- Quickdraw McLaw
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If you haven’t yet seen the heartwarming story about Fifth Third Bank surprising a nurse by paying off $150K in student loans, here it is. Although it is unlikely to happen for any of you, it’s the kind of thing law graduates dream of, right? One of our readers want to know if you have any heartwarming stories about your law school loans? If not heartwarming stories, any tips for dealing with working in a soul-crushing profession just to pay back the bank? Any advice on strategies for paying them off?
Heartwarming story: I paid them off.
Strategy for paying them off: spend less than you make.
Sure, we lived in a modest home, brought our lunches to work with us, drove paid-for cars, ate at home, tok inexpensive vacations, and I wore Men's Wearhouse suits during my first 5-6 years in practice; but by doing so we got rid of my ~$125k in student debt and now we have the money to do some really cool stuff. And really, in retrospect it wasn't all that difficult.
I graduated in 2007 and I know lawyers of my vintage still swimming in six-figure debt while driving leased BMWs. I know other lawyers who graduated in the early 1990's who are still paying off their own debt while their children are in college! My suggestion: tighten the belt and get the loans paid off. It made me a better lawyer, allowed me to do work I actually enjoy, and increased my peace of mind. The short-term sacrifice was worth it. When that principal balance started shrinking, I really started feeling good about life.
Well done! Great to see there are still some people out there that can play the long game and avoid the traps of instant gratification.
As Dave Ramsey says: Live like no other now so that later you can live like no other.
Yes, thanks for saying something positive. I am a new grad and have six figures in debt, and do not regret my choice, though I will probably be driving the same car for the next ten years and wearing cheaper suits it was totally worth it! I am doing what I love and to those who say "no one should have six figures in student loan debt" you should shove that statement where the sun don't shine; student loan debt is a necessary evil if you are raised in an average American family and want to do more than get a bachelor's degree.
A partner at a law firm I clerked at during law school gave me some good advice. If you live like a lawyer while you're in law school, you'll live like a law student while you're a lawyer. Number one tip (too late for most obv) is to minimize the amount of loans you actually take. I finished law school about $70K in debt. I wasn't on scholarship so I needed loans for tuition, but I worked part time and over summers to pay living expenses and a little tuition.
Once I got out saved up a small bit for some cushion, but after about 6 months I put absolutely every cent possible into killing those loans. By the time I was a third year I was putting $2K to $3K a month toward paying them off. Got it all paid off about 4 years after I graduated. I wasn't quite living like a starving law student those whole 4 years, but definitely living modestly. You know, things like no fancy new car, yet.
As far as "strategies" go, it's pretty simple, the faster you pay the faster they go away. You have to choose what you value. Do you value buying the nicer car/house/suits/vacations right away once you graduate, or do you value peace of mind knowing you reached the first pillar to financial freedom inside of your tenth year out. Nothing necessarily wrong with the first option, but you have to know yourself and how well you can manage the psychological weight of the loans hanging over your head for years. For me, I chose to inflict a little short term pain on myself in order to gain a lot of freedom. Sure, I was a little boring for a couple years, but it's the best thing I ever did.
That is great advice. I eschewed my dream schools for the full ride at the Midwestern state law school. Graduated debt free. Admit I had no real perspective even as a 25 year old law school graduate what "debt-free" would really mean for my life as a lawyer.
Just do PAYE
Don't rely on PAYE or other government programs to pay less or defer payment.
(1) You have no contractual right to these programs. Congress can yank them at any moment and then you're back on the terms of your note. You don't want to become dependent on these programs to meet your personal nut each month and then have the government yank them.
(2) Even if the loan is "forgiven" at the end of PAYE, you will pay taxes on the amount forgiven, which could be quite substantial.
I refinanced by loan last year at a much lower rate than I had with the government. I am paying it off as quickly as I can. Student loan debt is terrible debt to carry because you can't discharge it in bankruptcy and you have few, if any, debtor protections.
I'm not sure how I feel about this. I understand the tighten your belt and pay it off line of thinking, but I also don't buy in to the extreme version of that which includes not taking vacations and not rewarding yourself every now and then with a nice dinner out. Private practice (and that's all I can speak to) is hell. The last thing that I would want for anyone is to live a life of hell at work while eating TV dinners just to pay that debt, and then die in a car wreck or something – having never taken that trip to Disneyland or Paris or whatever. So I have lived the "everything in moderation" life. Life is too damn short to spend it only living to pay off college/law school debt. Maybe live life while paying off the debt in a reasonable time, while not incurring any new frivolous debt. Do what works for you. Some people can't stand that debt hanging over their head, so it makes their life too stressful. For me, the job alone is stressful enough. I'm spending money, not frivolously, to take that vacation, have a nice bottle of wine and not want to kill myself.
Hence why a lot of the advice you hear is "don't go to law shcool."
I don't understand the statement "[l]ife is too damn short to spend it only living to pay off college/law school debt." Does that imply that one should ignore the debt? Or does that imply that one should pay it off slowly so as to spend a greater percentage of one's short life paying off debt? Wouldn't it be less painful to spend a short period living frugally in order to pay off the student debt rapidly? Wouldn't that then free up a larger portion of one's short life to life without debt and engage in more interesting activities?
Next, if you die in a car wreck not having taken the trip to Paris or Disneyland, how will you know that you didn't take the trip to Paris or Disneyland?
You won't know, but your family and loved ones will. Your kids will never have that memory with you at Disneyland–only that we were poor and mom/dad worked a lot. YOLO. Make it count. Yes, pay your bills and live within your means, but all work and no play, makes Jack a dull boy.
Only one of a multitude of reasons for that advise… It forces a very large expenditure for the chance of obtaining the license to try to get a job in a miserable and thankless occupation. Long term, I frequently wonder if prospective lawyers wouldn't be better off taking all that money and investing into a franchise business (think McDonald's).
Well said, 11:26.
Agreed, well said @11:26 and also @10:13. I think @10:13 is just saying – try and have some balance without killing yourself over the debt, when the profession itself is already so stressful.
Both of my kids say they will never become lawyers, because they see how stressful and time-consuming the profession is. I always wonder about the Nevada families which have three or more generations of attorneys. Do they know something I do not, or are they gluttons for punishment?
I don't really see the connection between spending money and stress relief from work. Sure, if you spend zero money, have an unreliable car that breaks down every month, and eat ramen every day that's stressful. So yeah, go get lunch out a few days a week, get a massage, get some decent clothes, don't live like a hermit. Do it. But I don't see how leasing the newer expensive car, buying $1000 suits, or buying the big house helps relieve stress when you can't truly afford it. In fact, those are the big money leaks that are actually gonna cause stress. Those are the big money decisions that really keep people from paying off their debt in a meaningful way.
3:15 nails it.
Spend money, but do it in moderation, and do it wisely.
Spend it where it will actually help relieve stress, not add to it by saddling you with a giant car payment or mortgage.
Spend it to hang out with friends or family. Or better yet, have them come over for dinner. It's cheaper and it's often more meaningful / intimate.
To me, the easiest way to save money is to never eat out, except for special occasions. Especially lunch. Bad for your pocketbook and bad for your waistline. Go to the gym / for a walk / for a run at lunch instead. That relieves stress and is much cheaper (or free!).
Money can cause stress and misery. Money has the potential, when done correctly, to create the space for the opportunity for real happiness and fulfillment. But money can't buy happiness and fulfillment.
I don't really have any advice other than to just pay it off when you have the money to do so. I got out of law school about 10 years ago with $95k in debt. I was dumb and thought that student loans were basically free money. If I could go back, I'd obviously live much cheaper than I did, although it wasn't like I was living an extravagant lifestyle. I had a wife and a new baby at the time so just the standard bills weren't cheap.
After graduating, I started paying off my student loans in chunks whenever I would come into some extra money, like bonuses or tax refunds.
This year I got lucky and settled a personal injury case for a large sum and I used that money to pay off all of my debt. I'm now debt-free and I'm shutting down my law firm. I don't know what I'm going to do with my career, but I'm thinking I might be done practicing law. It feels so good not to deal with the stress and anxiety and constant conflict.
I know there are many people who enjoy practicing law and I commend them for it. It just wasn't the right career for me.
Well done and congrats! I know it is always scary to toss away the known and take that leap of faith into the unknown.
Follow your heart and find inner peace and happiness. I think you would be surprised at how many people are quietly jealous of the position you are now in.. the freedom to do what you want, not having to do what you don't like.
As someone in a similar situation, being able to have walked away from the practice of law and tell people that you can't fix their problems because you are "not authorized to practice law" is empowering and a relief.
On the bitches against the SBN front: I think it is wrong and a pain in the butt that you have to pay the SBN every year for the privilege of not being authorized to practice law (read: inactive status). I can understand and agree charging a fee when you change status, active:inactive or inactive:active would be fair and appropriate but what is the justification for charging every year for no services (you get the monthly magazine.. big whoop). Seems to be a simple money grab against a captive audience.
Hate me if u want, i made a lot then bk'd everything but the loans, lived like a king always, sorry if that offends but it's true
I left law school with $7,000.00 in student loan debt. My payments were $64.00 per month. I had two wonderful parents who paid for everything. But, I never lived like a king on their dime.
Best advice: Don't go to law school.
Second-best advice: If you do go to law school (or any school for that matter) take out the very minimum you possibly can in loans.
Lawyers, we should be telling young maybe-wanna-be-lawyers that many lawyers don't make the huge amounts of money people think they do, and chances are you'll be working like a dog and stressed out all the time, whether you make a lot or not.
As for paying off loans, it's actually really simple: live below your means and set up an aggressive repayment schedule. Don't buy into deferment or other BS that is only going to prolong the pain (unless of course you are truly in serious financial distress. Which you shouldn't be if you are employed.)
No one seems to understand what "live below your means" means anymore. It just means that you spend less than you make, and by a decent margin. (Sorry, $100 / mo doesn't cut it.) It doesn't mean eating ramen for five years. But it does mean that you shouldn't buy a new car (or god forbid, lease one!), or a fancy house, or anything else fancy.
Just because you're a lawyer, that doesn't mean you "deserve" or "need" any of those things (despite what the advertisers constantly tell you).
Law is an image-conscious profession. Resist the peer pressure to buy stupid, expensive shit that you don't need and won't make you happy anyway.
And if you haven't already, read http://www.mrmoneymustache.com You don't have to go that extreme, but it will introduce you to a new way of thinking about money vs. freedom.
Great advice!
I would also add that saving as much as you can comfortably do, preferably in tax advantaged accounts will especially early in your career will make you happier later in life.
A few may want to be working in their 60's or later but having the ability to retire early with a substantial net worth is far better than the new car lease every couple of years, or the revolving door of expensive toys you don't really care about except for the need to keep up with the Jones's.
@3:16 – I agree wholeheartedly with your advice, although it's always easier said than done.
The one thing I have an issue with is that I actually have made good money as an attorney and every time I look at another profession, I realize that I'm going to take a big pay cut to make the jump. For me, it's the negatives that come along with being an attorney that aren't worth making more. So I'm taking the pay cut for less stress and hopefully more happiness.
My advice: Do awesome on the LSAT and get a full ride (ok, at least 50% if you insist). If you can't do that, maybe you should take some time in the real world before you go to law school earning and saving. No one should have six figures in student loan debt. No one.