(financial) freedom ain't free

I'm still looking for a job.  While I have a promising lead or two, I haven't done any actual interviewing yet.  This has resulted in several sleepless nights, where I have nightmares that we are going to be evicted from our house because we can't pay for it, and that it will be all my fault.  Also, in the dreams, I default on my student loans. 

No one thinks that law school is cheap.  That is because it is decidedly not.  According to some articles, attending a top 10 law school (like Berkeley, where I went -- although it's a public school, it's still pricey) costs about $43,000 a year, just in tuition.  Plus your undergraduate education.  Plus the expenses of actually living for the three years you are in school.  This is usually financed by taking out massive student loans, with the expectation that you will either make big bucks to pay them off, or at least qualify for LRAP. 

So, since this is not a dinner party with in-laws, I will tell you my numbers, so you non-lawyer types can get a sense of what this means in real terms.  I graduated from undergrad with no debt.  I graduated from law school with about $150,000 in student loan debt.  That is the size of a decent-sized mortgage.  Fortunately, like a mortgage, they give me 30 years to pay it off.  Unfortunately, and unlike a mortgage, my interest rate is locked in to pre-crash highs, and I can't refinance it to bring the rate down.  So the interest rate on my educational debt is higher than that of our mortgage, our car loan, and one of my credit cards. 

 

 (an example of a house I could buy with the same amount of money I paid to go to law school.)

making plans

Sometimes planning is easy and fun.  Kathy and I both need to go to our "yearly" appointment with the woman-doctor (I put yearly in quotes because it has definitely been more than a year since either of us has gone) but we don't know where to go out in Westchester.  In our researching, we tried to pick a place that seems like it might also be good for the baby-having portion of our lives, even though that is in the future.  (Yes, more babies.  For a total of five children.)  That is the fun kind of planning.  Hooray, more babies someday!

Last night, though, Kathy and I started writing down what we had actually spent on the budget.  We are both over our "discretionary" amount by a percentage which is shocking and embarrassing to admit.  So I am not going to.  But suffice it to say, it was a lot.  In a moment of frustration, Kathy was all "WHY DO WE HAVE TO TRY TO SAVE SO MUCH MONEY?  I DON'T WANT TO HAVE A MISERABLE LIFE," which is how she feels if someone tries to take away her morning-commute coffee.  Because I also don't want to have a miserable life, I also do not want anyone (or any budget) to take away Kathy's morning-commute coffee.  Or my own, for that matter.

(via)

the budget

Last week, Kathy and I went to a local sportsbar, sat down with our bank statements and a sheet of paper, and hammered out our budget.  Yes, I had to bribe her with beer and football to get her to do it, but it was definitely time well spent.  We came up with a live-able budget where we can set aside a decent amount of savings each month, as long as I don't freak out and quit my job on the spot.  It will give us flexibility later in the year if I do decide to freak out and quit my job on the spot.

Then, we taped our budget to the inside of our closet door, and starting on the 15th, we're tracking expenses.  Earlier this week, I said to Kathy, "You know, in the kitchen at work they cut the sponges in half.  I mean, really, you never need the surface area of the whole sponge, and then you only have to buy them half as often."  So we cut our sponges.  We have also started washing out our ziplock bags.  I am constantly on the lookout for other tricky little ways to cut costs.

Now, considering the size of our monthly grocery budget, saving $2.39 on sponges every other month is not likely to make much of an impact.  Even adding in the washed-out ziplock bags and our other money-saving ideas is not likely to make much difference.  But lately, we've kind of been feeling like our entire life is out of control.  And so, reclaiming some control by cutting our sponges in half feels really good.

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love shack

(what I would be giving up)

For the most part, when I think about changing careers, I have talked about things like regret if I make the wrong choice, concern about dissatisfaction even if I change, ensuring that my new career lines up with my values, and the stress caused by a lack of work-life balance.  All of these intangible things are important.  But there is one big, fat, tangible pink elephant in the room.  Money. 

The salaries of junior associates at big New York law firms is public information.  If you're a halfway decent googler, you can find out roughly what I make each year.  I've narrowed my alternative career path options down to a select few, and if you just look in terms of raw numbers, it represents about a 73% pay cut.  SEVENTY-THREE PERCENT.  That means that if I move to the career I'm contemplating, I will make about 27% of what I am making now.  To be honest, even when I realized that, I thought, meh.  So what?  I've lived on less, rather happily.  I would have time to do the things I want to do.  You can't put a price on happiness.  Etc.  I convinced myself that, despite my enormous load of law school debt, I was not, in fact, wearing the golden handcuffs you hear so much about in law school.

Today, I was faced for the first time with the hard truth that if I wanted to quit my job on the timeline I am contemplating, and put into action some of the plans that Kathy and I have been making, I would have to give something up.  Something big, that I enjoy a lot, but which I can only afford on my lawyer salary.  Worse yet, it's not just me that has to give it up.  It's the whole family, Kathy and the kids too.  I have to ask the people that I love to make a sacrifice of something that they really like, so that I can have the potential (not the guarantee, just the potential) to be happier. 

This thing is the vacation house that we rent on Fire Island each summer.  I use the term "house" loosely.  It's actually a converted garage.  I affectionately call it a shack.  But it's been our shack for the last two summers, and we all love it.  And if I quit my job, we really can't afford it anymore.

Last week I alluded to a book by Joe Dominguez and V. Robin called Your Money or Your Life.  In this book, the very smart authors point out that you don't actually make what you think you do at your job.  Actually, you have to deduct a bunch of expenses from your salary, which represent things that you wouldn't need to spend money on if it wasn't for your job.  Then, you have to add together the hours you actually work, plus the hours that you spend doing work-related things. Like commuting.  Or checking your blackberry.  As we near the end of the year, and I looked at my billable hours, I am reminded of all the nonbillable stuff that I do.  So I decided to do a little experiment.