About The Debt

This blog is a journey, towards freedom.  As of the first day this page goes live, I will have racked up $267,825.89.  About $20,000 of that is left over undergraduate debt, but the other $250,000 was taken on during law school.  This blog, while occasionally regretful, will not primarily be about the high cost of school, or the hardships facing new lawyers.  Everyone, including me, is well aware of where the market is right now.  I am well aware I have made a big mistake in financing my entire legal education.  What this will be, I hope, is a documentation of how I finally make it out of the hole I dug for myself.

After graduation, it took me (like many young attorneys) about a year to find a full-time job.  During law school, I was convinced that I would be making enough to pay off the loans in a reasonable amount of time.  Never having made more than $30,000, the grand sum of $50,000 or $60,000 seemed like it would be more than enough.  Needless to say, my math was off, and I graduated feeling like I would never be out of debt.  After that, we always just paid the minimum required by our income-based repayment plan.

After more than I year of looking, I landed a full-time real attorney position.  Once I got hired, I began looking into financial blogs, to make sure my spouse and I were set for retirement.  The more I read, the more I became convinced that paying off the debt was the best thing I could do for our financial future, and the more each of us made, the more I realized that it was possible to pay the debt off in 10 years or less.  However, I had trouble connecting with a lot of the stories people were telling each other on the financial blogs.  Frankly, at this point, dealing with $50,000 in student debt would be a relief, and would only be a roughly two or three year commitment.  No one seems to want to deal with the really hard numbers, left over from really bad financial decisions.

Here are the hard facts arrayed against me at the moment:

1. Between my loans, my spouse’s loans, and a car payment (which will get paid off in June, 2016) we are in debt totaling over $341,000.
2. We live in a major metropolitan area on the West Coast, meaning the cost of living is quite high.  We have mitigated by living with roommates, in a cheaper part of town.  We will be moving again once our lease is up.
3. Because of zoning laws, finding housing close enough to work to be able to sell one of the cars is difficult.  We are looking into it for once our lease is up, but will likely have to settle for something further away than we would like.
4. I make $50,000 per year, and my spouse makes $68,000 (both numbers pre-tax/benefits).  Thank goodness this is such a hefty amount.
5. Currently, about 44% of our post-tax income goes to debt repayment, and another 14% goes to savings, through benefits at my spouse’s work.

Hopefully, at a once a week posting rate, we should begin to see some reduction in the debt load, and an eventual path to freedom.

As background, I wanted to really dig in to the psychology of how I, a reasonably intelligent, educated individual, managed to rack up over a quarter of a million dollars in debt.  You would think it would take a long time, but the time line is actually very short – I only had about $20,000 in debt before I started law school, a sum that I was paying down, and could have paid down in only a few months at my current levels of repayment.  And then, suddenly, I was trapped.

How it all started

The big introspection over the last year has been how I got myself into this situation.  I have always aspired to be “good with money,” which to me meant working hard, saving a bit, and investing wisely.  I started working at the age of 14, and other than a brief month of unemployment, haven’t stopped except during my three years of law school.  To me, that meant I was being responsible.

I have always wanted to be an attorney.  Not a trial attorney like on TV, they were too glitzy and glamorous.  I wanted something more human scale, that would provide assistance to others, and help move towards a more fair and peaceful world.  So I knew, even before attending college, that I would be going on to law school.  However, I made some missteps in college, at least when it came to being able to get scholarships during law school.

First, due to some health issues in high school, I was unable to join the military, who I hoped would pay for my college through a ROTC program, and that I could eventually leverage into a law degree and possibly some time in JAG for training on government dollars.

Then, when that didn’t pan out, I decided that if I just worked myself hard enough, between classes and jobs, I could make college worth the money spent.  Unfortunately, it turns out that I am just not smart enough to be able to pull it off.  I was working 30-40 hours a week, and attending classes full time.  I did not have the option of quitting my job, because it’s what allowed me to go to school, and quitting school seemed like a dumb idea: I would never be able to get ahead if I did not complete my degree, and I would be on the hook for part of a degree I didn’t even have.  Between the jobs, depression, anxiety, and some other health issues, I graduated with a 2.9 GPA.  The career center adviser told me flat out that I would not get into law school, and I should really consider another line of work.

In the meantime though, other students could PAY TO WORK.  Not get paid to work, but pay out of their own pockets (or their parents’) for the privilege of fetching copies and filing at a firm.  Other students could go to the library and digest the information and build on it while I went and cleaned bathrooms.  Other students could drive to the store, I walked or rode a bike (a hand-me-down from the 80s that my dad fixed up).  It felt like I was trying so hard to be responsible, but the deck was stacked against me.  I couldn’t take the time for my studies that my peers could, and that was reflected in my grades.  My grades being so low affected my ability to attract scholarships, so I had to continue to work, which affected my grades and my ability to afford to take on unpaid work, which impacted my ability to get better-paying jobs and network with people who might be able to help me find those better-paying jobs.

I spent the next four years after graduation working, building up my savings, and studying for the LSAT, which it turns out, I scored really well on.  Between my work resume, and great scores on the LSAT, I had a good enough application to get into several law schools, but with my low college grades, not good enough to get scholarships.  This is where the loans came in.

When I was applying to law school, and considering how to pay for it, I knew that my savings were not going to be enough to cover it.  I also knew that many places will ONLY hire unpaid interns, and that I needed that experience and networking to get jobs.  I also had already done the working and going to school thing, and knew that I was just not very good at it.  I thought, to give myself the best shot possible at actually making something of myself in law school, I should take the loans and not work during school time.

This idea was bolstered by the common refrain that school loans are always good debt.  I’m not sure that anyone giving that advice ever stopped to consider if there is a maximum amount at which that good debt sours.  I certainly never sat down and figured out what my income was likely to be (big mistake #1), what the ratio of debt to income would be (big mistake #2), or what my monthly payments to get paid off in 10 years would be (big mistake #3).  Like many young law school students, I assumed that whatever I made in the future would be more than enough to pay off whatever loans I took out.

The short version of the story is, I didn’t do my financial homework.  I allowed my past experience to color my ability to make choices for the future.  I could have worked while going to school part-time (lots of people do for law school).  I could have lived even more simply, and not taken out as much in “living expenses” and thus decreased my loan debt.  But I didn’t even think about it.  I was too absorbed in the short-term fear that I would not do well in law school if I had to work that I did not even consider the long-term future.

I did end up doing better in law school, much better.  I joined an honor society, was in the top 20% of the class for my second year, and missed the cutoff for the top third by graduation by .01 in my GPA.  I received honors for pro-bono work, and almost all of my internships were paid, so I even earned money while learning.

However, I discovered other things as well.  I decided I did not want to do “Big Law” because I was far too invested in having a family, but by the time I figured that out, I was already in debt over $100,000.  I also discovered that even if I wanted to do Big Law, I was neither smart enough nor had the correct psychology for it.  I am too anxious, too in need of validation.  I have panic attacks at work, and need to be able to disconnect on the weekend to gather strength for the week ahead.  I may not have survived in a large law environment.

I am now in an office I love, doing work I love, but at small firm wages, with Big Law debt.  Because I was impatient, and involved only in the short-term.  That is how I got here.  Hopefully, having a better eye on the future will let me get out of it.