Stories of extreme frugality in biglaw Forum

[2013]

18 month anon here:

Yep, it’s great to see others in big law who are saving a lot especially since I have no one to talk to about this in real life and it seems my coworkers are spending like $3800 for a 1br to be close to the office etc. People who went from negative net worth above are really inspiring.

To be honest though, I still feel like quitting big law at least once every week. The golden cuffs are so real though because I tell my self that if I can stay for another 2 years I can hit half a million (if the market doesn’t crash in between). As they say, “the first million is the hardest.”

Ive considered the Texas thing given how many recruiters email about it every day. I calculated I would’ve saved about 18k in taxes for 2018 had I been in TX (and even more going forward as my income rises) but I don’t think it’s worth a move just for financial reasons. My rent is already pretty low now so it would have to be a move for QoL which honestly does seem like it would be way better there, except all my friends and family are here. Hence, stuck in nyc.

Given how you live, Tx would not make sense. You’d save money, but you’d have to invest in a car/car insurance/gas, etc., to realistically make it work.

[februarybartaker]

I’m curious to hear from anyone who has approached FIRE by real estate or other private business investing (or franchises) with success.

[Anonymous User]

I'm curious about how having a sizeable nestegg makes people handle the stress of biglaw.

Does it make it easier to know that you can get fired and not be homeless and out on the street, or does it make it harder to know that you can just say fuck it and quit at any given point?

For me, having enough money in the bank (and no debt) to coast for a year (at least) makes it really hard to stay motivated

[Anonymous User]

Managed to put away 400K during an 11-year stint in the military making officer pay. Admittedly, we were able to take full advantage of the run-up in the market from the bottom to now, as well as middle-American COL and a lot of tax-free deployments (too many--why I got out). Now, my spouse and I are both working through the first few years of 2x biglaw (with no debt) and expect to easily double our NW by end of year 3 assuming a flat market (which may or may not materialize) and living on 50% of one salary (85ish K/yr) while banking the rest. Accepting 45+ minute train rides, driving a 10-year-old Toyota, and living in frugal apartments for the foreseeable while also enjoying cheap, active hobbies should get us there with mental health intact. After crossing $1M, we'll take stock of where we are, how we like our jobs and see if we want to "coast FIRE" doing public defender/legal aid in a rural district (the legal industry equivalent of BaristaFI) or willingly don the golden handcuffs for a couple of 8-10 year partnership pushes and potential ObeseFIRE. Time will tell.

Good luck out there!

[Anonymous User]

I'm curious about how having a sizeable nestegg makes people handle the stress of biglaw.

Does it make it easier to know that you can get fired and not be homeless and out on the street, or does it make it harder to know that you can just say fuck it and quit at any given point?

For me, having enough money in the bank (and no debt) to coast for a year (at least) makes it really hard to stay motivated

Oh, I think it's so much easier knowing that if I get fired tomorrow I can coast for a long time and be fine. I mean, I would probably hustle more at work if I was living paycheck to paycheck, but I think I do better work not being constantly stressed about pleasing every single person, saying yes to every single nonbillable thing, etc.

[dabigchina]

Managed to put away 400K during an 11-year stint in the military making officer pay. Admittedly, we were able to take full advantage of the run-up in the market from the bottom to now, as well as middle-American COL and a lot of tax-free deployments (too many--why I got out). Now, my spouse and I are both working through the first few years of 2x biglaw (with no debt) and expect to easily double our NW by end of year 3 assuming a flat market (which may or may not materialize) and living on 50% of one salary (85ish K/yr) while banking the rest. Accepting 45+ minute train rides, driving a 10-year-old Toyota, and living in frugal apartments for the foreseeable while also enjoying cheap, active hobbies should get us there with mental health intact. After crossing $1M, we'll take stock of where we are, how we like our jobs and see if we want to "coast FIRE" doing public defender/legal aid in a rural district (the legal industry equivalent of BaristaFI) or willingly don the golden handcuffs for a couple of 8-10 year partnership pushes and potential ObeseFIRE. Time will tell.

Good luck out there!

Is doing pd/legal aid really CoastFire? My friends in PI still work pretty hard. Definitely not something I'd equate with working as a barista.

[Anonymous User]

Managed to put away 400K during an 11-year stint in the military making officer pay. Admittedly, we were able to take full advantage of the run-up in the market from the bottom to now, as well as middle-American COL and a lot of tax-free deployments (too many--why I got out). Now, my spouse and I are both working through the first few years of 2x biglaw (with no debt) and expect to easily double our NW by end of year 3 assuming a flat market (which may or may not materialize) and living on 50% of one salary (85ish K/yr) while banking the rest. Accepting 45+ minute train rides, driving a 10-year-old Toyota, and living in frugal apartments for the foreseeable while also enjoying cheap, active hobbies should get us there with mental health intact. After crossing $1M, we'll take stock of where we are, how we like our jobs and see if we want to "coast FIRE" doing public defender/legal aid in a rural district (the legal industry equivalent of BaristaFI) or willingly don the golden handcuffs for a couple of 8-10 year partnership pushes and potential ObeseFIRE. Time will tell.

Good luck out there!

Is doing pd/legal aid really CoastFire? My friends in PI still work pretty hard. Definitely not something I'd equate with working as a barista.

TBF, I think baristas tend to work their asses off too. Anybody in retail or customer service, for that matter--those aren't easy jobs. So, it's ultimately all about how you define success. Right now, my spouse and I wouldn't personally categorize success as a beach in Costa Rica.

To us, FIRE is about the ability to do something meaningful and fulfilling with our careers, while not needing to look to a paycheck to cover expenses. So, in the broadest sense, the idea would be to take jobs that maximize our sense of happiness and use whatever smaller paycheck that job provides to "coast" to FIRE. Everybody is different though. And frankly, I've discovered I'm different now than when I was 22--so I'm open to the idea that a 45 year old version or me will define success differently than "now me". That's ok--that's the beauty of FIRE. It gives you the freedom to do exactly what you what to do, instead of what others would prefer you to do.

[objctnyrhnr]

When I am starting to lose motivation to save money, I just google stories about people getting suddenly and unexpectedly pushed out of Biglaw. Then when that stresses me out, I look at other stories about how marketable former fedclerk market midlevel biglaw associates are and I feel slightly better.

Ideal fire situation for me would be to be able to go to govt (prefer fed but state would be okay if I can swing it financially) while still bringing in say 200k or 250k with investment interest plus salary.

But then sometimes I fantasize about flying one way somewhere with SO and hanging there for a few weeks until we decide we want to do the same thing then doing it again for months at a time. Stay in legit (but not top of line) hotels, no stress Re money, fly coach though, good restaurants etc.

I have something like 400k in bank and have invested well. I figure I can hit goal #1 with maybe 700 or 800 in bank, meaning I’d stay at my market biglaw shop for another handful of years.

Goal #2 who even knows. And of course the child we had relatively recently complicates everything even a bit more.

Oftentimes, I think about how great it was that I listened to tls maxed out my Lsat and basically got a full ride to a t20 LS. Other times, I think about how much easier certain goals might be to attain (academia, ausa, judge) if I had taken out loans and gone lower/mid t10 after taking that extra year and maxing our lsat.

[Anonymous User]

Ideal fire situation for me would be to be able to go to govt (prefer fed but state would be okay if I can swing it financially) while still bringing in say 200k or 250k with investment interest plus salary.

What's big fed pay? Isn't it like 120k at the SEC? You'd need a million in the market to withdraw $40k/year using a 4% safe rate of withdrawl (which isn't very conservative and I'd say to go down to 3.5%), which would then still get you about 160k/year.

But then sometimes I fantasize about flying one way somewhere with SO and hanging there for a few weeks until we decide we want to do the same thing then doing it again for months at a time. Stay in legit (but not top of line) hotels, no stress Re money, fly coach though, good restaurants etc.

I have something like 400k in bank and have invested well. I figure I can hit goal #1 with maybe 700 or 800 in bank, meaning I’d stay at my market biglaw shop for another handful of years.

Goal #2 who even knows. And of course the child we had relatively recently complicates everything even a bit more.

This sounds pretty great, but sounds like FU money if staying at hotels and not working. How much would something like this even cost? I don't have kids yet but sounds like something that won't really be possible until I'm 50 if going the kids route too.

Oftentimes, I think about how great it was that I listened to tls maxed out my Lsat and basically got a full ride to a t20 LS. Other times, I think about how much easier certain goals might be to attain (academia, ausa, judge) if I had taken out loans and gone lower/mid t10 after taking that extra year and maxing our lsat.

I think you did the right thing and there's no point in regretting things. More than 80% chance that you'd end up in big law still and just have been 400k poorer right now if you took those loans. I remember during 1L I kept kicking my self that I didn't accept my HLS offer and took the full ride, but now 5 years later, a second year in big law, I'm grinning ear to ear (or rather my regret is more that I went to law school in the first place -- would be way worse with the debt).

[objctnyrhnr]

Ideal fire situation for me would be to be able to go to govt (prefer fed but state would be okay if I can swing it financially) while still bringing in say 200k or 250k with investment interest plus salary.

What's big fed pay? Isn't it like 120k at the SEC? You'd need a million in the market to withdraw $40k/year using a 4% safe rate of withdrawl (which isn't very conservative and I'd say to go down to 3.5%), which would then still get you about 160k/year.

But then sometimes I fantasize about flying one way somewhere with SO and hanging there for a few weeks until we decide we want to do the same thing then doing it again for months at a time. Stay in legit (but not top of line) hotels, no stress Re money, fly coach though, good restaurants etc.

I have something like 400k in bank and have invested well. I figure I can hit goal #1 with maybe 700 or 800 in bank, meaning I’d stay at my market biglaw shop for another handful of years.

Goal #2 who even knows. And of course the child we had relatively recently complicates everything even a bit more.

This sounds pretty great, but sounds like FU money if staying at hotels and not working. How much would something like this even cost? I don't have kids yet but sounds like something that won't really be possible until I'm 50 if going the kids route too.

Oftentimes, I think about how great it was that I listened to tls maxed out my Lsat and basically got a full ride to a t20 LS. Other times, I think about how much easier certain goals might be to attain (academia, ausa, judge) if I had taken out loans and gone lower/mid t10 after taking that extra year and maxing our lsat.

I think you did the right thing and there's no point in regretting things. More than 80% chance that you'd end up in big law still and just have been 400k poorer right now if you took those loans. I remember during 1L I kept kicking my self that I didn't accept my HLS offer and took the full ride, but now 5 years later, a second year in big law, I'm grinning ear to ear (or rather my regret is more that I went to law school in the first place -- would be way worse with the debt).

I think bigfed pay for more experienced attorneys is 20-50k higher than your estimates, at least in higher COL spots.

I also think if you really know your shit and make the right investments (maybe not all stocks), you can reliably pull more like 6%...but maybe I’ll be wrong and screw myself. Either way, I’m resigned to stay in biglaw for at least a few more years and hopefully save a few hundo thou more.

And yeah—the whole wanderlust plus kids thing is kind of trying to have my cake and eat it too. That is not lost on me. Then add this spotty ambition that I have (see eg random desires to be a judge or whatever) and I’m kind of all over the map in terms of thoughts re future.

I am happy with my decision to go to law school. Even if I didn’t genuinely like what I do 80-90% of the time, I truly cannot think of anything else I’d be decent at that would pay remotely as much. Add the fact that I do usually genuinely like it, and it makes the hours much more bearable. Just hoping not going t13 isn’t going to bar me from goals if the ambition trumps the wander lust over the next decade or two.

[Anonymous User]

Four years in biglaw, about $400k in savings not including 401k, plus paid off $80k student loans. I don’t drink and my wife makes great food.

[Anonymous User]

One thing to note is that graduates from a few years ago have benefited from a fantastic bull market- those that invested savings generally did quite well.

I don’t think significant loan repayment/savings require extreme frugality in biglaw- you don’t need to eat ramen to save a significant portion of a $200k+ salary/bonus- even in NYC. But another huge help is to have a spouse who also makes good money.

My spouse and I are at around $1MM investable assets and $1.3MM net worth 4 and 9 years out of law school. The pace is for basic FI in 3-4 years (defined as being able to retire with some reasonable lifestyle cutbacks) and full FI (defined as being able to retire at current lifestyle) in ~10 years in our early 40s.

One needs to be humble. Stock markets go up and they go down, jobs get lost, children get sick, goals change. But I can’t say law school and legal careers haven’t been very good to us financially.

[Anonymous User]

I’m curious to hear from anyone who has approached FIRE by real estate or other private business investing (or franchises) with success.

I'm about to close on my fifth house. I'm a fourth year. I have four investment properties and this one will be more of an appreciation play. I'd say I have anywhere between 50k-70k in equity currently. Also, after this deal, I'll be looking at more like 130k-180k in equity depending on how it turns out. I have an additional 80k in the bank. I had a bunch of setbacks, basically a two-year period where I was stalled. A couple of contractors basically stole my money. My friend who started at around the same time is up to 9 houses. We were both operating in affordable secondary markets. I probably would have made more investing the same money in the bull market, but markets do go up and down. With the exception of 2008, real estate generally trends up and produces cash flow, even during bad times.

My wife has a good job, but she has only recently been in biglaw. I also clerked for a bit and sort of got screwed financially there.

[Anonymous User]

There was another thread on this pretty recently:

http://www.top-law-schools.com/forums/v ... hilit=fire

I posted in that thread as well, but here's the gist of my situation:

I'm in my early 30s and up to about ~$600k, spread across real estate and a variety of accounts. I had no debt coming out of law school, and I'm frugal by nature. I was also fortunate enough to get Cravath scale in a second market. Oh, and I got lucky with a real estate investment. And obviously the stock market has been great for the past 10 years.

Having this much in the bank helped me get out of biglaw as a senior associate and take a lower paying in house gig. That decision is going to significantly slow my ability to truly "retire early", but the in house gig is a non-stressful 9-5 and totally worth it after almost a decade of grinding (LSAT, law school, biglaw).

In the future, I'm not really sure what I'll do when I reach my magic number in my mid-40s. Perhaps work for a nonprofit or do something non-legal. Or maybe go to a community college for some kind of trade skill. Or I may end up just staying at my non-stressful legal job.

The big wildcard in my mind is what my SO will be doing and whether we will have children. Answers to those questions could push back the magic number a bit. Also, my SO has some student loans that will need to be paid off at some point.

But at the end of the day, my aggressive saving early on let me take a much lower paying, less stressful job. Which is awesome. And according to the calculators, I don't need to save that much more money in order to retire by 65 or so. In other words, even if I make just enough money to cover my expenses for the next 35 years or so and let everything else just grow, I could still probably be close to having enough to retire.

[nealric]

I’m curious to hear from anyone who has approached FIRE by real estate or other private business investing (or franchises) with success.

I wouldn't count on real estate as a magic bullet with regard to FIRE. It's probably a better post-FIRE strategy as a retirement activity rather than a means to getting to FIRE. Although some people get really lucky with real estate (usually a product of being in the right time a the right place), for the most part, keeping a stable of rental houses is just a relatively low-paid part time job. I wouldn't expect returns all that much higher than the stock market from just rental income. I don't think too many folks in Biglaw have the time to devote to significant side businesses like that. For what it's worth, I had a colleague some years ago (not biglaw) who was let go in part because he was so involved in his real estate side businesses that it was hurting his work performance.

[jjjetplane]

Four years in biglaw, about $400k in savings not including 401k, plus paid off $80k student loans. I don’t drink and my wife makes great food.

Can someone please explain the math on saving $400k in biglaw over 4 years? I'm just not seeing how this adds up... Is this the aggregate of you and your wife?

[BasilHallward]

Four years in biglaw, about $400k in savings not including 401k, plus paid off $80k student loans. I don’t drink and my wife makes great food.

Can someone please explain the math on saving $400k in biglaw over 4 years? I'm just not seeing how this adds up... Is this the aggregate of you and your wife?

Second this. I don't see how nearly 500k (after tax) goes to savings and debt repayment in only 4 years on one BigLaw income. And then 401 contributions on top of that–almost 600k with max out. Totally possible with another decent income of course.

[BrainsyK]

Four years in biglaw, about $400k in savings not including 401k, plus paid off $80k student loans. I don’t drink and my wife makes great food.

Can someone please explain the math on saving $400k in biglaw over 4 years? I'm just not seeing how this adds up... Is this the aggregate of you and your wife?

Cravath scale pays ~$650k post-tax stub through year 4. OP saved ~$500k, leaving $150k in expense over 4.25 (counting stub months), which is ~$35k a year COL. While probably not pleasant to live on, is doable. This isn't even taking into account investment and biglaw's fringe benefits. ~$35k is ~$50k pre-tax. Many in NYC live on less.

[ghostoftraynor]

Don't know what poster put into 401(k), but if anything meaningful, it kind of kills the math.

[Excellent117]

Four years in biglaw, about $400k in savings not including 401k, plus paid off $80k student loans. I don’t drink and my wife makes great food.

Can someone please explain the math on saving $400k in biglaw over 4 years? I'm just not seeing how this adds up... Is this the aggregate of you and your wife?

Cravath scale pays ~$650k post-tax stub through year 4. OP saved ~$500k, leaving $150k in expense over 4.25 (counting stub months), which is ~$35k a year COL. While probably not pleasant to live on, is doable. This isn't even taking into account investment and biglaw's fringe benefits. ~$35k is ~$50k pre-tax. Many in NYC live on less.

I'm not sure where you're getting such a high post-tax number, especially because when that poster started in biglaw, NYC was still at $160k.

Edit: accidental anon

[Anonymous User]

I’m curious to hear from anyone who has approached FIRE by real estate or other private business investing (or franchises) with success.

I wouldn't count on real estate as a magic bullet with regard to FIRE. It's probably a better post-FIRE strategy as a retirement activity rather than a means to getting to FIRE. Although some people get really lucky with real estate (usually a product of being in the right time a the right place), for the most part, keeping a stable of rental houses is just a relatively low-paid part time job. I wouldn't expect returns all that much higher than the stock market from just rental income. I don't think too many folks in Biglaw have the time to devote to significant side businesses like that. For what it's worth, I had a colleague some years ago (not biglaw) who was let go in part because he was so involved in his real estate side businesses that it was hurting his work performance.

One of the RE anons from about. I agree and disagree with this. It's really not that much work to be honest. I probably spend like 3-7 hours a month on it, if I'm honest with myself. The part that's great is if you are good, you find deals and then figure out ways to take your money out the deal. Basically, you buy, rehab, renovate, then refi out your money. In theory, you're left with an investment property, some equity in that property, and used none of your money.

I just think it's really a better wealth building strategy and you can sort of snowball after you're out of biglaw. I did it because I wanted properties and a set amount of money to utilize the above method. I now have both and would really feel comfortable making like 60k a year because I can still find deals and acquire more properties with my war chest. It is something that really takes money to make money.

[nealric]

I’m curious to hear from anyone who has approached FIRE by real estate or other private business investing (or franchises) with success.

I wouldn't count on real estate as a magic bullet with regard to FIRE. It's probably a better post-FIRE strategy as a retirement activity rather than a means to getting to FIRE. Although some people get really lucky with real estate (usually a product of being in the right time a the right place), for the most part, keeping a stable of rental houses is just a relatively low-paid part time job. I wouldn't expect returns all that much higher than the stock market from just rental income. I don't think too many folks in Biglaw have the time to devote to significant side businesses like that. For what it's worth, I had a colleague some years ago (not biglaw) who was let go in part because he was so involved in his real estate side businesses that it was hurting his work performance.

One of the RE anons from about. I agree and disagree with this. It's really not that much work to be honest. I probably spend like 3-7 hours a month on it, if I'm honest with myself. The part that's great is if you are good, you find deals and then figure out ways to take your money out the deal. Basically, you buy, rehab, renovate, then refi out your money. In theory, you're left with an investment property, some equity in that property, and used none of your money.

I just think it's really a better wealth building strategy and you can sort of snowball after you're out of biglaw. I did it because I wanted properties and a set amount of money to utilize the above method. I now have both and would really feel comfortable making like 60k a year because I can still find deals and acquire more properties with my war chest. It is something that really takes money to make money.

I think it's a very YMMV sort of situation. If you are in a good market and are savvy with deals, it's a lot better situation than the opposite. It's also much more difficult for an NYC associate- there simply aren't cheap rental properties nearby and your strategy would be quite difficult to do remotely.

The easiest way is just do the boring 80/20 stock/bond index fund approach. It isn't sexy, but it should get you around 8-9% annually on your capital (averaged over time), and you don't have to do anything to manage it.

[objctnyrhnr]

Four years in biglaw, about $400k in savings not including 401k, plus paid off $80k student loans. I don’t drink and my wife makes great food.

Can someone please explain the math on saving $400k in biglaw over 4 years? I'm just not seeing how this adds up... Is this the aggregate of you and your wife?

Cravath scale pays ~$650k post-tax stub through year 4. OP saved ~$500k, leaving $150k in expense over 4.25 (counting stub months), which is ~$35k a year COL. While probably not pleasant to live on, is doable. This isn't even taking into account investment and biglaw's fringe benefits. ~$35k is ~$50k pre-tax. Many in NYC live on less.

I'm not sure where you're getting such a high post-tax number, especially because when that poster started in biglaw, NYC was still at $160k.

Edit: accidental anon

Believe the poster was adding up 4 years of that salary

[jjjetplane]

Four years in biglaw, about $400k in savings not including 401k, plus paid off $80k student loans. I don’t drink and my wife makes great food.

Can someone please explain the math on saving $400k in biglaw over 4 years? I'm just not seeing how this adds up... Is this the aggregate of you and your wife?

Cravath scale pays ~$650k post-tax stub through year 4. OP saved ~$500k, leaving $150k in expense over 4.25 (counting stub months), which is ~$35k a year COL. While probably not pleasant to live on, is doable. This isn't even taking into account investment and biglaw's fringe benefits. ~$35k is ~$50k pre-tax. Many in NYC live on less.

I'm not sure where you're getting such a high post-tax number, especially because when that poster started in biglaw, NYC was still at $160k.

Edit: accidental anon

Believe the poster was adding up 4 years of that salary

Still not sure the numbers work post-tax.

[nealric]

Four years in biglaw, about $400k in savings not including 401k, plus paid off $80k student loans. I don’t drink and my wife makes great food.

Can someone please explain the math on saving $400k in biglaw over 4 years? I'm just not seeing how this adds up... Is this the aggregate of you and your wife?

Cravath scale pays ~$650k post-tax stub through year 4. OP saved ~$500k, leaving $150k in expense over 4.25 (counting stub months), which is ~$35k a year COL. While probably not pleasant to live on, is doable. This isn't even taking into account investment and biglaw's fringe benefits. ~$35k is ~$50k pre-tax. Many in NYC live on less.

I'm not sure where you're getting such a high post-tax number, especially because when that poster started in biglaw, NYC was still at $160k.

Edit: accidental anon

Keep in mind that $100k a year invested for the last 5 years invested in a total stock market index fund would be worth $615k today. Someone who got lucky with picking investments could do even better than that. Compound returns really help you save over time, especially in a bull market like we've had for the last 10 years. It's a non-trivial component- even more so when you are talking people who are more like 10 years out.