's assumption that people in law school have middle class or upper middle class parents, that doesn't mean it's okay to set a budget that assumes that they'll continue to help you out when you're in your late 20's and working a six-figure job.

It's not wrong to have family help you through a crisis. But it is wrong to create a crisis by putting too much money towards your debt and not having an emergency fund.

[t-14orbust]

Have you ever had a job? Not an internship, where you're only there 2 days a week, but a real life every day job? I've had shit jobs and I've had great jobs. The one constant was that at the end of a hard day, every thing that bugs you about your life is magnified 10x. I interned at Conde Nast, for example. Long days. Nothing on biglaw, but long - 10 hours, 12 sometimes. Following that up with an hour on the subway very quickly became the most miserable part of my day. Trying to find a time to go grocery shopping when you can't bulk it all at once on the weekends was bad enough with 3 days of interning and 2 of full time college, I can't even imagine what it's like to be in the office 6 days a week and still have all the regular little household tasks that take up all your free time - laundry, dishes, groceries, taking out the trash, etc etc.

Being an ascetic is fine when you are a student. If you can do it as a junior associate then more power to you. But I think you're a lot more likely to go insane trying than you are to end up saving any money.

I understand that you're painting a picture for OP, and it's very important to have that expectation going in. However, it really depends on the person. Having worked in consulting for the past two years doing 60 hours weeks, you really get used to it. Whether you're happy or not is all about expectation - if you're somebody who needs to have a happening social life and a HIMYM/Friends style 20s, then BigLaw is likely going to suck for you.

For me, I'm perfectly happy working on the occasional weekend or late at night. You'll find time to go to the gym, happy hours, weekend trips, and dating. It just won't be as crazy as we were all raised to believe our 20s should be.

I was promised models and bottles

[ikethegremlin]

Have you ever had a job? Not an internship, where you're only there 2 days a week, but a real life every day job? I've had shit jobs and I've had great jobs. The one constant was that at the end of a hard day, every thing that bugs you about your life is magnified 10x. I interned at Conde Nast, for example. Long days. Nothing on biglaw, but long - 10 hours, 12 sometimes. Following that up with an hour on the subway very quickly became the most miserable part of my day. Trying to find a time to go grocery shopping when you can't bulk it all at once on the weekends was bad enough with 3 days of interning and 2 of full time college, I can't even imagine what it's like to be in the office 6 days a week and still have all the regular little household tasks that take up all your free time - laundry, dishes, groceries, taking out the trash, etc etc.

Being an ascetic is fine when you are a student. If you can do it as a junior associate then more power to you. But I think you're a lot more likely to go insane trying than you are to end up saving any money.

I understand that you're painting a picture for OP, and it's very important to have that expectation going in. However, it really depends on the person. Having worked in consulting for the past two years doing 60 hours weeks, you really get used to it. Whether you're happy or not is all about expectation - if you're somebody who needs to have a happening social life and a HIMYM/Friends style 20s, then BigLaw is likely going to suck for you.

For me, I'm perfectly happy working on the occasional weekend or late at night. You'll find time to go to the gym, happy hours, weekend trips, and dating. It just won't be as crazy as we were all raised to believe our 20s should be.

Trust me, I don't mind working extremely hard or extremely long hours. But if/when I am working in biglaw, I'm going to make sure I pay for the things that will keep me sane. One of those will be an apartment near my office, not in Harlem, which is what OP is suggesting. But yeah, I have no intention of being miserable. Just rather stressed.

[09042014]

OP, are you chinese?

[09042014]

Consulting is different from biglaw. Consulting, as I understand it, is 60 hours mostly M-T and some of friday. Biglaw doesn't really work like that. You get way more interrupted weekends in biglawl.

[NYSprague]

Have you ever had a job? Not an internship, where you're only there 2 days a week, but a real life every day job? I've had shit jobs and I've had great jobs. The one constant was that at the end of a hard day, every thing that bugs you about your life is magnified 10x. I interned at Conde Nast, for example. Long days. Nothing on biglaw, but long - 10 hours, 12 sometimes. Following that up with an hour on the subway very quickly became the most miserable part of my day. Trying to find a time to go grocery shopping when you can't bulk it all at once on the weekends was bad enough with 3 days of interning and 2 of full time college, I can't even imagine what it's like to be in the office 6 days a week and still have all the regular little household tasks that take up all your free time - laundry, dishes, groceries, taking out the trash, etc etc.

Being an ascetic is fine when you are a student. If you can do it as a junior associate then more power to you. But I think you're a lot more likely to go insane trying than you are to end up saving any money.

I understand that you're painting a picture for OP, and it's very important to have that expectation going in. However, it really depends on the person. Having worked in consulting for the past two years doing 60 hours weeks, you really get used to it. Whether you're happy or not is all about expectation - if you're somebody who needs to have a happening social life and a HIMYM/Friends style 20s, then BigLaw is likely going to suck for you.

For me, I'm perfectly happy working on the occasional weekend or late at night. You'll find time to go to the gym, happy hours, weekend trips, and dating. It just won't be as crazy as we were all raised to believe our 20s should be.

What your last paragraph says, isn't big law at all. There is no occasional weekend or late night. You don't understand big law 24/7 hours with sleep being a luxury.

[NYSprague]

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.

Assuming a 6.8% interest rate (law school loans are 6.2% and 7.2% this year) you would actually pay $125,000 in interest over 240 months.

A couple of points:

(1) It's psychologically much more difficult to not spend money you have than to not spend money you don't have. Living like a poor student when you're a poor student is way easier than living like a poor student when your take home is $8K or $9K per month.

(2) Living like a poor student when your income is in the 97th percentile of individual income will, as a practical matter, require you to violate a lot of cultural norms regarding what's considered appropriate behavior. Doing so has serious costs.

The only person I know who did this, lived way below her income, was an orthodox Jew who had other cultural norms. She never dressed well or went out. She didn't make partner either, though she was a good lawyer.

[billables247]

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[DELG]

<3 TLS

Keep bein' you

[09042014]

I haven't had a day off (under 6 hours billed) since memorial day, and I've got the weakest biglaw gig I've heard of.

[rayiner]

Transportation and food budget can be heavily subsidized by expensing to your work if you're being kept late, and the few gifts you have to give every year don't have to all be ipads. You're not spending 15K a year on travel, expensive meals, and gifts

At my firm, you only got cab + seamless if you were past 8 and had billed 10 hours that day. Given the unpredictability of when you'll have to stay late, it's really not practical to "heavily subsidize" transportation and food by staying late and getting Seamless and a car ride home. If you finish up at 7:30, you're not going to stay an extra hour so you can get car service!

You don't have $15k of slack per year on your proposed budget. You overestimated income and underestimated payments to the tune of $12k/year. You left out repayment of your firm's bar advance. Factoring those things together with raises and bonuses in years 2/3, and you're down to about $10k year in slack. You can easily eat this up on meals, dates, clothes, travel, gifts, and general household expenses. Are you going to use your Ikea dorm furniture for three years? If not, it costs thousands to reasonably furnish even a small apartment (bed, couch, etc). Do you plan on dating in Manhattan? People your own age? Do you plan on taking vacations?

My point isn't that you can't pay back $150k in three years. You can. My point is that if you live in a reasonable apartment within a reasonable commute, and don't shun your social circle (i.e. you go to nights out where other people schedule them instead of saying "oh that place is too expensive"), you will have to watch your money very carefully. To the point of: "maybe I need to bring a thermos instead of grabbing Starbucks." And that's easier said than done.

[billables247]

At my firm, you only got cab + seamless if you were past 8 and had billed 10 hours that day. Given the unpredictability of when you'll have to stay late, it's really not practical to "heavily subsidize" transportation and food by staying late and getting Seamless and a car ride home. If you finish up at 7:30, you're not going to stay an extra hour so you can get car service!

You don't have $15k of slack per year on your proposed budget. You overestimated income and underestimated payments to the tune of $12k/year. You left out repayment of your firm's bar advance. Factoring those things together with raises and bonuses in years 2/3, and you're down to about $10k year in slack. You can easily eat this up on meals, dates, clothes, travel, gifts, and general household expenses. Are you going to use your Ikea dorm furniture for three years? If not, it costs thousands to reasonably furnish even a small apartment (bed, couch, etc). Do you plan on dating in Manhattan? People your own age? Do you plan on taking vacations?

My point isn't that you can't pay back $150k in three years. You can. My point is that if you live in a reasonable apartment within a reasonable commute, and don't shun your social circle (i.e. you go to nights out where other people schedule them instead of saying "oh that place is too expensive"), you will have to watch your money very carefully. To the point of: "maybe I need to bring a thermos instead of grabbing Starbucks." And that's easier said than done.

I think your points are all fair, and I understand the temptation to not be as vigilant with your spending. The reason why I feel it is manageable is perhapsI'm unrepresentative - bare bones furniture, public transportation everywhere, don't really drink/go clubbing/party, dates on a budget....

So far I couldn't be happier, but it's definitely not for everyone and maybe not what I would do if I suddenly jumped up a few income brackets.

If we were to rephrase the issue - can you pay off a lion's share of your loans within 2-3 years while living reasonably, so that you could lateral to the inevitable lower paying job without fear of death by debt - could we reach a more convincing consensus? For example, if I had 150K worth of debt, and was trying to pay off 120K of it by the time I decide to leave BigLaw in 2-3 years, would that afford a much more reasonable lifestyle in your eyes?

[NYSprague]

Consulting is different from biglaw. Consulting, as I understand it, is 60 hours mostly M-T and some of friday. Biglaw doesn't really work like that. You get way more interrupted weekends in biglawl.

You're definitely on call less, but I'm no longer surprised when I get tossed something on Thursday that needs to be done by Monday on top of the work due Friday.
You won't get something on Sat morning to be done on Mon, but you'd have to pull semi all-nighters if you want to free up your weekends in such a situation.

To give you some context, I think during our busy seasons, my record was about 21 consecutive days worked (although the weekends were a lot more lax).
Office record is like 5 weeks. This probably isn't as bad as some BigLaw, but it's not peaches either.

Also, I don't work management or strategy consulting. Those may be better/worse, but I have no idea.

What your last paragraph says, isn't big law at all. There is no occasional weekend or late night. You don't understand big law 24/7 hours with sleep being a luxury.

I keep getting completely different descriptions of BigLaw hours/responsibility. Some say you're on call all the time, some say you work 8-8, some say you work 10-12... I don't know what to believe anymore. All I know is that there's a lot of differences by region, practice group, and people.

The averages I've heard around here are 60 hours on average and 80+ when it's especially busy. So for most of the time, that doesn't exactly qualify as "on call 24/7 and not able to sleep."

There is a major difference in deadlines at least in corporate. I rarely get something on Thursday that can wait until Monday. Usually it has to go out that same night, at least an initial internal draft, so the client can have it in the morning or ASAP.

[billables247]

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