Advice for a 1st year associate attorney?

[Anonymous]

I think paying off loans is good advice, BUT I would also consider the interest rate on your loans. My law schools loans have a very low interest rate, so it makes more sense to keep those loans and use the extra cash to pay down other fixed expenses that I would have still have regardless (mortgage, car payments, etc.)

[Anonymous]

Save every penny you make then get a cushy job at a non profit or the fed gov't. That's what I did and I have zero regrets and love my career and work/life balance.

[Anonymous]

Anonymous wrote:Save every penny you make then get a cushy job at a non profit or the fed gov't. That's what I did and I have zero regrets and love my career and work/life balance.

Oops, I only read the title. Like others said, don't fall into the trap of a lavish lifestyle that forces you to stay at the firm. All of my friends bought fancy cars and rented expensive apartments when they started at big law - huge mistake if you ask me. I drove a $15,000 car and got a tiny one bedroom apartment. I was able to save $170,000 in three years at big law (not including 401k) and I also paid off about $100k in student loans. I had almost no living expenses because most of my meals were paid for because I was working. Sacrifice now to make the rest of your life easier...it's worth it.

[Anonymous]

i agree with all the above, except that i would not pay off the low interest student loans until much, much later. I thiink 9:59 said tihs above. For example, if you have 2% or 3% student loans, I would not pay them off early.

I would skimp on rent and get the cheapest apt. (studio) and save up to put the money into a down payment for a house. Some may disagree, but I think a home is still a good investment in the DC area. I think the mortgage interest is one of the few deductions you may have.

I don't know the details, but I believe if your salary is $160K, you might earn too much for writing off the interest on student loans. I am not sure if you earn too much for an IRA, but suspect you might be.

I would definitely do the three-six months savings in case of an emergency.

[Anonymous]

Are people who graduating now coming out with loans at 2 or 3%? I thought those times were over. I graduated in 2008 and my loans were fixed at 6.8 and 8.6% when I graduated.

[Anonymous]

Live cheaply! My DH is a BigLaw associate (he's in year 3 right now and clerked for a year right out of law school) and we watch so many of his colleagues living paycheck to paycheck because they are renting luxury apartments in Dupont, Logan Circle, Georgetown, Foggy Bottom, etc. It is crazy. I'm talking rent to the tune of $3,500/mo. They are paying the minimum on their loans, drive nice cars, eat out ALL THE TIME and go on expensive vacations when they travel.

DH and I aren't the most frugal people out there, but we enjoy a very nice quality of life and save a good bit and also aggressively pay down the loans. We should be finished with the loans in another 3 years. He borrowed 100k (and interest rates weren't great), we are happy with our plan to knock out the loans in 6 years. We also max out on 401(k), have a 6 month emergency savings, though we'd like to get that up to one year.

One of the things that helps the most is not being single. DH and I have been together since college, so we've been sharing living expenses for all of our adult lives (we've been out approx 10 years). We have so much more freedom with two incomes than his single counterparts at his firm. My income isn't huge, my salary is $50k, but with him as a 4th year associate, our HHI is $250k. That "extra" $50k I bring to the family is huge in terms of allowing us to save more, put more on loans, etc.

So, my advice - live cheaply, ignore your colleagues who are living large and find a partner sooner rather than later!

[Anonymous]

Former biglaw and still single.

Agree with PP! All my friends are now sharing living expenses with their sig other. I never felt it before - but now I feel like being single really makes things more difficult financially.

[Anonymous]

I spent three years in Biglaw and I was so happy when I got my opportunity to leave. I echo what others say about living as cheaply as possible so you can pay off your loans and sock away a nice amount of savings. Agree with other posters that when you leave biglaw you'll probably take a paycut so it will be harder to save at your current rate.

A few specific pieces of advice:
The partners don't care what brand of clothes you wear so long as you look clean and professional. You'll spend most of your time in your office anyways so basic clothes are fine.
I agree on finding a cheap place to live (or even with a roommate if you can) but I would try to live within 30 minutes of the office if possible because you won't have much flexibility starting out.

Good luck and always remember to keep focused on an exit strategy regardless of whether you want to make partner because you may not have a choice.

[Anonymous]

There is a lot of good advice on this thread. I echo the live WAY BELOW your means, and save, save, save approach. When I started at my law firm, I rented a one-bedroom apartment for 1200 a month and that felt like a lot to me. Other than my rent, I lived a very frugal life. Continued driving my old car, did not go crazy buying clothes, etc. We paid off my then-fiance/now husband's law school loans (I did not have any) our first year out and then just saved like crazy for our down payment and setting up our life. We saved a TON those years before we had kids. We are both still in big law 15 years later but the vast majority of our law school classmates are not. People burn out of this type of job very quickly. Life can be very difficult during those early years as an associate.

[Anonymous]

OP, lots of good advice here, but one thing you should do is max out that 401(k) immediately. (Actually, max it out in 2015 - you'll likely start with in September 2014, and use those 4 months to set up your emergency fund). It's $17,500 this year (I forget if it goes up next year). That's about $750 per paycheck. There's a huge tax advantage to it that is far greater than using those funds to pay off your debt a little quicker. You'll be amazed 25 years from now what that $17500 will turn into. Plus, if you take all the other advice, you will have no trouble building up an emergency fund and paying your loans off in 3-4 years anyway, and this will reap long term benefits. Good luck, and congratulations on asking the right questions.

Oh, and bill at least 2300 hours, so you keep those checks coming as long as you want them to.

[Anonymous]

You don't need to bill anything close to 2300 to keep the checks coming. This is DC, not NY.

[Anonymous]

Young associate here and I think 20:03's advice is best. If you're single with no children and don't own a house, you will pay a ridiculous amount in taxes. The only way to cushion that is to max out your 401(k) right away.

Like others said, rent VERY cheaply. I and so many of my fellow associates made the mistake of renting a nice apartment within walking distance of our offices, and every single one of us has moved. The price tag of living downtown is not offset by having no transportation costs. 160k sounds like a ton of money, but you'll be sad to see how little is left after taxes, rent, student loan payments, bills, etc.

I honestly do not know how these people managed to save $150k+ in three years (outside of 401(k)) and it honestly seems like a load of horse shit to me. If you're single and can save 20k per year I think you're doing a great job. The only way I was able to save 4k per month was by moving in with my fiance and moving far out of the city. She makes 1/3 of what I do but that extra income is essential (as another poster mentioned).

[Anonymous]

My two cents on the one bedroom plus den thought: when I was considering whether to get the den or second bedroom I realized that for the amount I was spending I could put my visitors up at the Ritz and spend less money. I wasn't expecting a lot of company, so the extra money was totally not worth it.

[Anonymous]

Live BELOW your means for as long as you can.

I would advise you treat yourself to something small every once in a while so that you are not tempted to blow it all on something useless later.

When I graduated, I worked with a woman who said people who have money sometimes feel like they have a hole in their pocket. If they spend just a little, that satisfies that need. I paid off my school loans (putting extra towards it) and would occasionally treat myself to some jewelry. In five years, I had paid off all my loans (granted, I didn't have 100 K in loans), and had saved up some money for a down payment (about 10%).

Pay off the School loans first. And try to save up an emergency fund (6 months worth of expenses is ideal).

[Anonymous]

Anonymous wrote:You don't need to bill anything close to 2300 to keep the checks coming. This is DC, not NY.

Hah. My dh in dc billed over 3000 last year and feels he needs to bill over 2400 to avoid getting fired.