Was your lateral paycut justifiable? Forum

[cheaptilts]

Anything more than $150k a year is likely completely unnecessary, so if you want to get out of big law and you're still making around that, you're fine.

Lol, not.

$150k, I’d happily take it if I worked in a low COL area (i.e., Shreveport, Tulsa). AFAIK, those markets do not pay all that well. But yes, in a large metro (and nearly everywhere in the NE), everything is so expensive. Plus, the taxes are steep.

I make $145K base as in-house counsel in a small town. I get a nice bonus but I use that to pay off debt so I never get to spend it. That $145k does not go all that far after max 401K contributions, HSA contributions, taxes, etc. That eats up about 40% of my paycheck. Then you take off mortgage, insurance, car loans (think Honda not BMW/Mercedes), student loans, etc. Now, I eventually max out Social Security later in the year, but it is disturbing how quickly that money goes with a family of 4. Two hungry and growing boys literally wipe our our refrigerator in a few days . I definitely feel comfortable, but I would not consider myself well off. Housing here is cheaper compared to big markets but not as cheap as say the South. I still do my own maintenance (oil changes/brakes/rotors, etc) on our vehicles to save money!

I am happy though with being able to leave at 5 most days, rarely any work at night or on weekends, and I use all of my vacation without any guilt each year (4 weeks).

You work what seems like a 9-5, spend time with your kids, and have savings, a car, and a house—all wth a family of four. Is this not the American dream?

[sparty99]

Anything more than $150k a year is likely completely unnecessary, so if you want to get out of big law and you're still making around that, you're fine.

Lol, not.

$150k, I’d happily take it if I worked in a low COL area (i.e., Shreveport, Tulsa). AFAIK, those markets do not pay all that well. But yes, in a large metro (and nearly everywhere in the NE), everything is so expensive. Plus, the taxes are steep.

I make $145K base as in-house counsel in a small town. I get a nice bonus but I use that to pay off debt so I never get to spend it. That $145k does not go all that far after max 401K contributions, HSA contributions, taxes, etc. That eats up about 40% of my paycheck. Then you take off mortgage, insurance, car loans (think Honda not BMW/Mercedes), student loans, etc. Now, I eventually max out Social Security later in the year, but it is disturbing how quickly that money goes with a family of 4. Two hungry and growing boys literally wipe our our refrigerator in a few days . I definitely feel comfortable, but I would not consider myself well off. Housing here is cheaper compared to big markets but not as cheap as say the South. I still do my own maintenance (oil changes/brakes/rotors, etc) on our vehicles to save money!

I am happy though with being able to leave at 5 most days, rarely any work at night or on weekends, and I use all of my vacation without any guilt each year (4 weeks).

Give me a break. You max out your 401(k) and make $145k. If you have student loans and car loans, then you should sell your cars and get cheaper ones. You should also stop maxing out your 401k and you know, pay off your student loans. You are not managing your finances well.

[2013]

Anything more than $150k a year is likely completely unnecessary, so if you want to get out of big law and you're still making around that, you're fine.

Lol, not.

$150k, I’d happily take it if I worked in a low COL area (i.e., Shreveport, Tulsa). AFAIK, those markets do not pay all that well. But yes, in a large metro (and nearly everywhere in the NE), everything is so expensive. Plus, the taxes are steep.

I make $145K base as in-house counsel in a small town. I get a nice bonus but I use that to pay off debt so I never get to spend it. That $145k does not go all that far after max 401K contributions, HSA contributions, taxes, etc. That eats up about 40% of my paycheck. Then you take off mortgage, insurance, car loans (think Honda not BMW/Mercedes), student loans, etc. Now, I eventually max out Social Security later in the year, but it is disturbing how quickly that money goes with a family of 4. Two hungry and growing boys literally wipe our our refrigerator in a few days . I definitely feel comfortable, but I would not consider myself well off. Housing here is cheaper compared to big markets but not as cheap as say the South. I still do my own maintenance (oil changes/brakes/rotors, etc) on our vehicles to save money!

I am happy though with being able to leave at 5 most days, rarely any work at night or on weekends, and I use all of my vacation without any guilt each year (4 weeks).

Give me a break. You max out your 401(k) and make $145k. If you have student loans and car loans, then you should sell your cars and get cheaper ones. You should also stop maxing out your 401k and you know, pay off your student loans. You are not managing your finances well.

If OP is on PAYE or REPAYE, it absolutely makes sense for them to pay the minimum amount on the student loans and max out 401(k).

[nixy]

As much I always enjoy a good round of “how much is a reasonable salary” and the wildly varying personal expectations treated as absolutes that go with it, I feel like “should I take a pay cut of $100-150k” is really a very different issue than the usual “how can I live in an expensive city on less than [name large salary here]” discussion. Sure, I can see the arguments for “you don’t need more than $150k in salary,” but I just don’t see how that’s really relevant here. The OP’s choosing between a staying in a job they actually really like that clearly pays more than that, or taking a new job that pays $100-150k less (but probably still more than the $150k tossed out as a max necessary salary) that they’re not as excited about but think will help their personal life. “You only need $150k” it pretty beside the point. Like will the OP be fine financially as long as they make over $150k a year? Probably, yeah. Is that really the issue here? No.

Tl;dr - can people *not* get distracted by the “how much salary is enough” comments and focus on the OP’s actual dilemma?

OP, I agree with QContinuum that my concern is that you currently love your job. And of course I defer to your understanding of your situation about your ethnicity and starting a family. If you think moving is absolutely necessary to do that, and this is the best option you’re going to have in that market, then it doesn’t really sound like waiting makes much sense. Is there no happy medium in terms of location more conducive to dating than where you are now, but with better work options?

In the end it sounds like a really personal decision. Valuing the shot at a personal life is totally rational, but so is wanting to maximize your career satisfaction. So I guess there isn’t a clear wrong answer?

[Npret]

I wouldn’t leave a job I love for the nebulous situation of a possible family that you describe. It’s highly likely I don’t understand all the implications because I’ve never been in this situation, so I’m just giving my opinion on what I would do.

Is there any way you can find or attempt to find a serious relationship before you move?

Your uncertainty about your decision is justified.

[AVBucks4239]

Anything more than $150k a year is likely completely unnecessary, so if you want to get out of big law and you're still making around that, you're fine.

Lol, not.

$150,000 a year, assuming you max 401k and HSA, means $90,000 in take home pay, or $7,500 per month. That's an insane amount of money in 99% of the country. And if you make the poor decision to live in NYC and SF, that's on you, but you should be able to make it just fine.

You should also stop maxing out your 401k and you know, pay off your student loans. You are not managing your finances well.

This isn't necessarily true. This is a complicated analysis that involves tax rates, retirement planning, guaranteed return on investments (by paying down loans) vs. hypothetical future returns (which will probably be higher than the debt interest rates), expected tax rates at retirement, expected tax rates if RMD's kick in, etc.

And I think the most important factor, which is discussed very thoroughly at Bogleheads if you read there, is compound interest. Basically, foregoing five years of investing could cost you hundreds of thousands down the line when you project it out far enough; whereas debt payoff is probably going to save you maybe $10-20k in interest.

There's also the factor of the money actually being yours. Throw interest at a debt and it's gone into the ether (assuming it's not paid off). Throw it in a pre-tax account and it's yours, although you may need to do some financial somersaults to get it -- but at least you have it.

I too am around that income and I max tax-advantaged space until I'm in the 12% bracket. That saves 10% on the tax rate, then I also believe there's about a 2% spread between my debt rates and projected S&P index returns (long term), so I don't think that poster is bad with money; but the "woe is me" when he's maxing everything is laughable.

[LBJ's Hair]

Anything more than $150k a year is likely completely unnecessary, so if you want to get out of big law and you're still making around that, you're fine.

Lol, not.

$150,000 a year, assuming you max 401k and HSA, means $90,000 in take home pay, or $7,500 per month. That's an insane amount of money in 99% of the country. And if you make the poor decision to live in NYC and SF, that's on you, but you should be able to make it just fine.

Look, for many people, living in NYC or SF or another major metropolitan region isn't really a "choice"--- our friends, family, significant others, and professional networks are all here. yes, ok, we could theoretically move to San Antonio and cut our COL by 65%, but we would also be completely alone. forgive us for wanting to live a middle class lifestyle in an expensive city, rather than becoming economic refugees in our early 30s

[sparty99]

Anything more than $150k a year is likely completely unnecessary, so if you want to get out of big law and you're still making around that, you're fine.

Lol, not.

$150,000 a year, assuming you max 401k and HSA, means $90,000 in take home pay, or $7,500 per month. That's an insane amount of money in 99% of the country. And if you make the poor decision to live in NYC and SF, that's on you, but you should be able to make it just fine.

You should also stop maxing out your 401k and you know, pay off your student loans. You are not managing your finances well.

This isn't necessarily true. This is a complicated analysis that involves tax rates, retirement planning, guaranteed return on investments (by paying down loans) vs. hypothetical future returns (which will probably be higher than the debt interest rates), expected tax rates at retirement, expected tax rates if RMD's kick in, etc.

And I think the most important factor, which is discussed very thoroughly at Bogleheads if you read there, is compound interest. Basically, foregoing five years of investing could cost you hundreds of thousands down the line when you project it out far enough; whereas debt payoff is probably going to save you maybe $10-20k in interest.

There's also the factor of the money actually being yours. Throw interest at a debt and it's gone into the ether (assuming it's not paid off). Throw it in a pre-tax account and it's yours, although you may need to do some financial somersaults to get it -- but at least you have it.

I too am around that income and I max tax-advantaged space until I'm in the 12% bracket. That saves 10% on the tax rate, then I also believe there's about a 2% spread between my debt rates and projected S&P index returns (long term), so I don't think that poster is bad with money; but the "woe is me" when he's maxing everything is laughable.

It shouldn't take 5 years to pay off the student loan debt if the person is making $150,000. If you stopped investing for a year or 2, it could probably be paid off. What if they lose their job? Then they have a mortgage, student loan debt, and car debt. But if they were debt free and lost their job, oh well. You have no debt. Plus the stock market isn't even making money right now. You could easily be investing more aggressively if you simply paid off that debt in a year or 2 by temporarily stopping investments.

[Anonymous User]

Anything more than $150k a year is likely completely unnecessary, so if you want to get out of big law and you're still making around that, you're fine.

Lol, not.

$150,000 a year, assuming you max 401k and HSA, means $90,000 in take home pay, or $7,500 per month. That's an insane amount of money in 99% of the country. And if you make the poor decision to live in NYC and SF, that's on you, but you should be able to make it just fine.

You should also stop maxing out your 401k and you know, pay off your student loans. You are not managing your finances well.

This isn't necessarily true. This is a complicated analysis that involves tax rates, retirement planning, guaranteed return on investments (by paying down loans) vs. hypothetical future returns (which will probably be higher than the debt interest rates), expected tax rates at retirement, expected tax rates if RMD's kick in, etc.

And I think the most important factor, which is discussed very thoroughly at Bogleheads if you read there, is compound interest. Basically, foregoing five years of investing could cost you hundreds of thousands down the line when you project it out far enough; whereas debt payoff is probably going to save you maybe $10-20k in interest.

There's also the factor of the money actually being yours. Throw interest at a debt and it's gone into the ether (assuming it's not paid off). Throw it in a pre-tax account and it's yours, although you may need to do some financial somersaults to get it -- but at least you have it.

I too am around that income and I max tax-advantaged space until I'm in the 12% bracket. That saves 10% on the tax rate, then I also believe there's about a 2% spread between my debt rates and projected S&P index returns (long term), so I don't think that poster is bad with money; but the "woe is me" when he's maxing everything is laughable.

It shouldn't take 5 years to pay off the student loan debt if the person is making $150,000. If you stopped investing for a year or 2, it could probably be paid off. What if they lose their job? Then they have a mortgage, student loan debt, and car debt. But if they were debt free and lost their job, oh well. You have no debt. Plus the stock market isn't even making money right now. You could easily be investing more aggressively if you simply paid off that debt in a year or 2 by temporarily stopping investments.

I am the one who posted but I didn't put everything out there since I wasn't trying to evaluate my finances. I pay my student loan monthly payments ($900) plus I will be putting my full bonus and any tax refund towards paying off my student loans (~$30K). This is in addition to maxing out my 401(K). My student loans should be paid of in the next two years. I am in my 40s but just graduated law school (long story). Job security is not an issue but retirement planning is starting to get more of my attention these days. Also, I don't know why people keep saying the stock market is not making any money right now, my 401(k)'s performance is +10% since the beginning of the year, +4% in the last year, and +22% in the last two years.

As for the OP - I would never take a pay cut to move to a different market in the "hope" that I could meet someone. I would imagine any big law city has enough of whatever religious or minority community you are looking for to meet someone.

[AVBucks4239]

It shouldn't take 5 years to pay off the student loan debt if the person is making $150,000. If you stopped investing for a year or 2, it could probably be paid off. What if they lose their job? Then they have a mortgage, student loan debt, and car debt. But if they were debt free and lost their job, oh well. You have no debt. Plus the stock market isn't even making money right now. You could easily be investing more aggressively if you simply paid off that debt in a year or 2 by temporarily stopping investments.

You’re smarter than this.

If you’re paying off student loans and lose your job, you go on IBR/PAYE. If you refinanced to save a couple percent that’s on you, but they still give you forbearance options.

And if you’ve been paying on a loan, it’s not paid off, and then you lose your job, all that money went to a debt and you still have the payment. If you invested, that money would be there.

To say the stock market isn’t making money now signals to me you haven’t been paying attention. And to think “it’s not making money now” signals market timing thinking, which is silly.

And $20k invested per year for 25 years is $1.35M. $20k invested annually for 25 years, and then no contributions for another two years (to keep the investment amount the same) results in $1.549M, or an increase in almost $200k. Three years is $1.657M. These amounts increase exponentially with bigger time periods and bigger investment amounts.

So burning your hair off to pay off student loans usually isn’t necessarily the right long term choice.

Time is your greatest asset with investing. Foregoing that to rush to pay off debt doesn’t usually make a ton of sense.

[LBJ's Hair]

It shouldn't take 5 years to pay off the student loan debt if the person is making $150,000. If you stopped investing for a year or 2, it could probably be paid off. What if they lose their job? Then they have a mortgage, student loan debt, and car debt. But if they were debt free and lost their job, oh well. You have no debt. Plus the stock market isn't even making money right now. You could easily be investing more aggressively if you simply paid off that debt in a year or 2 by temporarily stopping investments.

You’re smarter than this.

If you’re paying off student loans and lose your job, you go on IBR/PAYE. If you refinanced to save a couple percent that’s on you, but they still give you forbearance options.

And if you’ve been paying on a loan, it’s not paid off, and then you lose your job, all that money went to a debt and you still have the payment. If you invested, that money would be there.

To say the stock market isn’t making money now signals to me you haven’t been paying attention. And to think “it’s not making money now” signals market timing thinking, which is silly.

And $20k invested per year for 25 years is $1.35M. $20k invested annually for 25 years, and then no contributions for another two years (to keep the investment amount the same) results in $1.549M, or an increase in almost $200k. Three years is $1.657M. These amounts increase exponentially with bigger time periods and bigger investment amounts.

So burning your hair off to pay off student loans usually isn’t necessarily the right long term choice.

Time is your greatest asset with investing. Foregoing that to rush to pay off debt doesn’t usually make a ton of sense.

what does any of this have to do with whether OP should take a $150K paycut

[nixy]

It shouldn't take 5 years to pay off the student loan debt if the person is making $150,000. If you stopped investing for a year or 2, it could probably be paid off. What if they lose their job? Then they have a mortgage, student loan debt, and car debt. But if they were debt free and lost their job, oh well. You have no debt. Plus the stock market isn't even making money right now. You could easily be investing more aggressively if you simply paid off that debt in a year or 2 by temporarily stopping investments.

You’re smarter than this.

If you’re paying off student loans and lose your job, you go on IBR/PAYE. If you refinanced to save a couple percent that’s on you, but they still give you forbearance options.

And if you’ve been paying on a loan, it’s not paid off, and then you lose your job, all that money went to a debt and you still have the payment. If you invested, that money would be there.

To say the stock market isn’t making money now signals to me you haven’t been paying attention. And to think “it’s not making money now” signals market timing thinking, which is silly.

And $20k invested per year for 25 years is $1.35M. $20k invested annually for 25 years, and then no contributions for another two years (to keep the investment amount the same) results in $1.549M, or an increase in almost $200k. Three years is $1.657M. These amounts increase exponentially with bigger time periods and bigger investment amounts.

So burning your hair off to pay off student loans usually isn’t necessarily the right long term choice.

Time is your greatest asset with investing. Foregoing that to rush to pay off debt doesn’t usually make a ton of sense.

what does any of this have to do with whether OP should take a $150K paycut

THANK YOU

[AVBucks4239]

what does any of this have to do with whether OP should take a $150K paycut

"Is the paycut justifiable"

--> "You can probably live on $150,000 a year, so if you're still above that go for it"

-----> "I am barely getting by on $150,000 a year"

----------> "You aren't managing your finances well"

--------------> "Well actually"

It's a sub-discussion of the larger issue. OP is asking about whether a paycut is worth it. I'm offering the point that if you manage your money well, you will be fine, and you don't need all that money, and if you need to move for personal reasons, don't focus entirely on the dollars and cents. That dove-tailed into other issues. It's not the end of the world.

[nixy]

what does any of this have to do with whether OP should take a $150K paycut

"Is the paycut justifiable"

--> "You can probably live on $150,000 a year, so if you're still above that go for it"

-----> "I am barely getting by on $150,000 a year"

----------> "You aren't managing your finances well"

--------------> "Well actually"

It's a sub-discussion of the larger issue. OP is asking about whether a paycut is worth it. I'm offering the point that if you manage your money well, you will be fine, and you don't need all that money, and if you need to move for personal reasons, don't focus entirely on the dollars and cents. That dove-tailed into other issues. It's not the end of the world.

But it's also a perennial topic of discussion here that doesn't change anyone's convictions and doesn't address the OP's decision.

[Raiden]

what does any of this have to do with whether OP should take a $150K paycut

"Is the paycut justifiable"

--> "You can probably live on $150,000 a year, so if you're still above that go for it"

-----> "I am barely getting by on $150,000 a year"

----------> "You aren't managing your finances well"

--------------> "Well actually"

It's a sub-discussion of the larger issue. OP is asking about whether a paycut is worth it. I'm offering the point that if you manage your money well, you will be fine, and you don't need all that money, and if you need to move for personal reasons, don't focus entirely on the dollars and cents. That dove-tailed into other issues. It's not the end of the world.

But it's also a perennial topic of discussion here that doesn't change anyone's convictions and doesn't address the OP's decision.

I for one enjoyed AVBucks personal finance refresher.

But yeah, OP's decision seems to be a personal one. We don't have enough facts to exactly understand what's going on here. He/she was probably hoping someone went through something similar, but we'd need more facts to say.

[Sprinkler]

On lateralling, here’s the deal….no massive traffic nightmare places (as in, driving an hour to go 20 miles), no absurd taxes, chill firm but interesting work (in my field), matching 401k. Since I paid off my student loan, a modest COL location @ $175k (it's cut but workable), no more than 2,100 hours for bonus. A year ago I had an offer that was very close to that, but I would have had to retake the entire bar. Sadly, a Deal killer (then and now).

(The matching 401k is not a deal killer...I do not have it now).

[Anonymous User]

Mine absolutely was not. I was at a V50 and took a big pay cut to go to my home market (no national firms, but I worked at an AmLaw 200 regional firm). As a 3rd year, it was painful, but after the jump from 160k to 180k, it started to get even more painful. I was working about 90% of the hours for like 50% of the pay. I couldn't do it. Plus the work was less interesting. So I went back to another V50 in a coastal market and got back on the Cravath scale. Now as a senior associate with bonus (325k + 100k), the different is closer to 3x (i'd be at $160k-$170k this year at the regional firm).

It was a nightmare! And I liked the partners less at that firm than my first or current firm.

[BaiAilian2013]

Can we lay off criticizing OP's reason for moving and respectfully assume that s/he knows his/her ethnic group well enough to make that judgment? And incidentally, this may not be OP's situation, but there are certain immigrant groups in the US, often those who came primarily as refugees (recently or otherwise), that are in fact heavily concentrated in totally random cities.

OP - isn't a 5th year on the new scale making like a gazillion dollars, such that $150k less than that would still be a whole lot of money - particularly if moving to a lower COL city?

[Anonymous User]

Mine absolutely was not. I was at a V50 and took a big pay cut to go to my home market (no national firms, but I worked at an AmLaw 200 regional firm). As a 3rd year, it was painful, but after the jump from 160k to 180k, it started to get even more painful. I was working about 90% of the hours for like 50% of the pay. I couldn't do it. Plus the work was less interesting. So I went back to another V50 in a coastal market and got back on the Cravath scale. Now as a senior associate with bonus (325k + 100k), the different is closer to 3x (i'd be at $160k-$170k this year at the regional firm).

It was a nightmare! And I liked the partners less at that firm than my first or current firm.

How long did you stay at your second, regional firm before making the shift back?
Were you doing the same type of work?

[Anonymous User]

Can we lay off criticizing OP's reason for moving and respectfully assume that s/he knows his/her ethnic group well enough to make that judgment? And incidentally, this may not be OP's situation, but there are certain immigrant groups in the US, often those who came primarily as refugees (recently or otherwise), that are in fact heavily concentrated in totally random cities.

OP - isn't a 5th year on the new scale making like a gazillion dollars, such that $150k less than that would still be a whole lot of money - particularly if moving to a lower COL city?

OP here.
COL is similar. Cheaper housing but higher tax. Even after 150k cut yes it is still not a dreadfully small sum and ill be able to save although not a ton..

Actually Im leaning towards just doing it and if not come back (hopefully that’s possible).

[Anonymous User]

Mine absolutely was not. I was at a V50 and took a big pay cut to go to my home market (no national firms, but I worked at an AmLaw 200 regional firm). As a 3rd year, it was painful, but after the jump from 160k to 180k, it started to get even more painful. I was working about 90% of the hours for like 50% of the pay. I couldn't do it. Plus the work was less interesting. So I went back to another V50 in a coastal market and got back on the Cravath scale. Now as a senior associate with bonus (325k + 100k), the different is closer to 3x (i'd be at $160k-$170k this year at the regional firm).

It was a nightmare! And I liked the partners less at that firm than my first or current firm.

How long did you stay at your second, regional firm before making the shift back?
Were you doing the same type of work?

I was doing the same type of work, just smaller deals (the regional was an AmLaw 200 firm). I went to the regional as a third, left as a fifth, and am now a seventh.