Author Topic: Getting Off On the Right Foot: Advice for a Law Student?  (Read 3984 times)

wilkens

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Getting Off On the Right Foot: Advice for a Law Student?
« on: February 11, 2013, 09:05:38 PM »
Hi everyone. I have been lurking here for the past couple of weeks, reading everything. Just wanted to say this seems like a great little community.

A lot of what is said by MMM and on the forum resonates with me.

A little about me

I have always dreamed of being financially independent. I grew up in a single parent household where money was always the driving factor in virtually every decision. So from a very early age I knew I needed and wanted to be financially independent and never have to constantly worry about money like my mother did.

I should note I am Canadian. Currently live in Toronto.

I have an undergrad degree in commerce, a masters degree and am currently in my second year of law school.

My financial situation

Every summer I have worked and I work part-time during the school year. Despite this, I have about $40,000 in school debt:
-$26,000 government student loans
-$14,000 PSLOC

I basically live off of what I earn from my part-time job and used the money I earned last summer to pay down $12,000 off of my PSLOC.

Budget wise, the only expenses I have are:
-cellphone ($50) - in retrospect I shouldn't have gotten a plan this expensive but I need long distance to talk to my girlfriend.
-food (varies but probably about $250) - I try and buy whats on sale during the current week and make meals for the whole week. One or two days a week I will buy a coffee at school for $1.50.
-rent & utilities ($850) - living in Toronto is expensive
-public transit ($100) - monthly pass

I feel like I am really doing my best budget wise. Don't know what I can cut from my food budget without being hungry all the time since I am a big dude who works out and is always hungry.

I earn about $10,000 a year from my part-time job and will probably earn about $10,000 (maybe a few grand more) this summer.

Worried about my future

I made this post because I hate having debt. I do my best to try and minimize it. I used virtually everything I earned last summer towards my PSLOC to get it to $0 and then had to use it to pay for school again this year (hence it goes up another $14,000).

I really do not want to constantly be in debt the rest of my life. After I graduate I know I will earn a decent living as a lawyer working in a mid-size city (not a big firm in downtown Toronto).  Therefore, it is really important to me to minimize my debt. I don't need or want a fancy car or a huge house.

Really, my goals in life are to have a family (two or three children), a nice little house, enjoy my job and spend time with my family (watch my kids grow up).

Many people on here seem to want to retire early but really all I want is financial independence. I have no plans to and do not want to retire early. At this point, I believe I would be happy to work into my late sixties. I want to have my own small law firm or be a partner at a smaller firm eventually so I could scale down my work as I got older but that is not a concern for me right now. My main concern is just not having to worry about money the rest of my life.

So, really I guess my question is: What can I do or should be doing to work towards my financial independence at this stage in my life?

Thanks in advance!

marty998

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Re: Getting Off On the Right Foot: Advice for a Law Student?
« Reply #1 on: February 12, 2013, 12:10:47 AM »
How many degrees do you need? Is big law right for you or can you use your undergrad and masters for a different career?

An undergrad in business + my Chartered Accountants qualification is enough for me. I started a masters in a related discipline but thought hey wtf am I doing racking up $24,000 more in debt that I'll have to pay off, without getting the promotions or increased salary

bigchrisb

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Re: Getting Off On the Right Foot: Advice for a Law Student?
« Reply #2 on: February 12, 2013, 12:28:10 AM »
Can I suggest a re-think on the motivations of business ownership in the service sector?  There are many good reasons to do this (I'm 30 and one of three owners in an engineering services firm), scaling back the amount of work isn't one of them!  In many ways, if you are an owner of one of these firms, you don't own it, it owns you!  Fun for a while, but not a path to passive relaxation.

My plan instead has been to embrace the busy professional life, and to try to stash as much as possible, to provide a passive income if I choose to walk away.

I'd also second Marty's comments about gaining as much from professional experience as from a third degree - I debated hard about a PHD straight from university, and in hindsight, I'm really glad I got out there and got some experience instead.

Good luck!

Dee18

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Re: Getting Off On the Right Foot: Advice for a Law Student?
« Reply #3 on: February 12, 2013, 05:32:16 AM »
Sounds like you are fairly content with the path you are on.  If you want to get out of debt more quickly, you could reduce your housing costs.  I teach at a university and know students who have zero housing costs in one of two ways:  as a resident advisor in a dorm for younger students or by living with an older person who needs someone on the premises and occasional transport.  Of course, both of these positions mean giving up some freedom.  You just have to decide how badly you want to get rid of that debt.

DreamingofFreedom

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Re: Getting Off On the Right Foot: Advice for a Law Student?
« Reply #4 on: February 12, 2013, 05:42:54 AM »
If the debt is really upsetting to you, why not take a BigLaw job and pay it off during the first year?  Then you would have more flexibility as you move forward and see where your life takes you.

totoro

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Re: Getting Off On the Right Foot: Advice for a Law Student?
« Reply #5 on: February 12, 2013, 10:21:05 AM »
You will be fine.  Keep going with law school.  Your debt is manageable.  Get experience at a larger law firm in an area that you think you would like to practice in and keep your frugal ways and then move to a smaller firm in a smaller town than Toronto if you want lifestyle.  From there you can start your own firm or buy into one.

I did this.  Worked fine and the ROI was worth it for the extra schooling and debt.

CNM

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Re: Getting Off On the Right Foot: Advice for a Law Student?
« Reply #6 on: February 12, 2013, 10:38:17 AM »
I work at a small firm and I enjoy it enough, even though I want to retire ASAP so I can spend my time as I wish.

That being said, I hate to be negative, but why are you sure that you will have a job after law school?  Are you working for a family firm or have you been given a job offer yet?  The reason I ask is that I have heard that it is not as easy as it once was to get a job as a lawyer right out of law school.  It is also not easy- in fact, it's difficult- to get a well-paying BigLaw job out of law school unless you go to a top law school and graduate near the top of your class.  That's not to say there are not other jobs out there, but I would definitely not count on a six figure income when you graduate.  Instead, I would estimate something more around the mid five figures until you establish yourself.  And I'll also mention that roughly 1/2 of my classmates have fled the profession after a few years because they discovered they hate it and do something else instead.

Again, my experience with the legal profession over the past seven years has been mostly positive so the above is just a pessimistic view of the biz. 

thurston howell iv

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Re: Getting Off On the Right Foot: Advice for a Law Student?
« Reply #7 on: February 12, 2013, 11:34:50 AM »
^^^ I was going to say the same thing... ("After I graduate I know I will earn a decent living as a lawyer working in a mid-size city" ) - In this economy, it sounds overly optimistic unless you have some connection.

Either way good luck with it.

wilkens

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Re: Getting Off On the Right Foot: Advice for a Law Student?
« Reply #8 on: February 12, 2013, 11:44:48 AM »
Thanks for the responses everyone! I guess the consensus is that there isn't much I can do about having debt and that I should just minimize my expenses and keep them low when I start working.

The most important short-term goal for me is to pay off my debt. In the medium- to long-term, the goal would be to buy a house and pay it off within 10 years while simultaneously having a family and saving for my (future) children's education as I will be paying for at least their undergrad if not more (however much schooling they want). Obviously, at the same time I will sock as much money away into investments while also enjoying life a little bit. A nice one-week vacation every year to somewhere warm is something I have always dreamed of.

How many degrees do you need? Is big law right for you or can you use your undergrad and masters for a different career?

An undergrad in business + my Chartered Accountants qualification is enough for me. I started a masters in a related discipline but thought hey wtf am I doing racking up $24,000 more in debt that I'll have to pay off, without getting the promotions or increased salary

In retrospect, I probably wouldn't have done a masters degree since there was an opportunity cost of one year's salary plus additional costs of tuition. But, what's done is done and the knowledge and writing abilities I gained from doing the one year masters is hard to put a price on.

I don't want to practice in "biglaw". That is why I am concerned about taking on so much debt since my earning potential is lower.

Can I suggest a re-think on the motivations of business ownership in the service sector?  There are many good reasons to do this (I'm 30 and one of three owners in an engineering services firm), scaling back the amount of work isn't one of them!  In many ways, if you are an owner of one of these firms, you don't own it, it owns you!  Fun for a while, but not a path to passive relaxation.

Practicing law beyond the level of an associate sort of entails business ownership, particularly since you would be an equity partner in the partnership. But yes, I know what you mean. Practicing law is a service business which revolves around your clients. I am not naive enough to expect not to work hard - its what I have been doing all my life. But I believe in 20 years of practicing I could have the ability to scale back and give more work to more junior lawyers at my firm. Again though, I am not too concerned about this right now.

Sounds like you are fairly content with the path you are on.  If you want to get out of debt more quickly, you could reduce your housing costs.  I teach at a university and know students who have zero housing costs in one of two ways:  as a resident advisor in a dorm for younger students or by living with an older person who needs someone on the premises and occasional transport.  Of course, both of these positions mean giving up some freedom.  You just have to decide how badly you want to get rid of that debt.

I have seen a posting for a resident adviser-type position before. While living in the dorm would be free for the school year it also entailed having to do all kinds of activities and counselling of students in the process. Effectively, it would be another job and the hours looked like a lot since the expectation would be that you were available 24/7 for these students. I will look into something like this though. But it might not be worth it ultimately.

If the debt is really upsetting to you, why not take a BigLaw job and pay it off during the first year?  Then you would have more flexibility as you move forward and see where your life takes you.

I am weary of taking a job at a larger firm and then having what is referred to as "golden handcuffs". I am also not one to start something and not finish it. I want to start working somewhere where I can stay a while. In response to another posters comment, I worked with a medium-size firm last summer and will again this summer. The presumption is that I will article there since they like me and I like them (you have to write bar exams AND article for 10 months in Canada before becoming a lawyer).

I work at a small firm and I enjoy it enough, even though I want to retire ASAP so I can spend my time as I wish.

That being said, I hate to be negative, but why are you sure that you will have a job after law school?  Are you working for a family firm or have you been given a job offer yet?  The reason I ask is that I have heard that it is not as easy as it once was to get a job as a lawyer right out of law school.  It is also not easy- in fact, it's difficult- to get a well-paying BigLaw job out of law school unless you go to a top law school and graduate near the top of your class.  That's not to say there are not other jobs out there, but I would definitely not count on a six figure income when you graduate.  Instead, I would estimate something more around the mid five figures until you establish yourself.  And I'll also mention that roughly 1/2 of my classmates have fled the profession after a few years because they discovered they hate it and do something else instead.

Again, my experience with the legal profession over the past seven years has been mostly positive so the above is just a pessimistic view of the biz. 

I am not sure if you are American or Canadian but the legal profession is in pretty good shape in Canada. We do not have different tiers of law schools like the U.S. does. 

As I posted above, I am in decent position job wise when I graduate. Articling salaries (for the 10 month period) at mid-sized firms are roughly $40k to $45k and then first year associates make about $70k to $80k.

JessicaRed

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Re: Getting Off On the Right Foot: Advice for a Law Student?
« Reply #9 on: March 10, 2013, 12:54:39 PM »
I'm in a similar situation, but in 3L (Canada) and almost finished. I also really want to get rid of my debt, particularly as a lot of it is a result of poor financial decision making done prior to stumbling across MMM - it will be around $75000 (my professional line of credit, maxed out)

We've both read the MMM articles and we know where and what we should be cutting. However, my best advice is the advice that I am following myself - to live like a student until my debt is paid off. I.e. no new cars, no potentially cash-draining new house, no trips, no "trappings of success." I have my own apartment right now that I shared with my boyfriend (making a rent of $515) but I will have to pay for it myself next  year ($1030), as my MAG article is in my current city. However my hope/plan is to get a contract somewhere close to home for the year following that, so I can live with my parents for the second year.

My articling salary is ~$48,000, with some little percentage in lieu of benefits, and the little (annoying) deduction you have to cough up to be a part of the student union or whatever the hell it is. I have crazy tax deductions banked, so I'm hoping I'll end up being able to keep most of my income. I figure during articling:

10 months rent & hydro = $10,600
10 months phone = $800 (expensive plan, but I'm not changing it right now)
10 months food = $1200 (hopefully no eating out - I don't eat out now, so shouldn't be hard. Also my mum owes me some money that she'll pay back via grocery cards)
10 months gas = $200 (I can walk to work but in a non-mustachian rebellion I am keeping my car, as it costs me very little and I will need it the year after)
10 months internet = $600 (no cable)
10 months "sundry" = $1300 - I've become a lot better at not shopping much. Hope I will only improve.

My estimates are a bit vague and maybe a bit optimistic, but I still think I should be able to pay back around $30,000 during articling. If I move home then my rent and food costs pretty much go away (although gas will go UP!), but given that Crowns usually make around ~$75,000 starting out, I think I should be able to repay the remaining amount of the loan in year 2. And then debt free! But as you can see, it's only possible for me to do that if I keep living like a student until the debt is gone =)

(Even if I'm forced to stay here for a bit longer and keep the apartment, I still think I should be able to be debt free in 2 years)

 
 

unplugged

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Re: Getting Off On the Right Foot: Advice for a Law Student?
« Reply #10 on: March 10, 2013, 02:13:55 PM »
If you would be interested in seeing how another younger lawyer became financially independent, with a family, you should read up on the Paine Family.  Crystal and Jesse Paine really sacrificed and did some amazing things while he was in law-school with very little money and a bit after. They have successful businesses now from those sacrifices. The wife shares about this on her website moneysavingmom.

Good for you for desiring to be financially independent and such a young age.