Confessions of a Laid-off Lawyer

Just Your Average Joe Blogging Away His Debt—In One Year or Less

Nerves a Jumble

with 16 comments

Total Black: $1,048.98
Total Red: $227,468.57

Today I am scheduled to interview for the opportunity mentioned back in Decisions, Decisions.  And I’m nearly nauseous thinking about it.  The complications associated with relocating for a year-long position—or the anxiety if it were for two years—it’s gnawing at me.  Plus distance is a factor.  Unfamiliarity with the locale.  And, frankly, the reality that I could end up in a worse financial position.  I’m left wondering when, if ever, is it appropriate to make a move that could improve your career standing but leave your finances in even worse shape.

It’s not as if the law firm I’m currently working with were offering me a position.  And they’ve done that already for one of the contract attorneys working for the same agency but on another project; who says it doesn’t happen any longer?  See, that would involve a different analysis.  In that case, I’d be thinking about staying longer in New York, but also about the firm’s culture, the minimum amount of time I’d have to put in before I could think about leaving—so that it looked respectable and responsible.  I’d also be examining the benefits package and cost-benefit ratio.  Something I’m doing already with this out-of-the-blue opportunity.

Let’s assume salary is as I was initially told: $45,000 for the year.  I checked a few federal income tax calculators and it looks like I’d have to pay about $4,500 in taxes.  One said I’d be in the 10% tax bracket after exemptions and withholdings and credits and all were factored in.  Another said I’d be in the 25% category.  For estimation purposes, let’s just use $5,000 as a round number.  Thus, total income after taxes would be $40,000.  Let’s assume rent where I’d be going would cost about $1,000 a month.  Again just an estimate.  Maybe it would be less.  But in that case, less is more . . . to dump on my debts.  I need to err on the overestimate side to insure I can still get by.  So, that’s $12,000 for rent for the year.  That brings total income down to $28,000.  Federal student loan payments are about $500 a month.  That works out to $6,000 for the year.  Income drops to $22,000 a month.  For the MasterCard, this month’s minimum payment is $215.  Let’s assume that will be the same for twelve months: $2,580 for the year.  The larger Visa card is $303 for the month: $3,636 for the year.  The other Visa card was closed so I don’t know how that will play out.  Not much of a balance left.  The AmEx is back up again, but I can bring that down before I leave so I’m not going to worry about either of those for the moment.  So, let’s assume only those two: thus $6,216 annually, leaving me with $15,784.00.  But that’s not all: there’s still two more two student loans.  One is about $88 monthly: $1,056 annually.   Down to $14,728.  SallieMae is around $200 monthly: $2,400—down to $12,328.

So, let’s say I have $12,328 to play with.  Out of that amount must come food and other supplies (shampoo, soap, deodorant, etc.), transportation costs—if I have to buy a car that will be a decent upfront expense and then there’s gasoline to pay for  each month—car insurance too, COBRA payments or some sort of health care plan (if I don’t get a health care through the job), and any other sundry items: drinks out, coffee, socializing, etc.  Is $12,000 enough to cover all that?  Ah, and I forgot about the cellphone bill.  That’s about $150 a month: $1,800 a year.  Down to $10,200.

Or maybe I needn’t concern myself any further.  It’s already twenty minutes past the time when they were supposed to call.  Perhaps they’ve already selected someone else.  If so, then all of this was a lot of worrying for nothing.

And as for finances—total black is up.  Total red is about to come down a bit more.  I sent a check to my mother for $500.  I’m due to visit her next week, so I’ll bring another with me when I head back.  I figure if I send her $500 a week, that works out to $2,000 a month.  She’ll have all her money back in just about two months.  That should be ok.  I also sent out payments to the credit cards.  That drop won’t show up until payments post—at least by tomorrow.

Written by Laid-off Lawyer

March 18, 2010 at 16:01

16 Responses

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  1. You are forgetting to calculate state and local taxes (wage taxes), social security, etc. In most cases, federal, state and local taxes/deductions could come to about 25% of gross income. It depends on the local tax rates where you will be residing.

    Donnelly

    March 18, 2010 at 17:32

  2. Update: had the interview. Salary would be $53,500.00 annually. That’s nearly $10K more than I had estimated. If offered, I think I might take it.

    But, of course, as goes my life’s story: as I was wrapping up the telephone call, I received an email asking me if I’d be interested in interviewing for the clerkship I mentioned in Dream Big, Dear Gemini.

    Happy to have multiple opportunities to—hopefully—have to choose from, but it does generate a good deal of tension too.

    Laid-off Lawyer

    March 18, 2010 at 18:00

  3. True. I did forget about social security—and all those other taxes. But with the bump up in salary I just mentioned, I think I’d be able to swing it.

    Laid-off Lawyer

    March 18, 2010 at 18:04

  4. If offered the position, challenge yourself to find an apartment for well under $1,000/mo. Make it a game to find the best deal humanly possible, even if it involves a roommate or two.

    Anon

    March 18, 2010 at 18:12

  5. And if you get the position, you’ll have steady income, which means you can set up a budget and go on payment plans for your credit cards that will reduce your payments!

    Anon

    March 18, 2010 at 18:15

  6. $150 per month for one cell phone is stupid for someone with your financial issues…

    I know it’s been said before, but just saying it again!

    Chucko

    March 18, 2010 at 19:16

  7. It’s sad but true that I pay my secretary about $53,500.00 per year– and she is only a high school graduate. But hopefully the job you’re applying for has a future and will lead to higher paying positions and a career– on the other hand my secretary has nowhere to go.

    But honestly your best hope is to marry or partner up with someone rich– find someone 10-20 years older than you who is ugly but wealthy. Cook, cleans, and massage them. Lavish praise and compliments.

    David

    March 18, 2010 at 22:39

  8. 53k is a very difficult salary to live on with heavy debt. After law school graduation I started at that level and it is tricky.

    As I recall, in a previous post you estimated you’ll make 90-100k in your current position. You’re looking at a major drop in income. I’d estimate 1/3 of that income was lost to taxes/healthcare. 34k. Minus 12k year living expense (I started out paying 750 for a decent apt, lets include electricity, water). 22k. Minus 10k in credit cards and loans. 12k. Does this new location have public transport? Between a car, car insurance, gas, food, clothes, and everyday expenses it is going to be very tight. (Side question – can you finance a car with your credit?)

    Plus the IRS will be looking to collect their money one day. If not you’re looking at garnishment of wages.

    Don’t get me wrong, living on 53k is possible, but it just makes life tight. And it makes coming up with large sums of money (i.e. $1000 to pay on a student loan) very difficult. It requires lots of planning.

    I don’t think you can afford to take this job. Stay in NYC, get a roommate and methodically tackle debts from smallest to largest.

    beatingthehouse

    March 19, 2010 at 11:27

  9. Damn…this post and the comments just made me sad.

    I suppose, LoL, you need to figure out how likely it is that you can maintain your current jobs, and if those will be available to you, how long you can work the hours that you’re working. If you think both of those things will hold up for a while, then I think you really need to keep up with what you’re doing, but decrease your expenses.

    Perhaps if you did that for a couple more years, cutting your expenses, and actually made some progress on your debts, then you could afford to take a $50k/year job. It just doesn’t seem workable now–you are going to get yourself into MORE debt.

    Would you mind sharing with us what interest rates you’re paying on your various loans? I’m assuming the debt to mother is at 0%, but what about all of the others?

    The first step for you, depending on your rates, is to contact a debt counseling agency and consolidate your debts for a net decrease in interest each month. The ability to print out an amortization schedule and see what paying extra each month will do for you, etc. will be a big motivator.

    You have your “debt eggs” spread out into too many baskets now, and I think that is part of why you lose track of them, end up getting hit with fees, etc. There IS help out there for you, so why don’t you use it?

    Even if it is just a consolidation of your back tax and various cred. card debts, it would be so much more manageable.

    I admire your work ethic, you CAN get on top of this (that’s what she said!), but dude, you have to adjust your game plan…you just have to.

    T

    T-Bag

    March 19, 2010 at 12:02

  10. Why don’t you give something like this a try (either to find a room mate to move in to your place, or for you to move out of your place and in with someone else nearby)?

    http://www.roommatefinders.net

    T-Bag

    March 19, 2010 at 12:05

  11. His current earnings are from unsteady temporary jobs that are increasingly being shipped overseas. Not a safe long-term bet at all.

    Anon

    March 19, 2010 at 12:58

  12. Would the potential new job allow you to do something else evenings or on weekends to bring in more money? If it includes benefits, you’d at least be saving on health insurance. Are the student loans eligible for any sort of income contingent consolidation, and if so, have you “run the numbers,” and if this is a public service position of some sort, is it eligible for loan forgiveness?

    I would consider the intangibles this position might offer in terms of career in addition to the money. You are working many, many hours now, and the debt has not gone down in an appreciable manner. Unless your income in NY goes up, the debt is not going to go down, and you will eventually not be able to sustain the current schedule. And maybe a change of scenery would get you to develop a realistic spending plan and stick to it (i.e., deciding to spend no more than x dollars on each catagory of thing, and spending no more than that amount, regardless of how much money is coming in).

    Good luck!

    govtlawyer

    March 19, 2010 at 19:33

  13. Agree. Temp job rates are going down, and those jobs are becoming fewer and fewer. Taking a lower-paying job, but one that will lead to better, higher-paying jobs in the future, is a much better bet. Even if it means moving, getting 2 roommates, giving up the iphone, not buying coffee every day, not paying for an expensive gym, making a budget and sticking to it, calling credit card companies to strike up deals…

    Anon

    March 20, 2010 at 16:06

  14. IMO $53k is rather a good bit of money in most of the country. I wonder whether your standard of living would be much affected by taking that “low paying” job.

    You could rent an efficiency apartment, “grandmother” house, or get a roommate to cut that $1k per month down. If it’s a low cost of living market, you may even wind up with more square feet than you currently occupy!

    If you’re not trying to work 80+ hours a week, you’ll have more time to eat healthy and cheap, exercise outside rather than at a gym you have to pay for, comparison shop for all goods you buy, etc. You would also have time to take public transportation, to the extent it’s available.

    You may be able to put your loans on an income-sensitive plan to reduce your monthly payment.

    You’ve already invested $200k in your profession. Temping is getting you nowhere professionally (and not much of anywhere financially). If the new position would help you long-term, I’d take it.

    spaces

    March 20, 2010 at 22:01

  15. Going back through these posts, it looks as if I did just that! $900 a month, everything included.

    Laid-off Lawyer

    June 13, 2010 at 13:52

  16. This is exactly what ended up happening. I got a mother-in-law efficiency—or grandmother, however it’s called. And I hope to get a part-time job. Now I just have to get the income flowing again.

    Laid-off Lawyer

    June 13, 2010 at 13:54


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