Affordability rules (lenders, buyers, school)

[Parsec]

Originally Posted by Shrewsburried

I'm starting to think Timberline is utilizing his/her advanced degree to manage roadies, which would explain the wages and extensive knowledge of the local music. What is this field!

I don't know, but I'm starting to think he just wanted a job where he could sit around and surf the web all day. He's probably making more per hour of actual work than he did as a C-level executive assistant. Those admins work crazy long hours. How else do you reach 20,000 posts in 2.5 years? And I thought I was addicted...

[chicagoliz]

Originally Posted by Parsec

They're working on a contract basis, so no benefits right? Most professional self-employed consultants get paid in the $75-150/hr range. That jumps to $200+/hr if you have special designations, e.g. CPA, Esq.

In the legal profession, there are plenty of J.D.'s (Esq.'s) doing temporary/contract work that pays less than $35 an hour, often significantly less. I've seen some jobs that pay as low as $19 an hour.

And making in the mid-twenties per hour is at least a livable enough income, even if it is not a lot. Often people who do that work fresh out of law school leave for a job that pays LESS than that, but is a salaried position, and something that will look better on a resume.

An advanced degree doesn't guarantee the big bucks.

[MrLinderman]

Originally Posted by Parsec

They're working on a contract basis, so no benefits right? Most professional self-employed consultants get paid in the $75-150/hr range. That jumps to $200+/hr if you have special designations, e.g. CPA, Esq.

Hell, even my babysitter gets paid $25/hr and cleaning lady around $20/hr which is more than the people that Timberline hires.

The thing is that these are billable rates. Very few are billing those rates for 40 hours a week. Add in office space, overhead, professional enrichment (for the advanced degree folk), self-employment taxes, and higher insurance rates, and that money disappears very quickly.

I interned for a local attorney who billed 250/hour, had a solid amount of work, and netted probably 45k a year after all was said and done.

[MrLinderman]

Originally Posted by Parsec

I don't know, but I'm starting to think he just wanted a job where he could sit around and surf the web all day. He's probably making more per hour of actual work than he did as a C-level executive assistant. Those admins work crazy long hours. How else do you reach 20,000 posts in 2.5 years? And I thought I was addicted...

Are you sure we're not talking about me?

Ah, the benefits of dual monitors and ADHD.

[MrLinderman]

Originally Posted by chicagoliz

In the legal profession, there are plenty of J.D.'s (Esq.'s) doing temporary/contract work that pays less than $35 an hour, often significantly less. I've seen some jobs that pay as low as $19 an hour.

And making in the mid-twenties per hour is at least a livable enough income, even if it is not a lot. Often people who do that work fresh out of law school leave for a job that pays LESS than that, but is a salaried position, and something that will look better on a resume.

An advanced degree doesn't guarantee the big bucks.

In the legal profession, there are a lot of JDs doing nothing as well. The market is better, but it still hasn't come close to digging itself out of the mess it was in between 08-14.

[chicagoliz]

Originally Posted by MrLinderman

In the legal profession, there are a lot of JDs doing nothing as well. The market is better, but it still hasn't come close to digging itself out of the mess it was in between 08-14.

It's been a mess since 1992 or so. Law schools kept pumping out new graduates as jobs were being cut. A couple of decades of continually putting JD's into the employment pool has had some bad effects. The legal profession will never dig itself out.

[Parsec]

Originally Posted by chicagoliz

In the legal profession, there are plenty of J.D.'s (Esq.'s) doing temporary/contract work that pays less than $35 an hour, often significantly less. I've seen some jobs that pay as low as $19 an hour.

And making in the mid-twenties per hour is at least a livable enough income, even if it is not a lot. Often people who do that work fresh out of law school leave for a job that pays LESS than that, but is a salaried position, and something that will look better on a resume.

An advanced degree doesn't guarantee the big bucks.

Again, surprising. I spend a lot of time reviewing legal bills with our general counsel and it seems like every lawyer we work with is billing $500-1000/hr

Originally Posted by MrLinderman

Are you sure we're not talking about me?

Ah, the benefits of dual monitors and ADHD.

Haha I could've been talking about myself although my doctor said my ADHD has improved enough to stop taking medication.

[chicagoliz]

Originally Posted by Parsec

Again, surprising. I spend a lot of time reviewing legal bills with our general counsel and it seems like every lawyer we work with is billing $500-1000/hr

There are definitely some firms that do charge that but many lawyers do not. But in any event, the firm may bill that but that doesn't mean the lawyer himself sees that money. Often in big cases with lots of discovery, firms might bill out doc review at $100 or more an hour, but they only pay the temp lawyers $25.

[Partial Observer]

At one firm, my time as a first-year associate was billed at $250-300/hour. My compensation was actually around $24/hour, with poor health benefits and no retirement plan. And I was lucky to be making that, because there were hundreds of recent grads who would have taken less in a heartbeat just to keep their resumes current.

As a law clerk in 2008, I was making under $50K. In 2009, there was a hiring freeze. By 2010, the court was taking on law clerks who were subsidized by their own law schools. The schools provided a $20-25K/year stipend, and in turn they were able to report inflated "percentage of students employed at graduation" stats. Some of the people who took those deals were at the top of their graduating classes.

The point of this aside is just to illustrate that an advanced degree isn't necessarily a ticket to a comfortable lifestyle, and I think many people trying to establish "affordability rules" are operating from a baseline assumption that educated professionals always get good jobs, always marry people in the same financial stratum, and never have student loan debt.

My house cost about 2x my annual household income, and I am the very definition of housepoor (student loan debt, no savings, cheap cars, no vacations, no dining out). I would have gone lower, but I literally couldn't go any lower without extending my commute (which is already 1.5 hours each way) or living in a high-crime area.

On the other hand, many people I graduated with are doing very well financially and buying homes between 3-8x their annual salaries (the people I still keep in touch with have homes ranging from $600K to $2 million). But they all have something in common. In every single case, they either (1) have no student loan debt because their parents paid their way through law school, or (2) have wealthy parents who not only paid for college, but also gave them a house downpayment. The second scenario is surprisingly common among my peers.

Obviously, the affordability rules for self-made people are going to be different from the rules for silver-spooners or people who didn't have to pay their own way through school. It's possible to spend only 15% of your gross income on PITI (that's me), and literally have no money left to enjoy other things. On the other end of the spectrum, you have people like my friends, who spend roughly 30% on their home, but still eat out almost every night and travel for four weeks every year to places like Argentina, China, Italy, and New Zealand.

[wolfgang239]

I can't imagine going to school for 4 years, having a pile of debt and making such a small amount of money. As Partial stated, it seems to be one of the biggest barriers to people getting on their feet after school unless they have wealthy parents helping them out. In retrospect, I got lucky and went to a 2 year school because I couldn't get in to anything else. I was able to pay for it without loans because it was so affordable. Now I'm in the trades and am surrounded by people making $100k+ per year with a HS diploma or a at most a 2 year degree. The engineers with 4 year degrees barely make half of that starting out.