Today is the 65th edition of our guest post series called 10 Questions. It also will be one of the last. Everything must come to an end and 10 Questions will say ‘”Good bye!” near the end of 2016. If you’ve already sent me your answers or told me that you’re going to be doing so, don’t worry; I’m still going to publish you.
Today we hear from The Biglaw Investor. The focus of his blog is a little different than most Personal Finance/Early Retirement blogs – he writes for the high income professional.
He’s a lawyer by day (and night because lawyers work 1000 hours a week) and blogs in his spare time about the surprisingly common money issues that high income professionals experience. Take it away Biglaw!
Tell me about your blog and why it’s great.
I blog at The Biglaw Investor and talk about lawyers and personal finance, including financial independence and other challenges associated with having a high-income. I’ve found that when you’re making a lot of money and living in a high cost-of-living city it’s easy to waste a lot of money.
“Biglaw” is a term used in the legal market to define working for a large law firm (usually over 100+ attorneys) that pay market salary.
What’s market salary?
Here’s some legal industry gossip for you: every Biglaw lawyer gets paid the same amount of money and gets automatically promoted each year. It’s a weird system.
In case you’re curious, the current Biglaw salary scale is as follows:
2nd year – $190,000
3rd year – $210,000
4th year – $235,000
5th year – $260,000
6th year – $280,000
7th year – $300,000
8th year – $315,000
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Tell me how you’re going to change the world with your blog (dream big or don’t dream at all!).
Because not all lawyers work in Biglaw, lawyers start their careers in radically different financial situations. The salary distribution curve sees new graduates clustering in either the $60,000 or the $180,000 salary range. It’s called the legal bimodal salary distribution and of course most people (including law students) are not fully aware.
Lawyer Salary Distribution Curve
Regardless of whether you’re making $60K or $180K (the chart reflects the previous market salary when 1st year associate were paid $160L), most lawyers have a similar amount of debt. Worse, lawyers aren’t given any financial education in law school as law school focuses on training you to “think like a lawyer” – whatever that means.
The Biglaw Investor is a site for all lawyers to start or continue their financial education. We’re a community site that thinks about things like where you should incur capital gains if you’re planning on relocating for a job. It’s the site I wish I would have found when I started working as a junior associate.
What post are you most proud of and why?
I’m most proud of the article about whether you should contribute to your 401(k) or pay down debt. It’s an important article for me to write because early in my career I did not contribute to my 401(k) in an effort to quickly pay down student loan debt. While I don’t regret the decision, I regret framing the question to myself as an “either/or” situation and that’s really the point of the post. Ultimately it’s a false question and with a high income you should be doing both.
Do you enjoy writing?
I love writing. In high school I worked for the local newspaper and came close to pursuing a career in journalism. In fact, you can say that I’ve been blogging for 20 years. As a kid, I published a weekly newsletter that had over 2,000 readers. You can still see remnants on the Internet, like this post from 1996 looking for new subscribers.
1500 Days is about early retirement. Do you have early retirement dreams? At what age do you think you will retire?
Yes, absolutely. I think financial independence is important for everyone. The early 20th-century economist John Maynard Keynes predicted that the future economy would become so productive people would hardly need to work at all. While he’s a widely respected economist, many people think he got this prediction wrong.
I think he got it right.
In his essay written in 1930, he said “The course of affairs will simply be that there will be ever larger and larger classes and groups of people from whom problems of economic necessity have been practically removed.”
When I read that, I can’t help but think he nailed the financial independence and early retirement movement.
What he underestimated is how much of the population would choose to work longer and harder to consume more and more goods. But his statement about a growing class of financially independent people is spot on.
What is the best money management or investment tool you have come across?
You Need a Budget (YNAB) is really fantastic. I know a lot of people dismiss it because they don’t think they need help with budgeting. It’s easy to assume that you have it under control. But think about professional athletes looking for that 1% edge that separates them from an average pro and the hall of fame. YNAB can really put you in the hall of fame.
How do you handle people with different views on money, ie spendy people?
I say no. I’m surprisingly good at it too. I read these books and articles about people having a hard time saying no. I never get it. If I don’t want to do something, I generally just say no and move on. If somebody else wants to do it, by all means go ahead and good for them! I’m not here to judge anyone except myself, like when I lost $10,000.
What is your favorite style of beer – and what is your favorite beer in that style?
I’m a fan of amber beers and now that Shiner Bock is being distributed across the country it’s my default selection. I can’t just name one beer though – I’m also a big fan of Innis & Gunn, a Scottish brewing company. They make a “Rum Aged” beer that is finished in oak casks that were previously infused with rum, giving it wood, caramel and spice flavors. Highly recommended!
What is the best thing you’ve read lately.
I recently finished Bill Walsh: The Score Takes Care of Itself. For those that aren’t familiar, Bill Walsh coached the San Francisco 49ers during the ‘80s. You don’t need to be interested in football to enjoy this book.
The premise is that in order to win you should aim for what he calls a Standard of Procedure. If you focus on the process that produces the results rather than the results themselves, you’ll end up with the results you want each time.
That concept is absolutely critical to my philosophy of life. Focus on the perfecting the process and, as he says, the score will take care of itself.
What do you do for exercise?
I exercise four days a week in the mornings before work. Over time, I’ve accumulated a small gym that we keep in our NYC apartment including a WaterRower, stationary bike, dumbbell set and workout bench. The routine is three sets of weights (rotating through different muscle groups depending on the days), followed by 10 mins of high intensity on the bike and then high intensity rowing. My main problem is keeping up with the routine in the winter. Winter kills me.
In your path to financial independence, what was your strangest side hustle?
In college I ran a side hustle selling CDs. You could sell a box of 100 CDs on eBay for $30 or $40. They were mostly overstock items but I think people got a thrill out of getting a box of music because you would never know what you’d find (this was right before Napster and digital music hit the scene). After doing this successfully for awhile, I decided to buy 10,000 CDs in bulk from a wholesale liquidator. I’ll never forget the truck driver’s face when he pulled up to my dorm. We had no way of unloading the 2,000 pounds of CDs.
“Son, do you have a forklift?”
“Uhh. No.”
I ended up recruiting a bunch of friends and we broke apart the pallets on the truck and took the CDs out by hand. I made enough money on that deal to buy a laptop.
Keep up with The Biglaw Investor on Twitter, over at biglawinvestor.com or subscribe to his email list to get involved in a conversation with him.
Thanks Mr. 1500! It was a lot of fun doing the interview and answering your questions. It’s been even more fun and inspiring reading your blog over the past year. We’re always getting better every single day!
Biglaw Investor recently posted…Introduction to Tax Loss Harvesting
Biglaw – I love reading about how people hustled in their childhood. Selling boxes of CDs is genius I wish I had thought about that. I was not smart enough to think of that and mainly did manual labor like shoveling snow, detailing cars and cutting grass. But like I said I love hearing how people hustled to get ahead in their childhood.
Thanks for sharing 🙂
Mustard Seed Money recently posted…Work for Two Million Dollars or Retire Early?
Thanks MSM! I like hearing about side hustles in childhood as well. I did all the manual labor stuff too, but thought it was more fun to figure out how to arbitrage opportunities online. Plus, growing up in the South, it was hot outside. If only I had opened a Roth IRA when I was younger though!
Biglaw Investor recently posted…Introduction to Tax Loss Harvesting
Great Interview Mr. 1500 & Biglaw Investor. The disparity in law incomes was very interesting.
Wow, really interesting to compare the pay scale and graph!
Trying to tie the 2 in my mind, does this suggest a fairly short tenure in Biglaw?
You’re right that it’s a very short tenure in Biglaw. Many associates leave at the 3 year mark. Even less are around as 5-7th years. But that’s not the reason for the graph. The fact is that just under 20% of law school grads that land in a job requiring a JD end up in Biglaw and the vast majority end up elsewhere, particularly in the government jobs that pay at the lower end of the spectrum. It’s crazy market forces that really show you how the “average lawyer’s salary” is really a fake number earned by less than 4% of the population.
Congrats on being the last interview BI!
Really interesting to read about the pay scale, good if you can get it 🙂
Tristan
Dividends Down Under recently posted…2016 Goals: 3rd Quarter Update
Not sure why, we but have friends in pretty much all sectors, expect law. This therefore provided some really interesting insights into the world of law (for the US at least).
Good luck BI.