Face the facts, folks, law school isn’t cheap. Unless you’re at an in-state school paying in-state tuition for a decent in-state program, expect your three year journey through the fires of hell to cost you somewhere in the realm of six figures, if not more. The freshly minted attorney will step blinking from the birth canal of the bar exam owing as much to the federal government, or to private student loan lenders, than it would take to buy a house in most parts of the country. But, of course, it will all be worth it because once they have the ability to earn in the legal field, those young bucks and buckettes will rake in the dough hand over fist, right?
Oh you poor, poor deluded asshole.
Lawyers are Not Rich.
When I was a kid people used to come up to me and say shit like “Your dad’s a lawyer! That means you have money!” Then thy would flick a penny at me from the driver’s seat of their ride-on Benz as they rolled along to tell the ice cream man how much they really respected the small businessman in America. Meanwhile, having fought to the death with the children of two other attorneys and a medical resident over the penny, I would add it to the hoard, collecting the bodies of my enemies so that my family could sup on more than merely Spam and Mac’n’Cheese for the evening.
Guys, what I’m getting at here is that lawyers are not rich folks. Despite the public perception, most attorneys who have been in practice for a number of years exist firmly in the middle of the middle class. Those six figure salaries that you hear about for kids coming out of school with a law degree and a dream of being corporate counsel are restricted to only the top tier of attorneys. If you come from the top of the class at the right school, and you’re lucky enough to get hired at a top firm, you’ll get a six figure salary. The rest of us have to make it work on pay levels that are much more in line with what other “right out of college” folks make.
Sure Boozy. Now tell us the moon is made of cheese.
It’s green cheese, and it’s very tasty.
Look, a lot of first year lawyers are going to have starting salaries realistically in the area of $49,000 to $55,000 per year. This sounds like a lot of money, but that’s not taking into account a lot of shit like taxes and retirement funds, stuff that skims from the take home pay. If you’re a single lawyer, you’re paying a huge chunk to the government every pay day.
I mean, yeah, $49,000 SOUNDS like a whole lot of cash. But let’s put it a different way:
A lawyer making $49,000 per year, if paid twice a month, is receiving $2,041.67 (rounding up) on each pay day before taxes. This puts our fictional attorney, let’s call him Nick KnowNothing, in the 25% tax bracket. Now, if you don’t know how tax brackets work, here’s the quick and dirty: Because Nick is single, the first $9,325.00 of his annual income is taxed at 10%, the next $28,624.00 at 15%, and the last $11,050.00 at 25%. In all, that comes to $932.50 at the 10% level, $4,293.60 at the 15% level, and $2,762.50 at the 25% bracket. The total tax, then, with no deductions, is $7,988.60, or something damn near close to that. So we’ve now reduced Nick’s pay to $41,011.40 annually after tax (assuming Nick takes no deductions for that sweet end of the year refund).
Spread out over the pay period of two checks a month, this sticks Nick at $1,708.81 per paycheck, after federal taxes.
Still sounds pretty good, right?
Nick Has Student Loans
Nick, though, didn’t become a lawyer by hard work and determination alone. Instead, Nick had to take out student loans for undergrad and law school, and Nick is now (and let’s be conservative here) $100,000 in debt to the Department of Education on student loans.
Now, $100,000 is a hell of a lot more than some folks pay for a house, right? Right. And homeowners make those payments simply enough, you know? I mean, why can’t Nick?
First, a mortgage can be spread out over 30 years, and this used to actually be the industry standard for a mortgage. Student loans? 10 years. That means that, over 10 years, Nick will make about $100,000 in principal payments alone, or roughly $10,000 per year in principal payments. To go to our monthly analysis, that’s $833.34 in principal per month, or $416.67 per paycheck. That’s roughly 25% of Nick’s take home pay in student loan principal payments alone.
That’s not counting interest, though. Say Nick’s loans bear interest at the standard interest rate of 6%. That increases his monthly payment to about $1,110 per month, or $555.00 per check, increasing the cut to about 33% of Nick’s take home pay each check.
The taxes and loan payments are gone well before anything else comes out, so at this point, after student loan payments and federal taxes, Nick’s at $27,691.40 for his take home pay, the $49,000 we started with less the student loan payments at the standard ten year repayment and his estimated federal taxes.
Dude, $27,961.40 after taxes and loan payments isn’t bad.
Right, I mean, it’s like $1,153.81 per check, $2,307.62 per month. Not incredibly bad for a single guy living on their own. Nick should be okay.
Except Nick has some other costs, doesn’t he? And these costs directly relate to his ability to practice law.
For instance, Nick is going to need to pay a registration fee annually to keep practicing law. In my jurisdiction, that’s a $225.00 per year fee. Then there’s the cost of the CLE’s Nick is going to need to do, which in my jurisdiction is 12 per year, 6 of which must be in live education hours. If Nick wants to muscle through all 6 live credits by taking 2 back to back 3 hour seminars, he’s looking at $500 in CLE costs. Those online credits are cheaper though, only about $100 for all six if he catches a deal on them.
That’s not even counting some other costs Nick is going to have, like, for instance, membership in the county bar ($198.00 for fist year attorneys here, increasing with years in practice). Or things like his medical insurance payment (Let’s say $30.00 through his firm). And god help Nick if the firm doesn’t cover things that, while not technically required to practice, are good ideas if he’s going to practice, like attending three bar events per year to network and try to pick up clients (at $25 a pop, so another $75) or membership in social clubs (my first year I spent about $200 in social club memberships to meet clients).
All in all, Nick’s looking at another $1,658.00 per year in those costs, dropping his actual pay (after work related expenses) down to $26,303.40, or $1,095.98 per check.
Now let’s look at the fact Nick can’t live in a cardboard box and wear sweatpants to the office.
Suits Be Expensive, Yo.
Alright, so let’s be conservative and say Nick needs two nice suits to start out. We’ll take a look at Joseph A. Banks, who’s cheap as hell when it comes to suits and exists damn near everywhere.
An Executive Collection suit at Jos. A. Banks right now runs $179.00. Nick will need to buy roughly two suits per year for at least the next 3-4 years, because lawyers have to wear suits a lot and you should have more than one. So Nick’s looking at an additional $358.00 for the suits, not including tailoring which, if he takes it out of store for tailoring, he can probably get at $40 per suit (you have to tailor the goddamn suits folks. A poorly tailored suit makes you look like a defendant). That raises the suit cost another $80 per year to $438.00.
Then there are dress shirts, which you definitely do not want to buy from Jos. A. Banks. Let’s go to Macy’s. Good, reliable, relatively cheap Macy’s for the dress shirts, okay? We’ll even go with the bottom of the barrel Club Room shirts from Macy’s, they run about $20 each. Now, two suits…but you’re going to need a dress shirt for basically every day of the week in an office environment, so a conservative estimate? Let’s say 10. Nick needs 10 dress shirts. That’s enough he can skip the laundry for a week and not look like he found a shirt in the trunk of his car. So, another $200 in shirts, bringing the clothes budget up to $638.00
Shoes are a must, too. One pair of brown, one pair of black, because folks the shoes gotta match the belt. Oh yeah, and the belts. So let’s be conservative again and say $40 for a brown belt and a black belt (HI YA MOTHERFUCKER!). Shoes, we’ll go over to Payless and yank out some cheap ass oxfords at $40 each, for another $80. That sticks Nick now at an annual clothes budget of $758.00.
Ties? Let’s say $20 for a full range, if Nick doesn’t mind going to the salvation army and buying up a bunch of dead man’s ties. Maybe his soul resides in the over-wide necktie with the plaid pattern. You never know. You could be channeling Clarence Darrow through his formal wear. But in either case, souls of the damned or not, the dead man ties are gonna bring you up to about $778.00 for clothes.
So, with the $778 for clothes, that first year associate is now at…$25,525.40 per year in pay after taxes and expenses, or roughly $1,063.56 per check.
But Nick has to live, folks. Nick can’t sleep in his office.
Nick Has an Apartment.
So at $1,063.56 per paycheck, or $2,127.12 per month, Nick isn’t living in the Taj Mahal, right? Let’s say Nick gets a roommate and finds an apartment that’s $800 per month. His half of the rent is $400 per month, or $4,800 per year. Let’s also say the apartment has about $400 a month in utility expenses (cable, water, internet, power, gas, etc.), which Nick has half of, for another $200 per month or $2,400 per year. So for his home, Nick’s now at $7,200 per year, reducing the actual, not spoken for pay down to $18,325.40 per year, $1,527.12 per month, or $763.56 per check.
Of course, Nick needs a car, too. And a reliable car, one that befits an attorney, so a rambling rust bucket just isn’t going to cut it. Nick has good credit, though, so let’s say he gets a decent interest rate and buys a decent used car for a loan payment of $150 per month over three years, and $100 of full coverage car insurance per month with all the bells and whistles in case Nick is injured and has to take some time out of the office as a result. That adds another $250 a month to Nick’s expenses, or another $3,000 per year. Nick’s now down to $15,325.40 per year, $1,277.12 per month, or $638.56 per check.
And Nick has to eat, right? So let’s toss in a food budget based on the USDA’s proposed budget. Say Nick eats every meal at home and wants a little variety, so he’s a “low cost” guy based on the USDA calculations. That puts him at a $237.20 food budget according to the government, or another $2,846.40 per year. His pay, after expenses, is now $12,479.00 annually, $1,039.92 monthly, or $519.96 per paycheck.
Gas cost is a little different, but Nick can’t take public transport all the time, and we’ll assume he drives the average 1,000 miles a month most Americans drive. So using that, Nick will also need to be budgeting roughly $117 per month for gas, or $1,404.00 annually. Nick’s now down to $11,075.00 per year after expenses $922.91 per month, or $461.46 per paycheck. When budgeting, it might be wise to incorporate spending on credit cards into those calculations; those without credit histories could learn more about cards available to them in order to begin their budgeting.
That’s…still some decent money, man.
Yeah, but the thesis here isn’t “Nick will survive and have a couple hundred bucks left on each payday.” The thesis is “Nick is not rolling in the dough and making the big bucks simply because he’s a lawyer.” Nick has, if he’s lucky, $461.46 of unspoken for funds on every payday. If he’s smart and saves half of that, he has $230.73 of unspoken for funds every payday, or about $115.37 per week between checks. This $115.37 can be used to eat out, buy a video game, go to a movie, have a drink with friends, etc. But that’s all he has, and he gets one entertainment choice a month.
Which is like a lot of people. Because Nick, despite being an attorney, is firmly within the middle class as a starting out attorney, and is going to find himself one disaster away from insolvency on any given day until he either: A) gets a raise; B) finds another job; or C) saves up enough of a buffer that he can weather most storms easily.
Look, I wrote this for one purpose and one purpose only: to make it clear that the vast majority of attorneys are not made of money and should not be treated like they’re made of money. Most of us have massive expenses and budgeting involved in our daily lives.
I mean, that’s about it.
Cool, I got work to do.