Okay, so you might be thinking: All this inspiration and tips on improving my mindset are great -but how much do I need to save and for how long before I can leave this job?! Well this post is my response. 

We're going to crunch the numbers and look how much you'll make, how much will get taxed, how much you can make investing, how much you'll spend, and when you can safely walk out the door. A lot to get to, I know, so let's get started.

How much you'll make

Okay, so you should understand this part pretty well already if you work in biglaw. You've got your base salary, *new* (2018) summer bonus, and end-of-year bonus, all reflecting the recent bumps. As you should be reminded, we make A TON OF MONEY, so let's not waste it!

Crunch the numbers and here's what you've got gross income assuming no more associate pay raises in the next 5-10 years. Considering we're due for a market correction any day now, that's probably not the worst bet in the world (plus we're lawyers, so we're pretty risk averse anyway):

Well, look at us. Obviously this applies to the juniors given the recent 2016 & 2018 compensation increases. Still, a million bucks gross in four years for someone with zero job experience is pretty damn good. Unfortunately, it turns out we'll be spending quite a bit of that money. How much will basically determine your entire financial future unless you're part of the rare group that loves the biglaw lifestyle and wants to make partner. So that's what we'll turn to next.

How much you'll spend

So chances are your largest (or at least near-largest) expense will be your taxes. I know a lot of people don't count taxes as an automatic expense both because they're mandatory and you can mitigate/optimize them, so they're different for everyone. Additionally, you might be thinking something you may often have to figure out at work - what jurisdiction are we in?! Well consider this a moot court flashback because I'll be using an extremely oversimplified tax burden so that this can apply broadly (while being dead-on specific to no one). 

What I'm going to do is (1) take the total compensation, (2) deduct the max 401k contribution as of now: $18,500, (3) apply a 33% rate to the remainder, and (4) add back the $18,500 401k contribution. I'm going out on a limb, but frankly if you are making market biglaw money and can't afford to max out your 401k, I have no idea what you're doing (AKA START ASAP - IT'S FREE MONEY!) This calculation reflects what's actually happening - you are being taxed on everything other than that $18,500 and it should properly be counted as part of you savings in full.

As for the tax rate, one third is what we're using for our entire tax burden (federal, state, local) as well as our other mandatory deductions from our paychecks (Medicare and such). I KNOW THIS VARIES. I did the math on my own pay stub here in NYC and it was a bit more than 33% total, but I know we're on the high end here on taxes, so this should be a good estimate nationwide. Anyway, what do we have left?

Okay, so Uncle Sam pushes us back a year (4 to 5) in hitting about $1 million. Of course this would involve zero discretionary spending. Which is nonsense. That being said, we have quite a bit of money to spend. Just remember - what we don't spend WE INVEST, and the glory of compounding interest is just a few scrolls down! 

I'm going to save budgeting for many other posts, and I think any attempt at calculating one objectively would be a wasted effort for the purposes of this post. Therefore, I'm going to use myself as an example for the first year. I'm a pretty frugal guy, and I completely subscribed to the "live like you're in college" mentality for my first year. That being said, NYC is expensive and I went out to eat and drink a lot for someone who has been active in the FI community. So what I used was a $45,000 first year budget, which comes in at a $3,750 monthly budget. More than reasonable, but obviously unfeasible if you chose to rent a $3,500 1 bedroom by yourself.

The increases will be very doable, trying-to-resist-golden-hancuffs, but still spending more than before amounts ($10k per year, capping it at $90,000). This might seem high or low depending on your mindset, but I think it keeps you down to earth from buying crazy expensive dumb shit *cough* new car *cough*. But it still leaves room to buy that engagement ring, fund that wedding, start taking those vacations, have those kids, etc. Again, that's all in my plan, maybe it's not in yours, so feel free to re-crunch these numbers using your own more/less frugal budgets. 

What I'm going to do here is (1) take our post-tax money and deduct a rough annual budget, (2) apply a 5% rate of return on investment for the remainder (WHICH YOU SHOULD BE INVESTING), and (3) reflect the compounding interest by applying the 5% to the cumulative savings, rather than each individual year. Now you might be thinking "7% return is more realistic" or some other attack on this number, but remember I'm using this for the entirety of the remainder. 5% is what I think is a realistic average because people will have an emergency fund yielding only 1-2% and they may be diversified in safer, lower return-yielding investments like CDs or bonds. And here's what we got:

When can you quit?

As I'm sure you can guess, this is a highly personal decision. But for argument's sake, let's say you're just in this for the money. What can you do if you keep a budget similar to the one I assumed in my calculations? It turns out basically anything you want if you can hack it in biglaw for at least four years or so. Chances are you can hop to that in-house gig with better hours for less money, or that government gig for even better hours for even less money, or abandon the law completely for that high school teaching gig for even better hours for (you guessed it) even less money.

This also assumes zero savings over this time from a spouse or partner. If you can live of $90,000 (my max budget assumed), and your special someone can contribute $30,000 over time ($750,000 in savings or a job they like or a side-hustle or any combination), you need a mere $1.5 million to call it quits. The savings should be easier for your partner because my math assumes the spending is entirely yours (at least towards the end at $75k-90k). And wouldn't you know it, that's right where you land in your cumulative savings at the end of year eight - just in time to pass on partnership. 

So why did I say four years? Because yes you could do all eight in biglaw, but that's neither likely nor reasonable (nor fun). Instead you could extend your working years (boo!) for better jobs (yay!). You could work an extra 5-10 years, having a 10-15 year career at your dream job in government, in-house, education, business, etc. instead of toughing out those last four in biglaw. It seems like that's not a great trade, but if you're like me where missing Little League games is a deal breaker, I think you might find that trade becomes pretty easy.

I hope this detailed breakdown helps some of you rethink your goals and priorities, and more importantly shows you the path to freedom is clear and simple! Enjoy!