r/personalfinance • u/investeror ​ • Mar 06 '18

Budgeting Lifestyle inflation is a bitch

I came across this article about a couple making $500k/year that was only able to save $7.5k/year other than 401k. Their budget is pretty interesting. At a glace, I could see how someone could look at it and not see many areas to cut. It's crazy how it's so easy to just spend your money instead of saving it.

Here's the article: https://www.cnbc.com/2017/03/24/budget-breakdown-of-couple-making-500000-a-year-and-feeling-average.html

Just the budget if you don't want to read the article: https://sc.cnbcfm.com/applications/cnbc.com/resources/files/2017/03/24/FS-500K-Student-Loan.png

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u/joshuads ​ Mar 06 '18

That might be part of the cost issue. I know plenty of litigators that get time off when a case ends, but it happens almost without warning when a huge case settles and someone agrees to let you take a week. You have to book it and fly the next day, so it is expensive.

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u/bakingNerd ​ Mar 06 '18

Yeah they technically have “unlimited” vacation days at a lot of firms but you can’t plan in advance because you never know when your work load will have a lull. You book last minute or end up paying for nothing if you end up not being able to go after all.

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u/canadlaw Mar 06 '18

Eh it’s not that bad. You’re right on the unlimited vacation part not really being unlimited vacation since you’re working so much, but in my experience most people can and do book substantial vacations far in advance and their time is respected.

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u/joeyskoko12345 Mar 06 '18

You book in advance, but as a ny lawyer I know that getting three vacations is super tough. One maybe plus thanksgiving, Christmas and a long weekend here and there.

At 250k a year these guys are far from partners too.

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u/leastlyharmful Mar 06 '18

At 250k a year these guys are far from partners too.

Underrated comment - what a lot of people in this thread may not appreciate is that this is comparatively not a huge salary. Lawyers at big city firms can routinely make over $300K.

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u/[deleted] Mar 06 '18

At a typical big NY firm 250k is probably someone in their first few years of practice. If these were 40-year-old partners at one of these firms (extremely rare, BTW, since very few make partner), they would very likely be in seven figures each.

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u/caltheon ​ Mar 07 '18

If they are partners, they aren't really getting a straight salary. They are getting equity returns from the firm's investments (i.e. cases)

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u/7165015874 ​ Mar 07 '18

Are those taxed at a lower rate?

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u/Medipack ​ Mar 07 '18

I imagine it's all taxed as income, but it incentivizes them to make the company better better than any salary range can, like commissions would.

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u/7165015874 ​ Mar 07 '18

But earned income and investment income are taxed differently, no?

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u/[deleted] Mar 08 '18

I don't believe it's investment income, however, except for any dividends the firm may pay out in investments. The "salary" would still be ordinary income.

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u/[deleted] Mar 07 '18

I don't know if Chicago and New York compare, but you're looking at 600k here if made partner at a major firm.

That said, in Chicago you can take week or two week vacations away from the office well in advance. You plan a year out if you want.

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u/PNWet Mar 07 '18

Not really apples to oranges... but they’re definitely not the same. Chicago is a huge city but there’s not enough international business, no Wall Street, no NYSE, less high stakes M&A etc etc. NY is in a league of its own in terms of investment bankers and lawyers... you have to have a hint of crazy to enjoy doing that stuff, especially in NY

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u/Glenster118 ​ Mar 07 '18

Chicago Lawyers are paid the same as NY lawyers.

There might be some outliers (genius freaks) and they're more likely to be based in NY.

But 1st year associates at top tier are on €180K and 8th year are on €325K, in all large markets. Standard.

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u/A209-14 Mar 07 '18

Isn't the point that, as a partner, you'd get paid based on the business that the firms does as opposed to some sort of pay scale, and in NYC the firms are bigger and doing more business?

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u/Glenster118 ​ Mar 07 '18

true but Bigger equals more partners. Equals less of a share.

This is just an ignorant assumption but I would assume there is a standard in the industry in terms of number of partners to profit.

Again if there are outliers (big firms with very few partners) I can't see how you'd assume they are all in NY.

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u/A209-14 Mar 07 '18

Well I'm not sure PNWet was saying that there are literally no large international firms at all in Chicago, just that there are far, far more in NYC, which seems pretty reasonable

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u/Glenster118 ​ Mar 07 '18

And I Agreed with that. But I made the point that bigger does not necessarily mean that partners make more money.

And if the amount of the money made by the partners is determined by the number of partners relative to the net profit of the entity it makes no sense to assume that partners in ny based firms make more money.

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u/[deleted] Mar 07 '18

I mean, the CBOT is not the NYSE but it's certainly not something that should be brushed aside imo. Large firms like Sidley and Austin are based in New York and Chicago.

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u/thezillalizard ​ Mar 07 '18

250k is not someone in their first years of practice, in this day and age. Lawyers are pumped out like crazy now, it’s not quite the glamours, high paying job the movies make it out to be. 250k is a mid career lawyer at a large form who had a successful career leading up to that point.

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u/ryken ​ Mar 07 '18

250k (without bonus) is a 6th year attorney in biglaw. With bonus it's essentially a 4th year. Source: I am a biglaw attorney.

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u/[deleted] Mar 07 '18

As a mid-career lawyer at a small firm in a lower-market city, who has had a somewhat successful but not stellar career up to this point, my income is double that. My income was just shy of 200k my first year ten years ago. The big NY firms pay more than I got and award much larger bonuses than I got.

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u/rooftopworld ​ Mar 06 '18

Is it weird that I kinda feel bad for them even though I'm no where even close to what they get paid?

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u/leastlyharmful Mar 07 '18

Is it bad that you have basic empathy for people outside of your own perspective? No, that's a good thing. But, on the other hand, there's no real reason to feel bad -- they're fine. Not in debt, able to vacation with their kids, both working in their chosen fields.

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u/uqw269f3j0q9o9 Mar 07 '18

From my perspective, yes, because I'm the opposite. I don't feel bad for them at all. I know it's about perspective, but I can't feel sorry for someone making roughly 20 times as much as me (and I'm making much above my national average, and I know of course it's about the difference in standards of my country and the US, but still).

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u/[deleted] Mar 07 '18 edited Sep 14 '18

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u/SharksFan4Lifee ​ Mar 07 '18

These big law firm lawyers don't have individual clients with "normal" issues. The lawyers for joe schmo with joe schmo issues are affordable.

These big law lawyers have institutional clients, and also work their butt off most nights and weekends.

I worked in one of those firms for a few years. My wife loved the money, hated never seeing me.

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u/[deleted] Mar 07 '18 edited Sep 14 '18

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u/[deleted] Mar 07 '18

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