Confessions of a Laid-off Lawyer

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

Breakdown

with 26 comments

Total Black: $6.71
Total Red: $245,625.09

No, not an emotional one.  A financial one.  Time to break down my finances for the month and lay it out for all to see.

I’m estimating much of the information here.  I still haven’t gotten paid from my current job.  Perhaps by the middle of next month.  So much of this data I’ve calculated on my own.  Once I get my first pay stub, I’ll update my financials.  For now, here goes:  

Salary: Annual salary for a first-year law clerk in the Virgin Islands is $53,886.00.  Thus, $4,490.50 per month.

Taxes: I’m unclear how to calculate federal income tax for the year.  The problem here is that I started the new position on June 1st—meaning that I should earn only half of my annual salary this year, i.e., $26,933.00.  To date, I’ve already earned $36,614.60 from the contract attorney position for January through June.  I don’t have salary information with me for the theatre gig, but that couldn’t possibly have garnered me enough to warrant serious consideration. So, for the moment, assuming the current job taxes me at the income rate for salaries between $33,951 – $82,250 for the 2010 tax bracket, then the maximum that could be withhold monthly is $1,122.63 per month.  It’s possible the current job could also set my tax rate at 15% since I’d actually earn between $8,351– $33,950 from this job for June 1 through December 31.  But, I think that’s a bit too advanced to expect of the court.  So, for the moment, I’m going to assume 25% as my tax bracket.  Thus, $1,122.65 per month.

Retirement: As employees of the government, we’re required to pay into a government retirement fund.  Law clerks cannot work the twentysome years required to vest in the plan.  But we’re still obligated to pay 8% of our salary into this fund.  We’re attempting to gain an exemption because, by definition, the bulk of us cannot “clerk” for twenty years.  We’ll get it all back later (unclear whether with interest).  But for now it means another monthly deduction.  Thus, $359.24 per month.

Health care: I couldn’t find exact numbers, but from what I recall, health care will cost me $85.00 biweekly.  Thus, $170.00 per month.

Taxes: Although I wasn’t able to pay the IRS the $7,100.00 I had agreed to by the 28th, I should have the money by the end of the week.  I’m banking on the agency being fairly large and not “watching” for my payment today.  I had thought of calling to let them know I’d be late.  But then I’m putting myself on their radar screen for sure—especially without having even been able to make a partial payment an alert them to that.  As of now, I’d be going with my tail between my legs, saying mea culpa and asking the IRS to “trust me.”  Better, I thought, to pay it late, and then call to alert them and apologize afterward.  At any rate, I’m going to trust that my payment plan will remain in place.  Thus, $500.00 per month.

Rent: The lease I signed includes utilities: water, electricity, cable TV and internet.  June and July were prepaid along with my security deposit.  Thus, $900.00 per month.

Auto loan: I haven’t received the paperwork yet for the auto loan, but the remaining balance on the loan is approximately $18,000.00  I believe the monthly payment is around $475.00 but let’s be safe and go for five hundred.  Thus, $500.00 per month.

Credit cards: Credit card companies haven’t established a set monthly payment for my cards.  I’m uncertain whether they’re supposed to.  But to be safe, I opted to take an average of the minimum payment over the past four months for my cards and set that as the estimated monthly payment.  For the American Express card, that would be $63.75 per month.  For the Master Card, that would be $182.00 per month.  For the Visa card, that would be $275.00 per month.  For the closed Visa card, that would be $198.00 per month.  Thus, $718.75 per month.

Gasoline: Looks like a tank of gas will last me for the week and that costs about forty dollars to fill it.  Rates here are currently $2.75 a gallon.  Thus, $160.00 per month.

Grand totals:

$4,490.50 (monthly salary)
-$1,122.65 (income tax)
-$359.24 (retirement fund)
-$170.00 (health care)

$2,838.61 (approximate monthly post tax income)

-$500.00 (tax payment)
-$900.00 (rent)
-$500.00 (auto loan)
-$718.75 (credit cards)
-$160.00 (gasoline)

Subtotal $59.86

What’s not included in the number above are money for food and other incidentals, nor student loans—federal are currently deferred—and also whatever amounts will be withheld for medicare and social security.  And money I need to send to my mother.  These numbers will also wiggle a bit because, as noted above, I don’t believe that my auto loan will be precisely five hundred per month.  We don’t have local taxes to pay either, so that’s good.  I’ve also already prepaid for my post office box for the entire year.  I may do that as well for car insurance: approximately $1,500 for the year.

But with everything laid out above, what comes through loud and clear is that I need to get a part-time job.  Pronto.  Moonlighting here I come.  I asked a fellow law clerk recently about a few leads.  Assuming I can pull in another $400 – $800 a month, and I’ll be much better off.  That will help close a few gaps above.

What else comes through loud and clear is that I need to eliminate one of the credit card payments.  I’ll be receiving a large check in July—the first check will be a normal paycheck and then the following will cover all backpay.  Let’s assume I get paid on July 15th for one week: roughly about $1,400.00.  Then the check on July 29th would cover pay from: June 1 though June 30 and then July 15th through July 29: three full pay periods for approximately $4,200.00.  So both of those checks—for a total of about $4,800.00 are available for any large payments.

Let’s assume my math is off and bank on four-thousand even in salary by August 1.  Rent for July is already paid.  I doubt the auto loan will come due just yet.  Deducting August’s rent and I have about $3,000.00 available.  I can use that to wipeout the AmEx bill or a student loan.  I can almost completely pay off the closed Visa account, eliminating nearly a $200.00 payment a month.  I can send that amount to the auto loan and possible eliminate monthly payments for a few months—depends on how the agency handles overpayments.

Lots of options.

26 Responses

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  1. I had hoped that would have had a detailed spreadsheet already for every single expense/income that you could think of (I mentioned putting this together before you decided on the clerkship to see if you’d be able to make your minimum payments on the expected salary, etc.).

    Maybe you did that and are now just fine tuning it. I hope so, because if not, you may be unpleasantly surprised (especially after the increased load of the car payment).

    Hopefully, this clerkship, even if it is a short term financial drain, will help you get a reasonable paying job later that will provide a good, steady income that allows you to start eliminating your debt. I’m sure that had to be the plan with the clerkship…but I wonder what is a realistic salary to expect in the legal world now?

    Is $100,000 reasonable do you think? If so, figure out what your likely after-tax amount would be and try to figure out, roughly, how much you could afford to dedicate to your debt payments and how many years/decades it might take to pay them off.

    Basically, you should do this long-term planning because you might find that some kind of bankruptcy (I know, we went over this before and much is not able to be discharged), or even getting “off the grid” is your best bet (I suspect you’d never do this now, but maybe after your mom passes…).

    I know this sounds apocalyptic, but you may be looking at close to $300,000 in debt a year from now, and the only two things you may have to show for the past year are experience as a clerk (I’m ignorant to how valuable this is), and a wasting asset (your depreciating Jeep).

    T

    T-Bag

    June 28, 2010 at 09:18

  2. It looks like you’ll be going further in hole each month, but I’m glad you took this job as it gets you on a much better legal track.

    Have you figured out what you pay for food, pet expenses, haircuts, bar dues, birthday gifts for family, going our for the occasional drink with colleagues, and anything else that is a predictable annual expense? Doing so would give you a better understanding of the whole picture, even though you aren’t going to have enough on your one salary to pay everything.

    How are your cats adapting to the new climate?

    govtlawyer

    June 29, 2010 at 07:23

  3. I don’t know about a hole. Clearly I’d be paying my credit cards and auto loan monthly. As well as the IRS. All per the numbers above. And even if slow-going, the direction would still be down. And if I can knock out that closed credit card with one large payment in about a month or so, that would free up $200 each month—and there’s the money for the expenses you mention.

    But otherwise—eh . . . I’ve been eating for 34 years. Maybe I’ll take a year off. It’s overrated sometimes. 😉

    Cats seem to be adjusting well. Other than the occasional 3am visits from Lady’s demon cat, growling outside my door—startling me awake. The boy seems to have lost weight. They are a bit more lethargic than normal. But now they’re back down to one room. I need to get them a scratching post. Otherwise, they seem to be doing well.

    Laid-off Lawyer

    June 29, 2010 at 07:28

  4. You will be going into a hole. The numbers above, which leave you with $59, don’t include car insurance (125/mo) student loans (several hundred/mo), food (remember how much you spent on food the month you broke it down? Several hundred), vet bills, etc.

    Anon

    June 29, 2010 at 09:13

  5. Buying the car was a mistake.

    In California you can cancel the contract to buy the car within a short period. You should see if your jurisdiction has that. Or you should just default and give the car back: you can’t afford it.

    It’s costing you at least $810 a month (per your calculations) to own a car. The real figure is probably closer to $900-$1000 a month after one takes into account registration, plates, upkeep, parking, and any tickets you get. And this is not even covering the depreciation on your asset. You already put a sizable chunk down and you will probably never see that again. This is easily costing you well over 1/3 of your take home pay.

    I’m a lawyer who has commuted by bicycle and public transportation and who still doesn’t own a car 8 years into practice. I live in a large metropolitan area so public transportation is easily accessible but it costs me and my whole family (wife and baby) less than $180 a month for transportation (including renting a car for long trips but excluding airplane travel). There is nothing that requires you to buy a car–especially a gas-guzzling toy. If you were going through bankruptcy, for instance, you would only be able to keep roughly a $3,000 car.

    BK Attorney

    June 29, 2010 at 10:16

  6. from one in-debt lawyer to another – good luck!

    ECB

    June 29, 2010 at 10:29

  7. Thanks!

    Laid-off Lawyer

    June 29, 2010 at 11:16

  8. Listen Burger King attorney—did you just stumble upon this blog and opt to chime in without knowing your ass from the hole in the ground where your head just was?

    You wrote: “There is nothing that requires you to buy a car . . . .” Oh contraire mon frere. In fact, there is. I don’t live in California. I live in the Virgin Islands. There is no public transporation to speak of here so yes, I do need a car. The type of car, and how much to spend on one, is a separate dicussion. But whether I need a car here is moot. The answer is yes.

    And as for your figures: I don’t understand where you get $810 from. I estimated $500 a month for the auto loan and about $160 for gasoline. That’s a total of $660. And, as noted above (and @Anon), I’ll most likely pay car insurance for the entire year up front, so that will NOT be a monthly expense to consider. As for registration, plates, and parking—again, not applicable here. All that is included with the purchase of the new car. There are no parking garages here or anything like that. And I’m not about to “budget” for something so unexpected as a parking ticket. That sort of budget-making is probably why we have runaway congressional budgets. A budget isn’t designed to predict every imaginable expense, but to account for past expenses reasonably certain to continue into the next financial year and any that are foreseeable. Getting a ticket on a Tuesday in December is not something I’m about to “budget” for. That can fall into a miscellaneous expense column.

    As for depreciation—any item purchased, in most cases, will depreciate as soon as the clerk closes the cash register. So that’s a moot point as well. Even if I bought an $8,000 used car, it would still depreciate just like a new car would. And no one said I’ll be selling Woody anyway. It’s just a possibility—and if necessary, it’ll probably be easier to sell a 2009 jeep somewhere in 2011—not necessarily in the Virgin Islands—than it would to sell a 2004 jeep in 2011.

    And as for your bragging about public transporation: I’m not as green as the next guy. I’m greener. I lived off public transportation for the past eight years (four in Washington, D.C., and four in New York). In fact, perhaps even longer since I lived in Poland for two years in the Peace Corps and then studied in Germany for a year thereafter. The last time I used a car on a daily basis was 1999! So don’t come at me with your holier-than-thou lectures about greener options. And if you were to claim that’s not what you intended—by linking “I’m a lawyer who has communted . . . .” with “There’s nothing that requires you to buy a car . . . .” in the same paragraph, you imply that because you do it, so can I.

    My situation is entirely different and I’m not about to bike from my apartment some 200 feet above sea level down to right at sea level and then along windy “country” roads on an island where the grasses obscure the upcoming vehicle around the bend—nevermind some cyclist. Plus there are no sidewalks here to speak of—other than in town proper—walking to work is also not an option.

    Laid-off Lawyer

    June 29, 2010 at 12:38

  9. I did indeed just stumble onto this blog. I thought you were posting to get constructive criticism? You only want people that enable you to post?

    And to the extent it matters I’m not a “Burger King” attorney–but that barb is evidently indicative of your attitude toward the practice of law and life in general: that you are such an important person that you deserve to spend $1,000 a month on transportation no matter the facts. Get over yourself. You’re a youngish law clerk. I may be helping individual people in an area of law that is not glamorous but I am providing people a real benefit and doing so honestly and living within my means. I am not better than you. In fact, I was you over the last 10 years. So I’m not posting to rub it in your face (although I am proud that I have changed my habits). I too almost justified having a car when I got a job at a firm and things were looking up. I’m very glad I was talked out of it but I fell prey to the same desires.

    BK Attorney

    June 29, 2010 at 13:04

  10. Here are my responses on the substance:

    Depreciation: it’s not a moot point. With a more expensive car you have more room to go down. f you bought a $100,000 stock and a $100 stock and both went down 10%, obviously you would lose a lot more money on the higher-priced stock. New cars are notorious for losing value. Here, it’s probably safe to say you will lose at least $8,000 in value on the new jeep. There’s a low chance of an $8,000 car losing all it’s value in a couple of years (although repair costs may be higher).

    Green Cred: I never mentioned this as the reason for taking public transport. For me it was mostly economical. That’s the argument I’m making to you. Of course the environmental benefits are there as well as the health benefits.

    Safety: This is the most valid concern. I can imagine it being too dangerous. So maybe a scooter instead? I don’t buy into the argument that a 200 foot hill is too much to bike over. Nor is it too big for a scooter. Maybe it’s not a local custom–in which case you should you get to be a trendsetter!

    Also, maybe you should have got an apartment closer to your work so you don’t have to have a car. Is that possible?

    How far is it? How far of a walk? If it’s within 3 or 4 miles it’s definitely within walking distance. Even with the hills. Didn’t you mention you want to get in shape?

    I think cutting these costs is going to be a lot more doable than getting another job.

    BK Attorney

    June 29, 2010 at 13:19

  11. Oops. I forgot to include my reply on the monthly budget argument you were making.

    You need to consider the actual cost of something not just the monthly payment you have going forward. I am trying to discover the cost of ownership and then put it in a monthly figure to see if you can afford the cost. It makes no sense to exclude some of the cost of the car simply because you’re prepaying. You need to see what it’s costing you not what the number is on the check you write each month. People often make this mistake when calculating the true cots of ownership of a home.

    And yes, tolls, car washing, car accoutrements (that Tweety doll car freshner you buy to hang on the mirror), and tickets are all part of the cost of ownership. You may not notice the costs because they trickle out but they are costs nevertheless.

    BK Attorney

    June 29, 2010 at 13:31

  12. I do indeed invite, welcome, request, and even sometimes demand feedback, comments, constructive criticism, etc. But I expect that prospective commneters will take a moment to get up to speed on the basics. Extend that courtesy at least. Talk about getting over oneself! Your comment was like someone butting into an ongoing conversation without knowing the topic of conversation.

    Dude—I don’t know what area of law you work in. And my “barb” (good word!) was not indicative of my attitude towards the profession. You dubbed yourself “BK.” The most famous BK we all know is Burger King. (Though you probably meant what? Brooklyn?)

    Laid-off Lawyer

    June 29, 2010 at 13:34

  13. Okay, fair enough. Maybe I’m too prickly and too quick to find insult.

    I have read a lot of your posts and feel like I’m reasonably well-informed. I saw your previous arguments that you needed a car–and I just don’t agree.

    I’m rooting for you–I like that you’re open and honest and all too many lawyers have the same issues you have but there is a lot of emotional baggage around these issues and very few lawyers talk honestly about them. We are like other debtors–and in many ways worse off than because we have these expectations that we need to dress well and drive around in fancy cars.

    BK Attorney

    June 29, 2010 at 13:56

  14. Yeah, why didn’t you look at something in walking/busing distance to work?

    Bouard

    June 29, 2010 at 17:21

  15. So I tracked it today: I live about 15 miles from work. Not really walkable.

    As to why I don’t walk: I’ll just pass on that topic. Come to St. Croix and your eyes will be opened.

    As for getting a place closer to work? Again, read the prior posts. See how little time I had to find a place. And it’s not like there’s an abundance of apartment buildings here. I was shown one condo place that is closer, but those condos were $1,000 a month—no utilities included. So $900 a month, everything included, was an awesome deal.

    Laid-off Lawyer

    June 29, 2010 at 20:08

  16. Well, that’s not neccesarily the case. If you had found a place in walking distance of your job for $1200 a month including utils, you could’ve avoided sacking yourself with the added liability of a car and all the costs that come with it. We understand that you only had two months, but you’ve potentially set your self back tens of thousands of dollars. Once again, spending two minutes breaking down your finances and considering this before acting rashly could’ve saved you headaches later on.

    Bouard

    June 29, 2010 at 22:31

  17. Also, BK stands for bankruptcy. XOXOHTH

    Bouard

    June 29, 2010 at 22:34

  18. And how would I get groceries? And to the airport? And the random night out to dinner? Or when I need to travel for work? The judge told me during the interview that I’d to buy a car; that was a must for life here. He was correct.

    Stop with this line of inquiry. You’re all just beating a dead horse. Read this link and this one. A car is mandatory here. The bus runs every two hours pretty much along one road, and that road isn’t anywhere near me. Running late one day and you’re stuck waiting with the goats and chickens for two more hours.

    Just stop already. I’m not commenting further on this topic. It’s silly. Pick another battle. Y’all don’t know what you’re talking about here.

    Laid-off Lawyer

    June 29, 2010 at 22:48

  19. This just happened to my friend on another board! She went and bought an $18,000 car and it got repossessed and we were all like uh don’t you know they have cars on craigslist for like $3000. And then we were mean for telling her that an $18,000 car, unless its paid for in cash, is ridiculous.

    Heather

    June 30, 2010 at 02:11

  20. I mentioned that I have frequented a USVI relocation message board for years and there are always used cars, for sale by owner, on there.

    It was an option, anyway…

    I realize you need a car on STX. Is it too late to get out of your Jeep deal though? I can still possibly help you find something reliable for less than 1/3 of the price.

    T

    T-Bag

    June 30, 2010 at 09:22

  21. 2003 Jeep Liberty 4×4
    May 15, 2010 07:18PM Registered: 10 months ago
    Posts: 271
    For sale a 2003 Jeep Liberty Sport, 4WD, V6 3.7L, auto, all power, ice cold AC, new tires. 37000 miles. Sand colored. In excellent shape. $9400 or best offer, leaving island–MUST SELL!
    Call (340) 344-9606

    **** From T-Bag: This vehicle is on STT, but see below.

    You can put a car on Norma H (transport), but it only runs once a week. 2 years ago, it was $280 one way, plus you have to go to the Lt. Gov. Office for all the clearance and pay a fee

    T-Bag

    June 30, 2010 at 09:28

  22. I think “bk” means bankruptcy…you should be nice to him, you might need need to use him as a contact someday 😉

    Seriously though, love the blog, it takes a lot of guts to bare your finances. You are really an exciting (for lack of a better word…at work and thinking about multiple things) writer.

    Shannon

    June 30, 2010 at 11:40

  23. Uh, T-Bag- that sounds like a great plan when you ignore the time space continuum and the difficulties in obtaining financing on a vehicle that is 7 years old.

    I think LL should have gotten a unicorn or maybe a dragon. Lemme see if I can find a classified ad for one in the 17th century or something I could send him…

    Sam

    June 30, 2010 at 13:37

  24. Not sure what the time space continuum has to do with it…nor financing since he’s borrowing from Mom anyway.

    Plus, could go with cheaper liability only insurance if it was owned.

    Did I miss something here? I thought the original plan was NOT to finance a vehicle and BUY one?

    T

    T-Bag

    June 30, 2010 at 18:34

  25. Hee… Sassy Sam. LMAO. Sorry I do love good tete-a-tetes—if one can pluralize that word.

    @T-Bag: The only “original” plan was to get a car. Initially I had thought the cheaper the better. But Sam is correct in that you can’t obtain financing—in most instances (and most likely not with my current credit score) for older vehicles. That means then that I’d have to come up with the entire balance upfront to purchase any used vehicle. I doubt ol’ Island Johnny would let me drive his car off if I could only come up with 10% of the asking price. Even to this day, I’ve only put down $4,500 on the Jeep. The ad you noted above would require approximately $9,000. So I would have had to re-rent the car for another two or three weeks—costing about $1,700 more. Add that on to the $9,000 used car purchase.

    Unfortunately, no simple solution here.

    Laid-off Lawyer

    June 30, 2010 at 18:56

  26. Yeah, I know–I mentioned before that your time pressure took a lot of options off of the table if you absolutely needed a car right away and at all times until you could procure a more affordable one.

    You can obtain financing for a used vehicle…I’ve done it several times through my credit union. However, your point about your credit score is well taken and would likely shoot a big fat hole in that option.

    But, it’s all moot since you can’t go back on your Jeep contract. Is that where the space-time continuum comes in? Or maybe Sam is just a Trekkie nerd and loves to toss that out there whether it fits or not?

    T

    T-Bag

    July 1, 2010 at 07:21


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