Jeremy's Weblog

I recently graduated from Harvard Law School. This is my weblog. It tries to be funny. E-mail me if you like it. For an index of what's lurking in the archives, sorted by category, click here.

Monday, August 16, 2004

On Saturday I wrote: "One associate said at lunch one day that she couldn't imagine living on less than $125,000/year in New York. 'It's impossible.' Well, no. It's not. It's impossible if you live in an apartment that costs $5,000 a month, and you really like diamonds."

One NY associate e-mails me to take issue:

I have to say I understand what she means. It's easy to LIVE on $125,000 a year--no doubt about that, you can live quite well--but money isn't just for living in the present, it's also about saving for the future.

Right now, after taxes, medical, dental, long-term disability, 401k (I contribute the maximum), TransitCheks, and so on, my take-home pay is just under half of my "salary." So we're down to $62,500 (to be generous). I pay $1500 a month in rent--you'd be hard pressed to pay less than that in Manhattan--and about $200 in utilities (cable, phone, electric), so subtract $20,400 and now we're left with $42,100. I go through about $100 in cash a week on lunch, cabs, etc., and my credit card bill (groceries, restaurants, clothing, shoes, occasional plane tickets/hotels, gifts for people, drugstores, cell phone bill, etc.) fluctuates but averages $1,000 a month. So subtract another $17,200 and we're left with a theoretical $24,900 in my savings account at the end of the year....

That sounds ok on paper, but now figure that there's probably no apartment I'd want to buy in Manhattan that costs less than $500,000 (again, keeping with NY standards, since the rest of the country is much, much cheaper), and most places require at least a 20% down payment (yes, I know not everyone dreams of buying a home, but I do, and I think many other people do too)... [so it takes] about 4 years until home ownership. Not terrible, but just imagine how long it would take to buy a place with a lower salary. I think THAT is what the associate meant, and speaking for myself, it's a big reason why I'd hesitate to leave my job, even if I didn't like it.

My reply: I'll admit that it's hard to live comfortably in Manhattan and save $25,000 a year for a down payment on a home if you're making less than $125,000 a year. :) Seriously, no, it's totally fair to make the argument that it's worth dealing with a job that someone may or may not love in order to have the comfort of the salary -- letting them live comfortably in Manhattan and save for a down payment. That's a totally reasonable argument, and I don't think that's a bad reason at all to work at a firm for a few years.

My point was only that it's pretty ridiculous to say that someone *can't* live on less than $125,000 a year. Because someone *can* decide that the job isn't worth it, and decide not to save toward a down payment, and decide to live in Queens or Brooklyn and pay $800/month in rent, and decide to spend less on lunch, and not fund a 401K... I'm not saying these are right decisions or wrong decisions, just that someone *could* make these decisions, and live on a lot less than $125,000 a year. To not even see them as decisions that someone can make, and to see herself as trapped in her job because she has no other choices, that was the point I meant to make. My e-mail buddy is right that $125K doesn't get you as far as you might imagine it would at first glance.

That's where my response stopped, but another friend who I shared part of the e-mail exchange with had a reaction that takes it one step further in the analysis -- if you concede that $125K doesn't let you live extravagantly in Manhattan -- and I guess it really doesn't -- then, really, what is the point of having the job if you don't like it? At least if it did let you live extravagantly, there'd be an argument... but if it just lets you live a merely comfortable life, then is that so much better than making the sacrifices to live on even less but have a job you love more? At least then you get the job satisfaction part of the puzzle, if under neither circumstance you get the 'live in luxury' part of the puzzle. Interesting insight there.

But I just wanted to share the follow-up -- in any case, it's more nuanced than my original post treated it, I think. $125,000 isn't necessarily a life of luxury living in Manhattan... and so if you value living in Manhattan and not having to eat ramen (although who doesn't like ramen?!), then it may make the whole thing worth it just on those grounds.