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Personal finance for young lawyers

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4 hours ago, QuincyWagstaff said:

the former is usually LV and can reasonably be suspected to contain a firearm or illicit drugs.

that was comedic gold

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Posted (edited)
3 hours ago, MaybeOneDay97 said:

I believe you may be looking at it from a purely optimistic perspective. Shit happens. Expenses may vary and funds have to be allocated elsewhere as a result. Nonetheless, the optimist in me would love to hear some insight on this matter because I'm sadly looking at a similar financial hole

Here is the budget: My goal/plan to strive to save/invest almost $92k while paying back my law school loans in 3 years. I assume bay street pay because thats my goal. I know its not a guarantee, its a budget/plan to strive towards :) hope this helps some OLs plan their expenses. I can post my calculations for yearly expenses if anyone cares. ***Note: I assume that I will work during 1L summer at a regular job, and 2L summer on bay, I factored that income into debt calculation*** Cost of living while in school was based on the 8 month school year while I am at a net loss. Living expenses during summer were subtracted from “savings” listed in the calculations. 

1st Year:

Tuition: $25,866

Cost of living: $12,800

Bursary: $1500

OSAP Grant: $3000

OSAP Loan: $7300

Savings: $30,000

Money left over: $3100

Debt: $7300 in no interest OSAP loan

 

2nd Year:

Tuition: $25,866

Cost of living: $12,800

Bursary: $1500

OSAP Grant: $3000

OSAP Loan: $7300

Savings: $8100

Debt: $7300 in no interest OSAP loan

Debt: $18,766 borrowed from PSLOC

Debt $950 interest

 

3rd Year:

Tuition: $25,866

Cost of living: $12,800

Bursary: $1500

OSAP Grant: $3000

OSAP Loan: $7300

Savings: $9000

Debt: $7300 in no interest OSAP loan

Debt: $17,866 borrowed from PSLOC

Debt: $1900 interest

 

*buy out interest free OSAP loans with PSLOC*

 

Total debt: $61,382

Repayment: $1838 per month for 3 years

Total amount with interest: $66,178

**Repayment Calculations **if** I secure a big law job as I hope too**

1st year of repayment:

-Articles, $1700 a week for 44 weeks = $55,934 after tax ($6,233 per month)

-$4395 per month left after paying student loan: $3000 per month for living expenses, $1395 for investing ($16,740 total)

2nd year of repayment: 

-1st year bay street rate $115,000 plus standard 15% bonus (that's my understanding if you hit billable hours target) =$132,250 before tax = $90,689 ($7557 per month)

-$5717 per month left after paying student loan: $3000 per month living expenses, $2717 to invest ($32,604 total)

3rd year of repayment: 

-2nd year bay street rate $130,000 plus bonus =$100,393 after tax ($8366 per month)

-$6528 per month after student loans = $3000 living expenses, $3528 to invest ($42,336 total)

Edited by Lawstudent97
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Posted (edited)

I am loving this debate. 

FWIW, I always carried a backpack during undergrad and law school. I found it was easier on my back/shoulders than a messenger bag.

I also own a car, but take public transit to work. That 30 minutes I have in the morning to listen to music and creep people on Instagram catch up on the news is so valuable to my mental health. I can also get ahead on my billables by answering emails if needed, although I try not to think about work until I'm walking into the office.

Edited by hitman9172
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Posted (edited)
3 hours ago, chaboywb said:

You've not even entered law school and you're already calculating your three year repayment plan on an assumed Bay Street salary?

I don't blame you for being prepared and minimizing debt is always a good idea, but you're putting the cart before the horse here.

I treated law school like I would any investment. If I were to invest 100k and three years time into a restaurant for example, obviously I would have a budget and plan on how recoup my investment. 

Not directed at you, but it’s scary to me that so many law students are blindly taking on 6 figure debt without a plan like this!

Edited by Lawstudent97

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@Lawstudent97 you should budget for worst case scenarios. That's planning. Once circumstances change where your worst case scenario is different, you change again. 

But beyond that, where are you going to school where you imagine cost of living over a full 12 months is 12 800, including rent? 

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Posted (edited)
9 minutes ago, pzabbythesecond said:

S
@Lawstudent97 you should budget for worst case scenarios. That's planning. Once circumstances change where your worst case scenario is different, you change again. 

But beyond that, where are you going to school where you imagine cost of living over a full 12 months is 12 800, including rent? 

I’m going to osgoode! And cost of living was based on 8 months (because I’ll be working during the summers) this is in some ways a worst case plan, most things were over-budgeted. The only part that is really a best case scenario is landing a bay street job! 

For example, when calculating interest on my line of credit I pretended that I took out the full amount I would need for the year on day 1 because it was easier to calculate. This makes the interest higher than it would actually be. I also used the old prime rate at 3.95% and its currently at 2.45% that would lower it even more

I also budgeted $500 a month on food (while in law school) which I can easily beat, and considerable vacation money during the repayment years

I use the YNAB app to budget my monthly expenses and I usually beat the budget each month, so unless there are extenuating circumstances that arise I should be able to beat the budget!

Edited by Lawstudent97

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Posted (edited)
13 minutes ago, Lawstudent97 said:

I’m going to osgoode! And cost of living was based on 8 months (because I’ll be working during the summers) this is in some ways a worst case plan, most things were over-budgeted. The only part that is really a best case scenario is landing a bay street job! 

For example, when calculating interest on my line of credit I pretended that I took out the full amount I would need for the year on day 1 because it was easier to calculate. This makes the interest higher than it would actually be. I also used the old prime rate at 3.95% and its currently at 2.45% that would lower it even more

I also budgeted $500 a month on food (while in law school) which I can easily beat, and considerable vacation money during the repayment years

I use the YNAB app to budget my monthly expenses and I usually beat the budget each month, so unless there are extenuating circumstances that arise I should be able to beat the budget!

You know yourself, but I would find it very difficult to live in Toronto on 1.5k per month 8 months of the year. You've accounted for nearly no spend on entertainment. I guess you could find housing for a grand a month if you get a lot of roommates, but that's no easy task either.

My advice: you're under budgeting, and you'll realize it in first year. Better adjust your expectations now. 

Also isn't Oz tuition 30+k a year?

Edited by pzabbythesecond
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1 hour ago, jatthopefullawyer said:

what are you investing in? 

Whatever the best option is at the time. Real estate/stocks/index funds

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1 hour ago, pzabbythesecond said:

You know yourself, but I would find it very difficult to live in Toronto on 1.5k per month 8 months of the year. You've accounted for nearly no spend on entertainment. I guess you could find housing for a grand a month if you get a lot of roommates, but that's no easy task either.

My advice: you're under budgeting, and you'll realize it in first year. Better adjust your expectations now. 

Also isn't Oz tuition 30+k a year?

12800 is 1600 a month. My gf splits rent with me  so it’s around 800 for rent utilities and internet . That leaves 800 for phone bill, food and other. That’s more than I need. 
Osgoode tuition is exactly what I put. 

My bad for the confusion, the budget could have been more clear but I never intended to post it when I made it. It was just for me and I knew all the details like where the numbers came from. I also had a backup budget if I end up living alone which had 2.1k a month budget! 

Edited by Lawstudent97

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I had a plan to graduate with about 70k debt. That goal becomes more of a distant memory each day.

The current events in our world have put into perspective how impossible it is to plan. I got that Bay Street summer job I was hoping for, which allowed me to loosen the purse strings a bit... and now the summer term is cut short. Plus, the hireback rate will likely be substantially lower when I finally finish articling. Nothing is ever certain.

Again, good on you for being debt-averse, @Lawstudent97, it's the right attitude to have. But don't be upset if things don't go quite how you plan. I can barely predict next week, let alone five years from now.

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2 minutes ago, chaboywb said:

I had a plan to graduate with about 70k debt. That goal becomes more of a distant memory each day.

The current events in our world have put into perspective how impossible it is to plan. I got that Bay Street summer job I was hoping for, which allowed me to loosen the purse strings a bit... and now the summer term is cut short. Plus, the hireback rate will likely be substantially lower when I finally finish articling. Nothing is ever certain.

Again, good on you for being debt-averse, @Lawstudent97, it's the right attitude to have. But don't be upset if things don't go quite how you plan. I can barely predict next week, let alone five years from now.

Agreed completely! I’ve also prepared for the worst. Just hoping for the best! I like to budget as a goal to strive towards, I’m always okay if I end up spending more. I have access to 135k loan and I’m planning on putting 60-70k on it so I have a lot of room for error 

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9 minutes ago, Lawstudent97 said:

12800 is 1600 a month. My gf splits rent with me  so it’s around 800 for rent utilities and internet . That leaves 800 for phone bill, food and other. That’s more than I need. 
Osgoode tuition is exactly what I put 

Tuition has been steadily increasing every year (I believe $2k to $3k per year). 

You should also account for books/printing/etc. 

I assume your rent will also increase, amount determined by whether you are subject to rent control or not. 

I feel like you are severely underestimating the amount you will want to drink and eat out during law school. 
 

As everyone else has said, good luck and it’s a positive that you are actively thinking about this. But be prepared for major and unexpected changes to arise. 

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1 minute ago, ottawhat said:

Tuition has been steadily increasing every year (I believe $2k to $3k per year). 

You should also account for books/printing/etc. 

I assume your rent will also increase, amount determined by whether you are subject to rent control or not. 

I feel like you are severely underestimating the amount you will want to drink and eat out during law school. 
 

As everyone else has said, good luck and it’s a positive that you are actively thinking about this. But be prepared for major and unexpected changes to arise. 

Very good point, I forgot to account for books! (I also didn’t include ~5k I have in a diversified TFSA) so things go both ways! 
 

If I still post on this website when I graduate I can update you guys on if I hit my goals... if anyone still cares which I doubt ;) 

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7 minutes ago, Lawstudent97 said:

Very good point, I forgot to account for books! (I also didn’t include ~5k I have in a diversified TFSA) so things go both ways! 
 

If I still post on this website when I graduate I can update you guys on if I hit my goals... if anyone still cares which I doubt ;) 

If you have 300 posts as a 0L you'll likely be here your entire legal career.

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32 minutes ago, Lawstudent97 said:

My gf splits rent with me  so it’s around 800 for rent utilities and internet .

I'd be extremely impressed if you make this happen for three years in Toronto.

Internet and utilities is at least 100 a year. Phone plan at least another 40 (more realistically 50-60). Then a one bedroom in Toronto for the remainder?

You're under shooting your budget. I'm telling you.

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7 minutes ago, pzabbythesecond said:

I'd be extremely impressed if you make this happen for three years in Toronto.

Internet and utilities is at least 100 a year. Phone plan at least another 40 (more realistically 50-60). Then a one bedroom in Toronto for the remainder?

You're under shooting your budget. I'm telling you.

I guess time will tell. I’ve been budgeting for years and almost always end up exactly on budget. But yeah I could definitely have overlooked certain factors. I’m not materialistic tho so I pretty much only spend money on food/living and my entertainment budget is pretty low! 
 

Anyways the point was mostly to be a guide and a way to evaluate my investment! If I end up spending an extra 10-20k while I’m in school I’ll still be happy with my investment :) 

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Posted (edited)

Who starts at $115k? I'm pretty sure $105-$110k is the norm. 

And I've never heard of a "standard" 15% bonus.  

I would do all of my planning off of my base salary, which looks about $5-10k inflated for both years. However since you've budgeted for $1700/wk in articles, you may find about $5000 more will come to you in bonuses (if you end up at a firm that kept its student bonuses instead of going up to $1900/wk). Of course, you could also end up at one of the $1900/wk firms.

Edited by easttowest

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3 minutes ago, Lawstudent97 said:

I guess time will tell. I’ve been budgeting for years and almost always end up exactly on budget. But yeah I could definitely have overlooked certain factors. I’m not materialistic tho so I pretty much only spend money on food/living and my entertainment budget is pretty low! 
 

Anyways the point was mostly to be a guide and a way to evaluate my investment! If I end up spending an extra 10-20k while I’m in school I’ll still be happy with my investment :) 

Have you also made budgets for low and medium scenarios?

E.g.

Low: Work full-time for minimum wage during the summers. Article for less than minimum wage or for free. After being called have to spend significant period of time hunting for an associate position or have to go sole.

Medium: Make $12,000-$13,000~ per summer on average. Article for $35,000-$40,000. Make $60,000, $70,000, and $80,000 during your first three years an associate.

The scenario you've posted above is pretty close to an ideal scenario.

 

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2 minutes ago, Toad said:

Have you also made budgets for low and medium scenarios?

E.g.

Low: Work full-time for minimum wage during the summers. Article for less than minimum wage or for free. After being called have to spend significant period of time hunting for an associate position or have to go sole.

Medium: Make $12,000-$13,000~ per summer on average. Article for $35,000-$40,000. Make $60,000, $70,000, and $80,000 during your first three years an associate.

The scenario you've posted above is pretty close to an ideal scenario.

 

I tried to make a low scenario if I don’t land a Bay Street job, but I was having trouble finding good information about the pay. If the numbers you posted are accurate I can make one with those. 
 

In all honesty tho, I wouldnt be going to law school if I wasn’t confident I have the ideal skill set to land a biglaw position. I know you guys don’t know me and will think I’m crazy and over ambitious but that’s okay :) 

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