Jr Mustachian couple needs advice re: ASTRONOMICAL student loans

[LipFoliage303]

We'd love your feedback.

[Reepekg]

Haha I would love to be paid more and pay off those loans myself the old-fashioned way....  I've really really REALLY enjoyed not having to look for a job every night after working all day (as a temp).

Hahaha! You're f-ing welcome that the taxpayers (yours truly included) will swoop in and pay off your debts for you while you enjoy not being bothered to further your career. Hope you had a grand time at law school!

Advice: Rent out the basement and take care of your kid your damned self.

[Reepekg]

That was a pretty face-punchy tone. Use your good attitude towards getting a second job to pick one up asap.

[Lanny]

I'm a bit confused on how with two law degrees and 400k of combined debit you can't manage to bring in more than $85k together. I hate to think your education was a waste but you need to get motivated to bring in more money, it doesn't make sense to me to stay at a low wage for 10 or 20 years just to have your debts written off, why bother getting the degree in the first place?

[Daleth]

I agree. We've tried, and are trying, but the legal profession bottomed out (seriously, it tanked) in our 2nd year of law school. Massive layoffs. There are thousands and thousands of attorneys and no legal work. I'm not saying this to gather sympathy for attorneys, I know there is none to be had, I'm just saying it's not for lack of effort that we don't have lucrative legal careers. We're open to anything. I was serious about house painting. I'd do anything. Preferably NOT legal. It was the single greatest mistake of my life, and my wife's life. Advice to anyone reading this - do not go to law school.

As a fellow lawyer, let me qualify that: do not pay $200k to go to law school. Do not pay $100k to go to law school. Figure out if it's highly likely to be a good investment, and if so, go to law school.

But dude. $30k a year? You could hang out a shingle,* handling divorces or small-time business lawsuits or personal injury, or helping local people set up small businesses, or doing consumer law to help people fight off evil banks and unlawful creditors, and make more than that easily. With your nonprofit experience, maybe you could start a practice specializing in representing, advising, and setting up nonprofits. What tanked is the market for corporate lawyers in large and medium-sized firms, and the funding for public-interest lawyers. What did not tank is the need for everyday legal services. People are still getting hit by cars, shafted by their insurance companies, divorced, etc., just as much as they ever were.

Oh, and Colorado has medical and recreational marijuana now; in another state I know a guy who launched himself out of poverty and misery by restyling himself as a consultant to people wanting to set up medical marijuana dispensaries. There are ANY NUMBER of ways you could put your law degree to work YOURSELF, rather than hurling your resume into the same void everyone else's resume is aimed at, and make way more money than $30k. Do you have the initiative?

Also, you happen to live near one of the best if not THE best IVF clinics on the face of the earth (the Colorado Center for Reproductive Medicine, just south of Denver). They do more than 300 donor-egg cycles a year and every single one of them requires the following contracts: (1) contract between the intended parents and the egg donor (each of whom needs separate representation); and (2) contract between the intended parents and either the donor agency or (if the donor is a "clinic donor" rather than an "agency donor") the IVF clinic (ditto on separate representation). They also do god knows how many cycles with surrogates, and those also require contracts. And in many cases contracts also need to be drawn up for couples (or single moms) using sperm donors. All of this is generally done over the phone, so unless your state's rules of practice require you to have a physical office, you don't need an office other than the desk at your house.

Lawyers charge $700-$1000 just to talk to the parents (or the donor, whoever they're representing) for twenty minutes and then print out an egg donor/intended parent contract with the correct provisions on it--they have a few standard provisions, insert the right one and voila. Oh, and for each contract that's $700-$1000 charged to the parents AND another $600-ish charged to represent the egg donor (that fee is also covered by the parents). A lot of lawyers combine this type of practice with adoption law (representing couples who are adopting, whether domestically or from overseas). Obviously don't do this or any other legal practice in a half-assed way, but you can take CLE's and read up and do it right, and make way the hell more than you're making at your nonprofit.

A law degree is no longer a permission slip that lets you sleepwalk into a high-paying job. But it gives you a lot of lucrative options that no one else has, or no one else can do as convincingly (if you're setting up a medical marijuana dispensary and need some advice, do you hire the "consultant" or the got-damn "lawyer"?). So tell me, where's your initiative?


* Note to laypeople: this is lawyerspeak for "start your own law firm."

[curler]

If you want to do more with the HOA disputes, I would highly encourage you to get involved in a national parliamentarian organization (NAP or AIP).  There are very few people who have both the law degree and the parliamentarian credentials, and they can be a huge asset to HOAs as well as other member based organizations (churches, unions being the other big ones).

[Saving mom]

Any mortgage servicing shops in the area? Legal background is good for that. I would focus on getting practical experience to be able to move into a higher paying role at a corporation. At that salary and with kids, you might want to think about teaching. Better pay and benefits and family friendly schedule. If only I could convince my husband to become a teacher!

[Mr Mark]

http://www.despair.com/mistakes.html

[Lackland]

$200k @7% for my student loan
$200k @7% for wife's student loan

...

Right now our expenses are running at about $3k a month including our student loan payments under the IBR plan (Income Based Repayment). For those not familiar, after 20 years of making IBR payments Uncle Sam will forgive all of our student debt. Because I am working for a non-profit, Uncle Sam forgives my debt after 10 years of IBR payments. Right now my IBR payment is $90 a month and my wife's is $250.

...

Be careful with IBR. The Public Service Loan Forgiveness truly forgives all of the balance after ten years; the normal 25-year plan does NOT. The forgiven amount under normal 25-year IBR is apparently treated as income under current tax law. Worst case scenario may be that if you're still carrying a huge balance in 2038 due to not paying down principle fast enough, you may wind up paying the top bracket rate on the forgiven amount.

[TrulyStashin]

Love it. Thanks a lot for the constructive feedback. We've got a lot to think about. We are both barred in New York, so we'd have to wait two years to waive into Colorado. But I'm listening.

Take the Colorado bar exam for crying out loud!  Good grief there is a lot of complainypants going on here.

The job I had at law school graduation required the DC bar so I took the DC bar exam.  When a new job opportunity opened up in Virginia, I grabbed it and took the Va bar exam the very next year.  Back-to-back bar exams was rough, but damn, you gotta do what needs to be done.  Your law degree is meaningless in CO if you're not a member of the bar!  No wonder your current job pays so little, you're not being paid to be a lawyer.

What I deducing is that you barred in NY but then moved to CO without plans to get barred there.  You've both got low-paying jobs.  And a baby on the way.  It's past time to start thinking long term.  Good thing you found this site.

[10moreyears]

Is this for real? or is it a joke? How does one, actually two, have the smarts to finish law school and not have the smarts to carve out a niche to make more than $35k per year in this profession? If you knew of the challenges in the law profession in your second year of law school, why didn't at least one of you bail out and pursue a different path? I am also troubled with the attitude about paying back the loans. Take some personal responsibility to pay them back instead of expecting  the taxpayers (us) to finance your education blunder for you!

[CorpRaider]

The ABA probably increased the number of schools by about 1/3rd during the worst recession since the great depression.  Thanks alot, oh wise gray-bearded stewards of the profession.  You might want to be cautious about how much side income you generate or at least be cognizant that it might impact your public service forgiveness.  You should probably also factor in the forgiveness as compensation when you analyze your options.  If the live in nanny is cheaper than out of home childcare, it could work.  You should watch that movie where the nanny tries to kill and take over the wife's place before any interviews though. 

[Rebecca Stapler]

Haha I would love to be paid more and pay off those loans myself the old-fashioned way....  I've really really REALLY enjoyed not having to look for a job every night after working all day (as a temp).

Hahaha! You're f-ing welcome that the taxpayers (yours truly included) will swoop in and pay off your debts for you while you enjoy not being bothered to further your career. Hope you had a grand time at law school!

Advice: Rent out the basement and take care of your kid your damned self.

YOU are ridiculous. The OP is using his law degree to do good things for other people -- providing a service that otherwise could not be provided were it not for the Public Service Loan Forgiveness program. That program is a result of not paying public service attorneys enough money to get by and still advocate for the neediest people in the country, prosecuting criminals, and advising government agencies. Asshole.

And working for a nonprofit does not being the OP is not bothering to further his career. My years clerking for a court and at Legal Aid were the best career development that I have ever had.

[TrulyStashin]

Any mortgage servicing shops in the area? Legal background is good for that. I would focus on getting practical experience to be able to move into a higher paying role at a corporation. At that salary and with kids, you might want to think about teaching. Better pay and benefits and family friendly schedule. If only I could convince my husband to become a teacher!

Unfortunately, someone with an advanced degree often isn't easily hired into teaching because the pay scales typically mandate pay set by # of years of experience and type of degree.  So a first year teacher with a bachelor's degree is paid $30,000 (for example) but the same rookie with a JD is paid $34,000 (for example).  Neither one of them knows what they're doing in the classroom yet and the JD's knowledge really isn't necessary or useful in the classroom so it adds no value.  From a budget perspective, principals will hire the BA-rookie over the JD-rookie every single time.

[CorpRaider]

From what little research I've done, in a couple of districts, I think the JD is actually on the PHD scale (at least in the ones I've looked at). 

[totoro]

Yes, you probably should take the bar exam for your state.  Why have you not done this?   Right now if I understand things correctly neither of you can work as a lawyer?  No wonder your incomes are low. 

Now, $30,000/year - what is that after taxes? What benefits are you eligible for, if any, at $55,000/year family income?  Any tax breaks?  I doubt that you are doing that much better working than you would be staying at home with your child.  Not to mention the privilege of staying at home with your child.  Work out the numbers and add in renting out your one bedroom area.  Renovate the area to add a mini kitchen and separate it as a separate suite if you can.   Keep doing the mediations - find a babysitter for those times.  Study for the bar exam.

Your house is affordable, which is great.

[MountainFlower]

Rent out the basement.  I would furnish it and rent it out short term to visitors coming to NOAA, CU, and NCAR for big bucks. 

If you are in north boulder, check out the UCAR daycare (part of NCAR).  It will be FAAAAR less money than an au pair or nanny. 
http://www.cclc.com/our-centers/boulder/co/000674/
I've known people who have gone the nanny route in boulder and frankly, they had to find a new one about every 3 months; people tend to be kind of transient here.

HOA law seems pretty lucrative.  I know we paid our HOA attorney a lot when DH was president of our HOA.  It seemed like she mostly just did the required paperwork.  She also did not litigate.  We had to hire another lawyer when the developer sued the HOA.  It seemed like the HOA attorney was kind of riding the gravy train. 

Good luck.

[willn]

Haha I would love to be paid more and pay off those loans myself the old-fashioned way....  I've really really REALLY enjoyed not having to look for a job every night after working all day (as a temp).

Hahaha! You're f-ing welcome that the taxpayers (yours truly included) will swoop in and pay off your debts for you while you enjoy not being bothered to further your career. Hope you had a grand time at law school!

Advice: Rent out the basement and take care of your kid your damned self.

YOU are ridiculous. The OP is using his law degree to do good things for other people -- providing a service that otherwise could not be provided were it not for the Public Service Loan Forgiveness program. That program is a result of not paying public service attorneys enough money to get by and still advocate for the neediest people in the country, prosecuting criminals, and advising government agencies. Asshole.

And working for a nonprofit does not being the OP is not bothering to further his career. My years clerking for a court and at Legal Aid were the best career development that I have ever had.

Problem is he can't afford to help anyone, he has half a million in debt, most of it unsecured.

Helping others is best done by getting your financial mess cleaned up. If they get their income up to 175K they should be able to kick those loans in the ass in about 3 years.  Then they can be dogooders.

Eh the advice might've been harsh but the fact is they gotta fix this to win.

[brand new stash]

I don't know as much about the rest of your situation, but there is no way in hell that a live in nanny is the most mustachian child care arrangement you can make for one kid.   Some options that will be much cheaper...daycare, nanny share, finding a stay at home mom who is looking after their own kids but willing to watch an additional baby a few days a week. 

[rebel100]

Haha I would love to be paid more and pay off those loans myself the old-fashioned way....  I've really really REALLY enjoyed not having to look for a job every night after working all day (as a temp).

Hahaha! You're f-ing welcome that the taxpayers (yours truly included) will swoop in and pay off your debts for you while you enjoy not being bothered to further your career. Hope you had a grand time at law school!

Advice: Rent out the basement and take care of your kid your damned self.

YOU are ridiculous. The OP is using his law degree to do good things for other people -- providing a service that otherwise could not be provided were it not for the Public Service Loan Forgiveness program. That program is a result of not paying public service attorneys enough money to get by and still advocate for the neediest people in the country, prosecuting criminals, and advising government agencies. Asshole.

And working for a nonprofit does not being the OP is not bothering to further his career. My years clerking for a court and at Legal Aid were the best career development that I have ever had.

The response was harsh...but I disagree with your rebuttal,  The OP...AND his wife mortgaged their freedom in pursuit of dual law degree's.  He doesn't have the option of shirking his responsibility to himself, his wife, and that unborn baby.  Family first, folks down at the homeless shelter (or whatever) next.  I applaud the OP's expressed willingness to get a second job or swallow his pride to take "lesser' work to climb out of the hole....he needs to go do it and take responsibility for the mess....imagine how great it will feel in 5-10 years and YOU fixed the problem...called being a man.

[rebel100]

I don't know as much about the rest of your situation, but there is no way in hell that a live in nanny is the most mustachian child care arrangement you can make for one kid.   Some options that will be much cheaper...daycare, nanny share, finding a stay at home mom who is looking after their own kids but willing to watch an additional baby a few days a week.

THIS!  live in nanny?  You gotta be kidding me!  Rent that space out to whoever will pay the most, OP keep working while the other lawyer works from home. 

[willn]

Unfortunately, there are rules to our "permanently affordable" housing

There's a not so subtle problem here worth talking about--these programs you're in --loan forgiveness, affordable housing.  They sound great and maybe they can help.  But I don't like the idea that they restrict your freedom in exchange for a benefit that you could, as a clearly intelligent, hard working person, could easily gain for yourself.   Waiting out the long period for forgiveness? Fuck that. I'd rather scratch and claw and suffer for 2 or 3 years to get out from under them. I can't imagine having those things hang around like a bad habit, thinking about how not to break the agreement and holding me back from choices.

The housing sounds ok for now but once you smash those loans, I'd take another year and save up 150K (two lawyers? Fucking maximize your earning potential!) and get a house without the restrictions.   Get barred, get busy, get your freedom back in 4 years.  Nothin' to it.

[kudy]

There are some exceptions (like a roommate or caregiver...

If there's an exception for a roommate, and you're only renting out part of the house, isn't that the definition of a roommate? It sounds like you're in the clear to rent a room.

[Mazzinator]

My two cents...

I vote for you to take advantage of the pslfp but pay off your wifes loans. You may have to fuile your taxes separately so your ibr is based on your low income. Don't forget your 401k and traditional IRA to lower your AGI to make your ibr payments low to none. I think for her, it's 25 yrs on ibr and the amount forgiven is taxed!!!

Get a roommate, have some other sahm babysit your baby and you need to pick up as much side income (that's not taxable) as possible. I was thinking, you guys should move into the "basement apt" and rent out the rest of for max rental income. But now i see some "rules" about not being able to do that... Point is, you must get really creative and make huge sacrafices to pay this shit off!!! This requires a LIFE change!!!

Btw, we were/are in a similar boat. I'm an architect and my dh is a lawyer..the two most underpaid professions out there..and my dh could get the pslfp, but we are paying that shit off!!! Only $97k left to go..started with $250k...

Good luck

[chicagomeg]

My two cents...

I vote for you to take advantage of the pslfp but pay off your wifes loans. You may have to fuile your taxes separately so your ibr is based on your low income. Don't forget your 401k and traditional IRA to lower your AGI to make your ibr payments low to none. I think for her, it's 25 yrs on ibr and the amount forgiven is taxed!!!

Get a roommate, have some other sahm babysit your baby and you need to pick up as much side income (that's not taxable) as possible. I was thinking, you guys should move into the "basement apt" and rent out the rest of for max rental income. But now i see some "rules" about not being able to do that... Point is, you must get really creative and make huge sacrafices to pay this shit off!!! This requires a LIFE change!!!

Btw, we were/are in a similar boat. I'm an architect and my dh is a lawyer..the two most underpaid professions out there..and my dh could get the pslfp, but we are paying that shit off!!! Only $97k left to go..started with $250k...

Good luck

Please don't work under the table for unreported income so that my tax dollars can pay for your loan.

[SunshineGirl]

Can you sign up with LegalZoom or those types of prepaid services?

[Mazzinator]

Please don't work under the table for unreported income so that my tax dollars can pay for your loan.

Fair enough... My apologies, never looked at it that way.

[arebelspy]

I am sorry that you received rude comments and emails from members of this forum.

I hope you can ignore those people and take to heart the genuine advice from people who care.

Welcome.

[SunshineGirl]

I could be wrong, but I believe you still would have to pay FICA taxes based on the value of the room as well as the pay. Something to look into.

[StarryC]

As I see it, you have 2 options.

1) Remain relatively poor for 10-25 yeas and pay your IBR payments, and remain in the low income housing. This will probably result in a relatively "mustachian" lifestyle.  Try to keep your AGI low by contributing to tax sheltered savings like 401Ks and 403Bs (because this reduces your IBR payments as well).  Try to save up an emergency fund/ pay the taxes on the loan forgiveness fund in that time.  Retire at a normal to late time, relying on social security if it is there.  In order to save enough to retire at 68 you will need to do most of the mustachian things anyway.  Obviously, some people think this is taking advantage of the "moral hazard" but, as a lawyer, you probably believe that the system is set up in a certain way that has been agreed to by society, so complying with that system is acceptable. (I agree!)  Some risk if the programs you are relying on go away, and may get depressing as you'll see practically no forward motion for 10-25 years.  All your savings will pay taxes in the 25th year.   May be balanced by the feeling that you are doing good for the world.

2) Work hard to pay off your loans: Get barred in Colorado by taking the test + at home/free study.  Try to find a job paying more.  I'd
think there are firms paying at least $75-80k a year that both of you could work at, eventually.  Yes, it might take more than a year of applying and going to networking events, and it might not be interesting work.  Still live as frugally as possible, of course.  Live on one salary, pay off the loans with the other, and you'll have them paid off in 5-7 years.  Then start saving for retirement. You'll probably have to work at least 20 more years saving one salary, but you could probably retire by 50 or 55.  Disadvantage is hard work, less time with your kid now, may be frustrating seeing all that money go to loans.  Advantages are : early retirement, seeing continual progress on loans.

Either way, rent out the basement for some money, because even $200 coming in is better than $0.  Reduce grocery, transportation, and spending budgets as much as possible.  And decide which life you want!

[Rebecca Stapler]

As for a shared caregiver situation: Approach this with caution. A friend of mine tried this, but the other mom was a new mom, and had no idea what it entailed. She bailed after a week and left my friend SOL in terms of care. As for grandparents caring for baby, you have to be sure that they agree with your parenting choices and, where they don't agree, it doesn't matter to you. Otherwise, I recommend that you pay them so they don't feel like they're doing you a favor -- and therefore don't feel compelled to follow your "rules." If you do have a grandparent caregiver, I would account for buying them carseats, high chair, crib/pack n play, etc. so they have adequate equipment.

As for the mediation side gig: I think that is a great skill to develop for eventually hanging out your own shingle. That type of gig gets more and more lucrative as you gain experience, so if you can pursue that option more aggressively -- especially before baby arrives and you free time vanishes for a few months -- do that!

[Daleth]

I've been doing a lot of mediation of HOA disputes and it's pretty lucrative. $100 an hour, but it's only an hour or two a week (side job). With enough experience and word of mouth, I could see myself doing it full-time.

Oh yeah, I forgot about that! I've thought about getting into that myself. If you can do that in CO despite having only an NY license, that is AWESOME. There is some serious money in that. In your shoes I would focus most of my efforts in that direction because you already have your foot in the door and if you did even 12-14 hours of it a week, you would DOUBLE YOUR CURRENT INCOME. Seriously. From $30k to $60k, by REDUCING your work hours to 12-14 a week! What's not to like about that?!?!?!?!

Love it. Thanks a lot for the constructive feedback. We've got a lot to think about. We are both barred in New York, so we'd have to wait two years to waive into Colorado. But I'm listening.

That's excellent. FYI, I don't think you can waive into CO unless you've been actually practicing law for the previous X number of years--in other words it's not just "five years after you pass the bar, you're good to go." It'll be different from state to state but probably something along the lines of "NY bar plus 5 years of practice" or "NY bar plus you practiced as a lawyer full time for 3 of the last 5 years." You might want to look into that and see what your options are. I would guess they are either take the CO bar exam or, if NY permits it, practice NY law for at least the next two years while living in CO.

You can get the details from the CO bar folks, but my guess is unless you somehow manage to spend the next 2 years working at least half time and more likely full time as some sort of online lawyer (which I'm not sure NY even permits you to do), it seems likely to me that you're not going to be able to join the CO bar without taking the CO bar exam. Yeah, it's a hassle, but break it down by the hour. Say it takes you 100 hours to fill out all the paperwork, prepare for and take the exam. And then say this permits you to increase your income by even $10k a year. You just got paid $100/hour to take the bar exam... and two years from now, it will have been $200/hr... and 3 years it'll have been $300/hr...

And lest you think I'm wildly exaggerating about it possibly taking you just 100 hours, remember that you've already taken one bar exam not that long ago, and even if you took a full-scale BarBri course designed for people who've never taken the bar, it would be 120 hours long. Add the time for paperwork and the two-day exam and you're at 150 hours, tops. So it's not going to take you more than that, and it could take you a lot less because you've already passed one bar exam; you know the drill.

And whether it's 100 or 150 hours, it WILL pay off handsomely--to the tune of $100+ an hour. I'd be willing to bet there is plenty of mediation work that you can't do without a CO law license. HOA's are just the beginning! You could make A LOT of money that way, and if you enjoy it and already have your foot in the door, my god, the prospects are endless. You could even study for the bar while still earning money: build your HOA practice (and whatever other mediation work you can do without being a member of the bar), get it to where it alone could bring you $30k/year (i.e., do it for about 6-7 hours a week!), quit your nonprofit job, dedicate yourself to studying for the February 2014 bar exam (easy to do when you're working less than 10 hours a week!) and voila.

And if your wife wants to do something similar, take turns: she keeps working her $50k job while you build up the HOA stuff to somewhere in the 6-10hr/week range, study for the bar, pass it and then ramp up your mediation until it's bringing in more like $60k. Then you guys would have enough income for her to quit, study for the bar... etc.

As for this...

Hahaha! You're f-ing welcome that the taxpayers (yours truly included) will swoop in and pay off your debts for you while you enjoy not being bothered to further your career. Hope you had a grand time at law school!

YOU are ridiculous. The OP is using his law degree to do good things for other people -- providing a service that otherwise could not be provided were it not for the Public Service Loan Forgiveness program. That program is a result of not paying public service attorneys enough money to get by and still advocate for the neediest people in the country, prosecuting criminals, and advising government agencies.

+1 on that. We the taxpayers forgive the loans of people who choose to work in low-income professions that we the taxpayers consider important. You scratch our backs by doing low-paid but necessary work, we'll scratch yours by forgiving your loans.

But that is not Mustachian. Slaving away for 20 years at low-paying jobs just to get out from under debts when you could instead work as a mediator for 10 years, earning $2000/week for a PART TIME JOB (namely, 20hrs/week of mediation)... that's just silly. Choose the 20hr/wk, $100k/year option! THAT is Mustachian. Leave the loan forgiveness programs for the idealists who, unlike you, do NOT have the option of earning $100k a year at a pretty satisfying part-time job!

[Daleth]

From what little research I've done, in a couple of districts, I think the JD is actually on the PHD scale (at least in the ones I've looked at).

You're right (except law profs are paid way the hell more than most PhDs), but people, this dude is not getting a law professor job. Let us not mislead him. He has thus far gone the wrong route for that: he's a few years out of law school without, as far as we're aware, any teaching experience, academic publications, judicial clerkships or even much experience at all in practicing law. Also, he just bought a house in Boulder and they're expecting a kid--any higher-ed faculty job, including law, requires you to be willing to move anywhere in the country because the jobs are relatively scarce and highly competitive. The chances, even for someone who HAD followed the path that leads to law-professordom, of getting such a job within an hour or two of the town where you live is minimal.

A sibling of mine is a law professor--it's a great gig and thus not easy to get into. Adjunct professors of law certainly get jobs locally--adjunct means they just teach like one class a semester and have no benefits or anything at the school; for law profs it's well paid (unlike adjuncts in humanities fields), but the people hired for it are practicing lawyers. Emphasis on the PRACTICING.

So let us set aside pipe dreams and concentrate on what this guy can actually do to improve his financials and quality of life.

[Reepekg]

I would like to apologize to the OP. My decision to be mean on the internet clearly was ridiculous, and it is not cool he/she received nasty emails. The OP seems to be in a tough spot but willing to take action, and I'm glad other members stepped up to offer useful guidance.

I do think MMM's example of getting out of debt, securing financial independence, and then helping society is the one to follow.

[arebelspy]

I would like to apologize to the OP. My decision to be mean on the internet clearly was ridiculous, and it is not cool he/she received nasty emails. The OP seems to be in a tough spot but willing to take action, and I'm glad other members stepped up to offer useful guidance.

I do think MMM's example of getting out of debt, securing financial independence, and then helping society is the one to follow.

[Lackland]

I am super impressed by Reepekg's civility.

A bit off topic, but I'd like to take this opportunity to bring up a documentary that talks about the very awful life of idealistic young lawyers. Check out Gideon's Army, about public defenders in the South:

http://gideonsarmythefilm.com/

Unfortunately, it's still only out on HBO, which I don't think any Mustachian actually purchases. Hurry up, Netflix!

[plantingourpennies]

Don't give up so easily on paying those loans off. Mrs. PoP and put together a ~500K increase in our networth (from about 45K to 550k) over the past 4 years. For what its worth I have a degree in philosophy, and she has an MA in Math.

For two people with law degrees and an interest in FI, I don't see how it would be that tough to pay down 100k per year?

Best,
Mr. PoP

[plantingourpennies]

Just looked up what "Permanently Affordable" means in Colorado. Is this program actually designed to keep people poor, or is that just a happy side effect?

4. What are the restrictions on resale to keep a unit permanently affordable?

In Boulder the city places deed restrictions on resale. In Longmont, units are 10-year affordable; after 10 years the owner can sell at market, but must give the city 25% of the different between the original purchase price and the selling price.

With all due respect, I think this is fucking horrible. You are locking yourself into bad long-term prospects in return for a false sense of security now. If I understand this correctly, you are locking yourself out of any equity from your home over the next 10 years, and then accepting a 25% haircut. The average mortgage lasts between 6 and 9 years; under this program they wouldn't get any equity, ever? A nation of serfs...

Somebody tell me I'm reading this wrong? Please?

Best,
Mr. PoP

Bonus question-Where the hell does the equity from the house go, if OP can't get to it? Equity doesn't just go poof; somebody is using it as a 0% loan?

[TrulyStashin]

From what little research I've done, in a couple of districts, I think the JD is actually on the PHD scale (at least in the ones I've looked at).

Yes, exactly.  A JD and a PhD. are both "terminal degrees" meaning there is no higher credential.  JD means "Juris Doctor."

[Rebecca Stapler]

I would like to apologize to the OP. My decision to be mean on the internet clearly was ridiculous, and it is not cool he/she received nasty emails. The OP seems to be in a tough spot but willing to take action, and I'm glad other members stepped up to offer useful guidance.

I do think MMM's example of getting out of debt, securing financial independence, and then helping society is the one to follow.

Thank you. Many people wouldn't take the time to apologize. Sorry for calling you an asshole.

[fiveoclockshadow]

Just looked up what "Permanently Affordable" means in Colorado. Is this program actually designed to keep people poor, or is that just a happy side effect?

Dang... I just had a look too.  Hmmm.... I'm going to file this under the ridiculous "home ownership at any cost betters the nation" type of BS.  Though I guess I shouldn't complain too much as the same silliness gives me a big tax break.  But really, it isn't clear to me how this helps people (nor how my tax break helps anyone either).

With all due respect, I think this is fucking horrible. You are locking yourself into bad long-term prospects in return for a false sense of security now. If I understand this correctly, you are locking yourself out of any equity from your home over the next 10 years, and then accepting a 25% haircut. The average mortgage lasts between 6 and 9 years; under this program they wouldn't get any equity, ever? A nation of serfs...

Looking at the Boulder version I believe you can get some equity but it is capped at 3.5% per year in appreciation.  So I think in Longmont the idea is there is probably such a cap for the first ten years (i.e. you won't be selling on the open market, you will be selling in the affordable housing program with regulated prices and buyers).  After that ten years the home can leave the program by being sold in the open market and that's when you give a cut back to the program.

Bonus question-Where the hell does the equity from the house go, if OP can't get to it? Equity doesn't just go poof; somebody is using it as a 0% loan?

Again, the equity doesn't really exist for the owner while the home is in the program - its price is capped and controlled.  At least in Longmont you eventually can get out.

Anyway, at first blush this seems like a Rube Goldberg way of doing things - public policy makers once again sacrificing virgins at the altar of home ownership.  I'm all for making sure low income earners have housing options, this seems like an odd way to do it.

Oh, and apologies for contributing to the drift off topic for this thread...

To the OP - I'm going to echo a lot of sentiments in this thread.  I think you are at risk of slipping all the way down the slippery slope of government programs into a cesspool of permanent poorness.  These programs you are using have perverse incentives against generating income or improving your financial situation in any meaningful way.  I understand the law profession is in many ways imploding and you made some poor education funding choices.  That will be a challenge to overcome.  But be sure to take the long view and carefully evaluate whether these programs will actually help you in the long term.  You must remember that while your portfolio includes $400K of student debt that is really nothing compared to the human capital of a young couple.  These programs are essentially going to force you to artificially cut your human capital - the biggest part of your portfolio at this age.  Tread carefully...

[totoro]

My thought is that it seems fine under the circumstances.   It is not going to make you rich but it is better than renting.  It doesn't seem better than owning though.

What is not as great is the low-income box you are placing yourself in...

I don't really know what I would do in your circumstances to be honest.  Part of this is that I don't understand the options in your area well. 

I am a lawyer myself - but in Canada.  It made a lot of sense to get some experience and go out on my own.  I'm able to work pt and make a good wage. 

Investing in market housing and renting out made a lot of sense for us too.  We now own eight rental units.  The mortgages are slowly being paid down by tenant rents.  When we stop working, some will be sold and used to pay of mortgages on the others and the rents will generate enough income to live on in perpetuity.  If we get tired of being landlords we can just sell and invest the money in the market.

I think your debt is the biggest issue here.  If you have chosen the low income to eventual forgiveness route that is one way - along with the controlled housing.  You are really restricted though. 

I guess I would just wonder if there is a better option for either making more money now and just paying it off, or generating a lot of money later while you follow your plan.  Like family help to get a rental property which is break even but increases your equity over time in a way that your current home will not.   

[sassy1234]

Hang in there and ignore the haters, especially that jerk early on. 

I totally understand your situation.  Several of my friends headed off to expensive law school in 2005 when everyone was saying it is a great path and you will make tons of money.  There are hardly any jobs now and the ones that are available pay nothing.  One of my hard working friends, passed the Bar and now works at Sears. 

I agree with you staying at non profits, so your loans with go away after 10 years.  Yes, other tax payers pay for this, but they all receive benefits from the government in some way shape or form, we all do.  Roads, libraries, child tax benefits, social security. 

Try to get a side gig even if it has nothing to do with your degree.  My background is in healthcare and I have started a tutoring business where I do the marketing, hire local college students to tutor, and coordinate the entire thing.  When people work for you, you get ahead. 

Sell the car, invest your money so it can start working for you, be frugal as you can.  Good luck and take one month at a time.     

[catmustache]

I'm not really going to comment on the whole increasing your income thing except to say that mediation is a great idea. If you can get some certifications and experience, it can quickly become a nice side business. Random, but if you do go that route, I'd suggest allowing people to schedule mediation slots online. I know my mentor routinely uses one specific mediator because it's less hassle to figure out what time everyone can make the mediation.

Another suggestion would be to look at whether it's worth selling the car (insurance +car payment) to get a cheaper one and itemizing your expenses to see where you're spending the most.  Maybe there's some way to decrease the 3k a month. That being said, if you're making about 85k a year, you probably have a few thousand a month you can throw at your debts, so maybe it's not much of a problem for you.

Also, I'm kind of surprised at your IBR payment. With the amount of money you and your spouse make and the amount of your loans, I wouldn't count on them being so low for long. They do recalculate every once in a while, so if you just got a new job, your payments may end up being more next year, especially if you have a side income. I got a raise of about 8k last year and my payments jumped an extra $200 a month. Filing separately may also impact your ability to take deductions (mortgage interest, children, etc.), so it'd probably be good to make sure you know that's the route you want to go before banking on that.
 Then again, if you're certain you're going to stay at the same income level for the next 10 years, I guess it might work out. Good luck!

[Mazzinator]

Sounds like you guys are going to pay off at least one set of sl..so here's some things to note..

Interest accrues daily, so making extra payments today (vs tomorrow or next week) IS saving you money.

Make sure your extra payments actually go to the principal. Many times it's applied to the next months payment first. Paying a month ahead or advancing the payment due date does not help you. You should call them to verify exactly how to do this as they all have some stupid ass way to do this.

Because you are "JR" mustacians, i would put her loans on the "standard repayment plan" NOT ibr. The min payment should be MORE than just interest. If you pay just interest or less per month it will capitalize, making your debt get higher despite making payments every month!!!

For the live in babysitter, i'm thinking your plan sounds very generous. I don't know much about CO, but i live in a vhcol area and they (sahm and other in home care) charge about $40-$50 a day for newborns. Which works out to be $4-$5/hr (they max it at 10hr day)

Also, anyway you could rent out another bedroom for a while too. Maybe for the local college school yr?? A lot of parent cosleep or roomshare with a newborn for the first 6 months or so anyways.

Anyways, the sooner and more drastic the changes are now, will give you guys a huge jumpstart on this.

Great job on getting a hold of things this soon...believe me, you do not want to wake up 7 yrs post graduating college and wonder why the fuck you owe more on your SL than you did at graduation despite paying $800/mn payment, and then have to jump through your ass with 2 screaming kids!!

[plantingourpennies]

I think this affordable housing program makes financial sense for a couple of reasons.

Again, respectfully, I think you are running scared. Man up, make some dough and pay the debt off. You can do it!

For Option A, in 10 years you will have suckled off the government teat via housing and loan reduction and be worth about 0, be far off from any type of financial independance and frankly not have many job skills.

For Option B, you and your wife will have aggressively improved your job skills, generated a 200k/yr income, paid off the loans in 5 years and saved like demons over the next 5. You'll be almost FI, but probably not there quite yet.

I can't comment on local housing market, but I suspect you are restricting your search based on what you think you deserve. There are blue collar, and no collar, neighborhoods around every community-find one. If you are smart, you can leverage home equity for other investing purposes down the line-you're essentially locking yourself out of a very valuable resource. Lastly, forget your credit. When you are wealthy it just doesn't matter. Now stop feeling bad for yourself and build some wealth...

Best,
Mr. PoP

PS. And who cares if law jobs are in the shitter? Get into sales-you have all the tools (excepting mindset, but that can be fixed) and the pay is great.

[RobinAZ]

Anyways, the sooner and more drastic the changes are now, will give you guys a huge jumpstart on this.

Great job on getting a hold of things this soon...believe me, you do not want to wake up 7 yrs post graduating college and wonder why the fuck you owe more on your SL than you did at graduation despite paying $800/mn payment, and then have to jump through your ass with 2 screaming kids!!

This is my DH's and my life story.  I am 9 years post-law school, he a little less post-grad school.  We just got married, combined $250k in student loans.  Thanks to one medical disaster before IBR and two lay offs since... the accrued interest has wiped out all the principal I paid down.  My husband hasn't made a dent in the principal in 5 years.

I got laid off two weeks ago and even with 8 years "Big Law" here in AZ there are NO JOBS.  When I got laid off before, I hung out my shingle and also was Of Counsel to a friend's firm.  I never should have gone back to a firm, and I am lucky to be re-joining his firm now, starting next week.  I have no book of business.  My "hustle" has sucked and it is time to stop daydreaming and wake up and get some initiative.  I am done with IBR and PSLF (my husband was on extended, NOT IBR or ten-year... he lost FIVE YEARS of qualifying because you HAVE to be on IBR or ten year standard, bastards).  All it does is encourage you to be poor.  They just re-calculated our IBR to $0 for 12 months.  So I have one year to build a firm and I hope we earn so much $$ that we are pushed back to the standard repayment which is $2600/mo) and I hope we are still living like we are broke and are doing what we should h ave been doing all along... paying as close to $100k/year to these damn loans until we are free from this hell once and for all.

If OP has time to message me, I'd love to hear how you got into mediation.  I have been a real estate and BK lawyer, with some civil litigation experience, and have represented HOAs in the past.  I'd be grateful for the input.

Keep trudging the path to happy destiny folks!!!

[MrsPete]

Wow, you've dug yourself into a hole, and you're looking at making it worse through this low-income housing and loan repayment program business.  You're two highly educated people, and you're looking to use programs designed for the least capable people amongst us.  You can do better.  You should do better.

First, a question:  Where are your families?  Could you live in someone's basement for a while?  Could you get a family member to babysit for you?  Half a million in debt means you don't necessarily have the choice to do just as you please, and family could be the answer to your problem.   

Failing that, is there an elderly person who might like a nice young couple to live in her house as company and to do the "heavy lifting" like home repairs and yard work?  Plenty of elderly people own houses outright, yet they have trouble caring for them -- it's one of the things that sends people into assisted living situations.  Post on Care.com -- you have nothing to lose. 

What's your plan for when the baby's born?  Your wife's going to be out of work for a while.  Will she have income at that point?  You haven't mentioned insurance.  Are you "set" for the birth?

And stern warning:  Once you have one child, you'll find that there's serious pressure to have another in 2-3 years.  At this point, you absolutely can't afford it. 

Do I understand correctly:  You have one client, a non-profit.  Does this take up all your time?  Could you start painting houses after hours?  You're in a dire situation, and you cannot afford to sit back and work a comfortable 40-hour work week.

Investigate frugal living.  Check out The Complete Tightwad Gazette from the library, and read it together. 

 

[worms]

Correct there is no way I'm being a law prof. They don't want my kind :)

I am working as an attorney for the non-profit. In CO there is a "one client" rule where I can represent one client without being barred here. My one client is the non-profit.

I have been practicing law and am currently practicing law here in CO. Waiving in after two more years is a definite. To mediate you don't need to be an attorney. Social workers do it, regular joe citizens can do it... you just need 40 hours of training. I saw one online for ~$500 but I did the one through the Colorado Bar Association for ~$900 (FIL paid for wife and I to do it when we moved here, thanks

Genuine question as I am not a lawyer...

Can a lawyer actually take the legal hat off and give advice in the same way that "social workers or Joe citizen" does?  I thought in most professions, once qualified your whole status changed?  A medic is always a medic and, unlike Joe public, would be considered under medical rules if their road-side first aid or public health advice proved to be negligent.  I would have thought that, similarly, a lawyer providing mediation services to a range of clients would still be thought of as acting as a lawyer and would breach the OP's one client rule for the CO bar?

[ichoosemyself]

Great thread, and great advice by some in the thread. As a fellow young JD who is in debt and making almost nothing, there was a lot of useful and actionable advice here. The way I try to think about things is to treat my student loans as if I had lost money on a house or something. You don't have to make your money back the same way you lost it. I will do whatever it takes to pay off my loans. I do not give a shit about any of things I cared about when I enrolled in law school, and a sunk cost is a sunk cost.