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Are You Happy With Your Income?

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4 minutes ago, Jaggers said:

You can rent a nice apartment 

How long can you rent for, especially when rent keeps going up. What do you do when you are retired and on a lower fixed income? Thats the point, if you are renting, you are just surviving. You are 3 missed paycheques away from being homeless.  I didn't go to Law school to "make do". 

Edited by shawniebear

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2 hours ago, BlockedQuebecois said:

Is it common for in house counsel for larger corporations to have pension plans? 

Yes, in house counsel are generally eligible for company pension plans and then depending on their level, company bonuses, stock sharing opportunities, and other financial incentives. When it comes to in house pension plans, thought, Defined Benefit pensions are nearly gone. I know that last year, another of the Big Five banks, which still had a DB pension that in house legal counsel would be eligible for, moved to the more common DC pension. Lots of marketing/communications about how great DC is, but I would guess that the long term staffers would not give up their DB for a DC pension for a million (or three)  dollars. Literally. 

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5 minutes ago, shawniebear said:

How long can you rent for, especially when rent keeps going up. What do you do when you are retired and on a lower fixed income? Thats the point, if you are renting, you are just surviving. You are 3 missed paycheques away from being homeless.  I didn't go to Law school to "make do". 

You keep renting. In most countries, people don't own property. There's no problem with that. I own my place in Toronto right now because it's slightly cheaper than renting, but there's not a big difference. My current place costs me about as much to own it as it would to rent it. I could sell it and rent it back and pretty much break even. Whether that would be good or bad for me long term depends on the relative returns of the real estate, bond and stock markets.

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I'm happy with what I make now, and with the trajectory I'm on. My spouse's income and the fact that we now live in Not Toronto means we're able to pay down our student debt and still be quite comfortable.

And as a PS, I have to agree with the others, above, who've said that calling $75k a year "nothing" is slightly ridiculous, although I'd also like to defend shawniebear a tiny bit by saying that the choice of words may have been a bit of hyperbole, and realistically while you can certainly live a decent life on that amount of money in Toronto, it doesn't leave much room for luxuries if that's what you're after. 

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1 minute ago, Jaggers said:

You keep renting. In most countries, people don't own property. There's no problem with that. I own my place in Toronto right now because it's slightly cheaper than renting, but there's not a big difference. My current place costs me about as much to own it as it would to rent it. I could sell it and rent it back and pretty much break even. Whether that would be good or bad for me long term depends on the relative returns of the real estate, bond and stock markets.

Most people rent. And as I stated previously, most people are not living, they are just surviving. You talk about how the difference in price between owning and renting is not that high, but you leave out the fact that you OWN the property after your mortgage is finished. And that provides you some stability for retirement. If you own a place to live and collect CPP at the minimum you know you will get by during retirement. If you are still renting in retirement, that CPP or whatever other pension plan you got just won't cut it. 

And you want to invest in the stock market? Take a look at what has happened over the last 2 weeks. 

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If you are paying that $450K mortgage at $1500/month (plus property tax and condo fees), about $800/month is going to your equity. Invest the difference instead, and you will start to put aside a sizeable nest egg. If you rent that property instead of buying it, after 25 years you don't own a condo, but you've got hundreds of thousands of dollars in your account.

The last two weeks have been bad for stocks. The last ten years have been great. The last 15 years have been alright. The last 20 have been great.

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It makes more sense to own a home than it does to build up a sizeable nest egg, only to pay rent when you retire. Let's say you retire at 65 and you die at 76, which is the average age people live to. Thats 11 years you need to pay rent.

Average rent in Toronto in $2000 a month. Let's assume for a minute that inflation does not exist and rent stays the same for the next 50 years. $2000 a month over 11 years is $264,000 of the "hundreds of thousands of dollars in your account" gone, before you have even paid for food, or medicine. 

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You're not making any sense. Those hundreds of thousands of dollars you save produce returns.

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Just now, Jaggers said:

You're not making any sense. Those hundreds of thousands of dollars you save produce returns.

How much money do you need to save up in a bank account by the time you retire to be able to pay rent, not even anything else, for 11 years after you retire? Your returns will largely be nullified by inflation. But in any event, this has strayed off course. People who are financially smart, do not rent. They know that in the long term it does not make sense.  

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Just now, shawniebear said:

People who are financially smart, do not rent. They know that in the long term it does not make sense.  

That is a ridiculous statement. It depends on the relative returns of real estate vs whatever you invest in.

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43 minutes ago, shawniebear said:

After taxes $75k a year leaves you with what, $4000 a month? Im pretty sure its less but lets go with $4k a month. The cheapest condo you can find in Toronto is $450k. If you have good credit and you are lucky enough to have your parents lend you the down payment that becomes a $1500 a month mortgage at-least, and that doesn't include maintenance. Most lawyers need a car to efficiently travel to and form court. Cost of owning a car is what, $10k a year, and thats if you own it. So that $800 right there. 

Now you are left with less than $2000. As I student my grocery bill was about $7-800 a month. After spending $100 a month on your phone plan and other random expenses, you are left with pretty much nothing. Forget about having kids, forget about vacations, or investments, or savings. 

Maybe I am just privileged, but that is not a good quality of life to me. I cannot see myself living comfortably on anything less than $150k a year, which would translate to around $7-8k a month. I can deal with that. 

I think others have addressed the worldview, but just to pick at your numbers also a bit as well:

1. Figure of $75K was a few years ago, I noted $95K was more current;

2. That was USD, not CAD;

3. Not for lawyers specifically, but generally;

4. Most lawyers don't drive around to different courts, don't necessarily even appear in court much, and maybe it's different now, many people in Toronto articled without needing a car, and I knew many lawyers who took public transit to work daily;

5. $700-800 a month for groceries as a student?! See link below average cost of groceries per month for men (women less) is about $320/month in Toronto.

6. You can get unlimited minutes/texts/data for $40/month;

7. Cheapest condo in Toronto is not $450K, just from a quick Google search I could easily find in the $200s in Toronto within an hour by transit from downtown Toronto;

8. Etc.

Again from a quick search here's a site that has an attempt to budget for a single person in Toronto, including entertainment budget etc., and more for phone than you, and it's only $32K per year:

https://www.lowestrates.ca/blog/finance/how-much-it-costs-live-young-person-toronto-2018

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@epeeist beat me to it, but I think we all just need to reflect on the idea of spending  $700-800 / month on groceries as a student. My partner and I spend half that.

I could eat prime rib every day for a month and probably just hit $800. 

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I don't skimp on groceries now (I used to for sure), but $800/month is almost $30/day. That's a lot of groceries. I'd say for two people who eat well, about $15-$20/day is more likely.

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25 minutes ago, epeeist said:

 

7. Cheapest condo in Toronto is not $450K, just from a quick Google search I could easily find in the $200s in Toronto within an hour by transit from downtown Toronto;

 

There is no such thing as a $200k condo in Toronto. Having to commute an hour to downtown means you don't actually live in Toronto. Even condos in Mississauga are at least $300k. Any condo listed under these prices is underpriced to trigger a bidding war, which is a very common tactic by real estate agents these days. Ask any real estate agent. 

I was addressing the $75k figure. Changing it to $95k, USD, obviously changes the analysis. 

I use to have one of those $40 plans with Wind. The service was horrible. Half the time I couldn't hear what people were saying. 

While some lawyers might not need a car, there are areas of law, such as criminal practice, where it is an absolute must. And in a cold country like Canada, a car is a sort of minimum luxury you would expect for a professional like a lawyer. 

And yes I do spend too much on groceries, as my parents constantly remind me. 

Edited by shawniebear
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I'm constantly arguing with my wife about whether we need a car. Sadly, she won't let me get rid of it.

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1 hour ago, Jaggers said:

 In most countries, people don't own property.

Most countries' residential real estate markets aren't a cum dump for Chinese kleptocrats.

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35 minutes ago, shawniebear said:

There is no such thing as a $200k condo in Toronto. Having to commute an hour to downtown means you don't actually live in Toronto. Even condos in Mississauga are at least $300k. Any condo listed under these prices is underpriced to trigger a bidding war, which is a very common tactic by real estate agents these days. Ask any real estate agent. 

I was addressing the $75k figure. Changing it to $95k, USD, obviously changes the analysis. 

I use to have one of those $40 plans with Wind. The service was horrible. Half the time I couldn't hear what people were saying. 

While some lawyers might not need a car, there are areas of law, such as criminal practice, where it is an absolute must. And in a cold country like Canada, a car is a sort of minimum luxury you would expect for a professional like a lawyer. 

And yes I do spend too much on groceries, as my parents constantly remind me. 

1. Condo in the borders of the City of Toronto = Toronto condo. Not to mention not everyone works downtown etc. And whining about an hour commute? I know people who commute longer driving, let alone by transit.

2. You didn't say some lawyers, you said "most" lawyers have to drive to different courts. And now you're conceding it's a luxury - albeit a "minimum luxury" whatever that means. For someone with children it may change the analysis, but lots of professionals don't need a car even if they choose to own one, regularly taking transit or even biking to work (have health club membership and shower there, etc.).

3. If you want to argue that you won't be happy without earning at least $150K or whatever, go ahead. But to redefine what Toronto means and consider luxuries as necessities and so on greatly weakens the arguments you have about the broader picture.

4. Again etc., I'm not going to argue phone plans etc.

Look, if you're saying that you will only be happy with owning a downtown condo close enough to work to walk but you'll own a car anyway, spending nearly a thousand a month on groceries, and so on, I can't say you're wrong, because I don't know you. But I'll certainly argue you're wrong to extend that to presuming that all people (or all lawyers?) need all of that to be happy, and without it they're doomed to a life of abject misery and toil or whatnot.

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8 hours ago, thegiggler said:

I articled in crim defense and was about one rent cheque away from bankruptcy when I got called to the bar. Luckily, I got a job with diamond and diamond* set up right after my articling. I suppose I am happy with my income right now, or, perhaps more accurately, my bank is happy with my income.

 

*i don’t actually work for diamond and diamond

Does D& D have their own lawyers?

 

Edited by Luckycharm
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I think the starting question here was both original and interesting, and so it's a shame this discussion has so quickly spiraled into the usual patterns. I'll answer the original question first, before I contribute to further derailment.

Speaking as a criminal defence lawyer in sole practice, I am happy with my income at present. It's also improved lately. I wasn't unhappy with it previously, but I can see how I might have become unhappy with my income before too long if it was entirely stagnant at the level it was at with no clear path to improvement. And that is, undoubtedly, one of the frustrations and difficulties with self-employment. When you work for someone else there are milestones clearly in front of you. If nothing else there's the reasonable and rational prospect of an annual raise that should be by at least some small margin greater than inflation. When you work for yourself ... well, Legal Aid hasn't raised their tariff rates in several years now. So if you do a lot of Legal Aid and aren't working more or bringing in more private clients, you're actually making less in real terms every year. That's got to hurt.

I don't want to speak too specifically to criminal defence right now, and in practical terms I know very little about personal injury law or what the income is like. But I will theorize that part of the difference is between self-employment in crim and working in an organized firm in PI. Because PI is certainly not "Big Law" in a true sense, but it's bigger than crim. Working as an associate locks you in at a reasonable mid-point. A firm has to pay associates at least reasonably well or no one with even half a brain would take the work. But I wonder about the upper-end prospects for anyone who doesn't become a partner or start their own practice successfully - and launching a practice in that field is still harder than crim. Meanwhile, the entry point for crim and the entry-level income is lower. But when you're doing your own thing in crim you can end up with a very good income in the future, and beholden to no one. I'm not talking only about the Marie Heneins and the Alan Golds. There are a lot of higher end criminal lawyers that no one outside the field has heard of that earn very good incomes. Their practice isn't flashy but it is lucrative. And for whatever it's worth, it's a hell of a lot more dignified than PI work.

At some point KingLouis and I might take this off-line, because the rest of what I have to say would be very specific. But just because you can't easily see the path forward in sole practice doesn't mean it isn't there. I'm hardly an authority on this topic. But I'm far more confident than I was in the earliest stages.

Now on the topic of the derail, I'll just say that shawniebear's tone rubs me the wrong way also, but he's at least put his finger on the real issue. He says that what's good enough for most people - even the large majority of people - is simply not good enough for him. That's fine. I mean, it isn't an attitude I can easily deal with when it's stated so nakedly and embraced so fully, but let's at least allow that he's set a starting point for his assumptions. If you feel the only way to live properly is to have far more than most people around you, then it's certainly your right to pursue an income appropriate to your "needs." But I think it's also more respectful to state these self-identified needs as such, rather than implying that most everyone else around you are stupid losers who have settled for table scraps and lives of failure.

To be perfectly honest, I'd have a lot of trouble going back to a "normal" income myself, now. But I also know that I could do it if I had to, and it wouldn't make me miserable. There's so much more to life than money. And it's a privilege to be able to say that, and to focus on things in life that aren't about food, shelter, immediate safety, etc. But that's a privilege we all enjoy even on what passes as a modest income in Canada. Once those safety needs are taken care of, it's simply wrong to describe the rest of what you want as a need of any sort. It's a priority you choose to have. And if that's where your priorities lie, that's your choice and I'm really not going to suggest you need to apologize for it. But I will say that these priorities inevitably compete with other priorities, and as I point out often when you focus on X you invariably need to give up Y. Money has a way of obscuring that trade-off sometimes, and it can be dangerous. Don't lose sight of what you are passing up to earn more money.

I guess it comes down to this. There are people in law - even a large number, I suspect - to whom earning potential is a huge draw into the field. Again, I truly won't denigrate them as a group. But when you introduce their attitude into a discussion as though it's the only reasonable way of looking at income at all ... yeah, that's going to start arguments. It implies that a lawyer who isn't making a large income (large by any ordinary definition) is somehow a failure. And I know lawyers who live very modest lives but have successful careers by any definition I care to apply - they are busy, respected, fulfilled, and do important work. Does it really matter so much if they go home to a rented apartment? Maybe it matters to you. But don't imply that they're wrong and you're right. And also, I work with and represent clients, quite often, who just don't have much. I know I'm more successful than they are. I know I have far more. But I don't feel better than my clients. I truly don't. I'm not a superior breed of human being who needs to spend $8 on a cup of coffee every time they spend $2. If I felt that way, I couldn't do my job properly anymore.

Anyway, that's it.

 

Edited by Diplock
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