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Author Topic: My postgraduation BigLaw budget  (Read 8580 times)

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Re: My postgraduation BigLaw budget
« Reply #50 on: May 12, 2005, 06:45:07 PM »
Interesting advice. Since I went to a cheap public school though, I avoided getting any student loans for my undergrad. I will however, be looking at a loan amount just shy of 100k for law school.

Lucky you... I have a relatively reasonable 15k, but I'm not too worried about it.  (I got the kind of consolidation where you get 1/4% off for direct debit and then 1% off after 36 payments--for a grand total of 1.65%... Whoopdeedo.) 

I am, obviously, somewhat more concerned about the loans I will be getting soon (especially as we are in a rising interest rate environment)...

everything

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Re: My postgraduation BigLaw budget
« Reply #51 on: May 12, 2005, 07:31:46 PM »
Not sure of the answer to the AMT question, although I know it's become a problem for some upper-middle income people who were never intended to fall within its parameters. There is talk that Congress should correct the problem, but it doesn't seem likely to happen soon.

As for the federal loans... I know what you mean about repaying for awhile. My consolidation is for 25 years, which makes me sick when I think about it. But, my interest rate is less than 3 percent, and after I schedule direct deposit it drops a quarter point and then with three years of on-time payments it will drop another quarter. With an interest rate of just slightly more than 2 percent, paying ahead doesn't make financial sense. I can definitely find an investment with a greater return than that. Add in that I'm married and will be able to deduct my student loan interest, and it makes sense for me to drag it out as long as possible.

There are really two realms of federal student loans to talk about here:  ones that have been consolidated at the current historic lows (scheduled to last only until 6/30 of this year--so if you haven't consolidated, get on the phone now), and the loans we will all be taking on over the next three years.

Already consolidated federal loans have interest so low that it barely even keeps up with inflation.  Throw in those random 1/4% discounts, and it's effectively a free loan (when looked at in the long haul). 

So if you have other loans with higher interest rates (as 99.9% of us will, because we'll be getting more loans in order to go to law school), accelerate payment to those newer loans first. Then worry about speeding up your older consolidated loans... 

Just because they're older doesn't mean they have to be paid off first...

Good point. I'm talking specifically about the really low-interest federal loans. Depending on your interest rate, pre-payment may not make sense. I'm graduating law school and have already filed my consolidation paperwork, so like you said, with the discounts it really is a free loan for me (I don't have any private loans).

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Re: My postgraduation BigLaw budget
« Reply #52 on: May 12, 2005, 07:58:33 PM »
Quote

Good point. I'm talking specifically about the really low-interest federal loans. Depending on your interest rate, pre-payment may not make sense. I'm graduating law school and have already filed my consolidation paperwork, so like you said, with the discounts it really is a free loan for me (I don't have any private loans).
Quote

Wow, congratulations on not having ANY private loans during law school!  WOW!

You're in such a great position, you should probably first pay off any other debts you might have while saving, buy a house, start paying that down, and then knock out the student loans, but only once you're comfortable in the other aspects of your life... (Alternatively, you could buy a house and then pay off any other debts you have, and then work on the student loans agressively...In fact, that might be better...) 

Carrying debt isn't great, but no matter what, this will be the cheapest money you will ever receive...  (In fact, I would argue paying your house down first, but that interest is at least tax deductible in most cases...Once all other debts are out of the way though, I say the house is the first thing to own outright!)

Again, congratulations on graduating!

burghblast

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Re: My postgraduation BigLaw budget
« Reply #53 on: May 13, 2005, 12:05:45 PM »
$958/month for a car?  Is it made out of solid gold?

limonjello

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Re: My postgraduation BigLaw budget
« Reply #54 on: May 13, 2005, 12:46:30 PM »
$958/month for a car?  Is it made out of solid gold?

Payment + insurance + gas + parking, etc. can very easily add up to $1000 a month on even a very moderately priced new car.

ormachea

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Re: My postgraduation BigLaw budget
« Reply #55 on: May 13, 2005, 12:52:30 PM »
Thanks, limon. A lot of people have actually brought that one up. When I post a revised one next week (that'll take into account more accurately taxes and pre-tax savings) I'll make a little note.

burghblast

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Re: My postgraduation BigLaw budget
« Reply #56 on: May 13, 2005, 01:50:46 PM »
$958/month for a car?  Is it made out of solid gold?

Payment + insurance + gas + parking, etc. can very easily add up to $1000 a month on even a very moderately priced new car.

Here's my experience with new car ownership:

Payment: $276/month
Insurance: $50/month
Parking: Free
Gas: $40/month

Of course I don't live in NYC.  Maybe it's harder to find free parking in Manhattan?

Intuition

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Re: My postgraduation BigLaw budget
« Reply #57 on: May 13, 2005, 03:21:22 PM »
Don't have experience with insurance in NYC, but I'm willing to bet it will be more than $50 per month.

Free parking in Manhattan?  ;D

ormachea

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Re: My postgraduation BigLaw budget
« Reply #58 on: May 13, 2005, 03:32:17 PM »
Going off an internet car loan calculator:

(All figures /month)
$30k car, financing $24k, 7%, 5 yrs:                        $465.00
NY insurance of aforementioned car:                            $105.00
Gasoline (nat'l mileage ave, 25 m/gal, $2.50/gal):    $110.00
Maintenance:                                                                $150
Parking:                                                                              $150
$980
Total:                                                                                       

burghblast

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Re: My postgraduation BigLaw budget
« Reply #59 on: May 13, 2005, 03:42:27 PM »
Going off an internet car loan calculator:

(All figures /month)
$30k car, financing $24k, 7%, 5 yrs:                        $465.00
NY insurance of aforementioned car:                            $105.00
Gasoline (nat'l mileage ave, 25 m/gal, $2.50/gal):    $110.00
Maintenance:                                                                $150
Parking:                                                                              $150
$980
Total:                                                                                       

If it costs $250 a month to insure and park your car, that's a good sign the area you're living in is too crowded and doesn't need any new people.  Move to someplace more reasonable :)

Also, buy a Cavalier.  Your payment will be much less than $465. 

Budget problems solved!