Good plan for the next ten years?

stacy
Sun, 16 Nov 2008 19:06:43 +0000

I ran the numbers on your plan, using current rates. If you go to a top law/business school, you will pay $160,000 for tuition and (let’s estimate–it could be more or less based on your standard of living and where you live) $80,000 for living expenses. If you get a high-paying job for two of those summers, you could (optimistically) pay off $50,000 of the loans, so your total debt load, assuming nothing from undergrad, is $190,000.

If you defer your loans for 5 years for a PhD, they continue to accrue interest. Let’s assume 6%, compounding annually (I actually don’t know how often it compounds–I know it happens upon graduation from law school). So now you owe about $255,000. On the standard repayment plan (10 years), that’s $2831 a month. You could do it in 20 years, thus lowering the monthly payment to about $1800, but you’ll be paying it off until your mid-50s and you’ll pay an extra NINETY-TWO THOUSAND DOLLARS in interest. So let’s go with 10 years.

So you join a big fancy law firm (which won’t give you lots of time for film-making, and who may not be interested in you because you’re older than your peers and don’t have experience they see as valuable, and are concerned you won’t stay there long–I’ve experienced all these concerns as a dual-degree law student). It pays $160,000 a year. After taxes, that’s about $9,000 a month. After your loans, you have $6200 a month to play with. You live in a big city (because that’s where the high-paying firms are, and when you’re working 80-hour weeks you don’t want a long commute). Since you’ll be married and want to start a family, let’s assume you have a 2-bedroom apartment and are the sole breadwinner (because the loss of your spouse’s salary would be offset by no daycare). That’ll run you about $2500-$3000 a month in rent (you’re not buying…that would be even more, and who knows if you’d even get a mortgage these days?). Now you have about $3500 to play with. Not bad, but expenses add up fast: food, clothes, baby toys, diapers, medical/renters/life insurance, transportation, equipment for your filmmaking, vacation (seriously, your spouse is going to divorce you unless you take a break from work and help with the kids sometimes), etc. Definitely no private school, and probably no savings for retirement or your kids’ college. And if your spouse is also paying off loans, the numbers aren’t going to work.

So is it doable? Yes. Would it be fun? Probably not. You’re going to be have to be a big-firm lawyer to pay the debt (a hard job to get, and hard to balance with a family and hobbies, and a job that prizes conformity–not a lot of “hippies” at the big firms). With such high loan repayments, it would be nearly impossible to step away from steady employment and start a production company–especially since that wouldn’t qualify you for most loan repayment assistance programs.

But maybe you have a rich uncle or something who’s bankrolling you, or something, and all these numbers don’t mean much at all.