Speaker 1 (00:00):
Welcome to the legal learning podcast. I’m your host Jolene. And with the legal learning center, I help prospective law students save $300,000 on law school. Today’s episode is a special solo show, partly because it is episode 52. So a full year of podcasting, partly because we had a listener submitted question that I really want to answer. And it was very timely too, because this next week financially free aspiring attorneys, the course that actually saves you $300,000 is on sale. So this question is perfectly timed. So what is this question? First? It was submitted by listener, blah, blah, rah. Hopefully I said that correctly and it was how to not go broke. If you’re only making $60,000 as an attorney, I know it doesn’t sound right, but I’m going to give you some examples of reasons. People make so little in the legal industry and it’s not because they went to a bad school or they did poorly in school.
Speaker 1 (01:04):
I mean, that could be part of it, but that’s not necessarily it again, it could be related to nonprofit work. It could be related to a need to do contract work, or they can’t find a job or a temp work or so many different reasons. They need to take a little time off and again, download their stress even different disabilities or literally that’s just how much that field pays. Let me give you some very specific examples of why people make something like $60,000 despite spending hundreds of thousands of dollars on law school. So again, aside from an industry, just not paying that much I have an attorney I was using to help with my children’s education. So this educational alternative, this is in Los Angeles. Okay. So we should be charging a lot more than a lot of other areas of the United States.
Speaker 1 (02:02):
This attorney charges me a hundred dollars an hour. That’s not very much do the math on that. Even if that person is working in billing 40 hours a week, that is not that much. Attorneys who sit in on depots in the Los Angeles area make anywhere from 50 to a hundred dollars an hour. And that $100 an hour is kind of more rarity than the norm. The enormous sort of more like 75 an hour temp work in the LA area, even for large firms and corporations is $75 an hour. So this is not just a one-off thing. These are things that are currently happening in 2021 in Los Angeles. So if they’re happening in Los Angeles, we’ll, Leeming your small town of whatever state it’s going to be less. Okay. So let’s get into how can you actually save money so that if that’s your situation, it’s not that big a deal.
Speaker 1 (03:07):
First, let’s start with the college level. You want to get good grades, right? I mean, that’s what gets you into the good school and a good L sat score, but here’s the problem. Most people use those to get into the best law school possible and they don’t actually use those things to save money. So really consider using your GPA and your L sat score not to get into the best school possible, but to actually save money, to go to a school that will give you a full ride or almost a full ride. That is one way to actually be able to survive on $60,000 a year income. All right. So how do you get the best Elsa possible? My recommendation is don’t be afraid to invest in yourself. Okay? We are not all born knowing how to do well on the LSAT. And if you really want to see a change in your score, usually the best way to do that is to actually hire an expert, to help you, whether that’s a class or a tutor or whatever your learning style is.
Speaker 1 (04:11):
I don’t recommend you invest in multiple courses and jump all over the place, but try to find something that works with your learning style. And if you just invest a couple of hundred dollars, a thousand dollars for each five point jump, you’re going to see probably tens of thousands of dollars in return. All right. So check out the Elsa episodes that we’ve already had on this podcast. If you want to learn more about that, but really investing in yourself is not a bad thing. Okay. So sometimes you know, that penny-wise, pound-foolish phrase applies kind of to the LSAT really think about where are you placing your money. It’s okay to put someone into that L set. I get it. It might be hard to come up with that money, but again, you should see that return on investment and how you use that investment is up to you.
Speaker 1 (05:02):
Because again, you can see hundreds of thousands of dollars in savings. If you actually apply it to going to school for free, versus just going to a better school, a lot of students try to avoid law loans, but what they don’t do is try to avoid undergrad loans. How much you take out in your undergraduate loans impacts how much you should take out in law loans. So if your a hundred thousand dollars in debt from undergrad, you should really be looking to take out like $0 at law school. You’ve already taken out your law loans. Basically. Now, if you’ve only taken out $30,000 in undergrad loans, okay, then you can take out a hundred thousand dollars in law loans. Now, my preference is you don’t do that, but everything needs to be weighed against all the other factors. So make sure you’re looking at the entire picture, not just law school.
Speaker 1 (05:59):
Now I’m going to get into leader, how you weight in how much you should be taking overall. Cause both numbers I just shared with about $150,000. That’s fine, but that doesn’t necessarily apply to everyone. So I’m going to get into some actual facts and figures in a little bit for now. Just take that as a general piece of advice that your undergrad loans need to also match up with your law loans so that your total debt, when you graduate is not astronomical, we don’t want a hundred thousand from undergrad and then 200,000 from law school or something like that. That’s going to make sure that you never practice as a nonprofit attorney. And it’s also going to wipe out a lot of other areas of law that don’t pay that well because you just can’t afford to live like that. All right. One of my top recommendations and I talk about this a lot in the financially free aspiring attorneys course is gap years.
Speaker 1 (06:57):
Why are gap? You’re so important? Why do I talk about them so much? Because they can literally make all the difference in your future career. I know some of you guys just want to get law school over with you just want to go straight through, do your undergrad, do your law school. And that’s great, but there’s no rush law school will be there. And if you actually are determined to practice in an area of law that you want to practice in gap years are really the main way. I see you setting yourself up for success. So you have to weigh what is more important, getting through law school as fast as possible, or actually working in the career field of your choice. It’s up to you. All right. If you just want to take that risk and go straight through fine. But if you are planning to practice in an area of law that does not pay that much, you really should look into gap years more seriously.
Speaker 1 (07:56):
And that applies again, if you’re not just practicing in non-profit, but in areas of law that are known to not pay that well, now, if you don’t know how much your area of law pays, you need to do that research. And I’m not talking about Google because Google does not know, okay, you need to actually reach out to attorneys in the city. You want to practice it in the area of law. You want to practice in and find out how much brand new attorneys in that area of law make. How much can you expect to make and ask several attorneys because they all have different experiences, but once you get that feel for, okay, I’m going to make between 60 and 75,000 as a new attorney, or I’m going to make 50 to 60,000 as a new attorney that will tell you how much debt you need to take out.
Speaker 1 (08:43):
And again, I’ll get into that in a minute, but let me talk first about the gap years. So again, this is based on Google numbers, but the average college graduate makes 50,000 out of college. So your first job, again, it obviously varies. The average law student takes out $150,000 in law loans. So using those numbers just as a frame of reference, if you graduate from undergrad and you make $50,000 a year, could you save half of your paycheck, like $25,000 a year? If you could, in six years, you could pay cash for all of law school. Now that’s not even including if you actually worked two jobs. If you worked a side job on top of your job, or if you actually were able to work overtime or make more than that $50,000, especially after raises after a few years, if you even save more than $50,000 a year, or if you were able to go to a school that costs only $30,000 a year.
Speaker 1 (09:49):
So you’re not taking out $150,000 in Lola, you could go to law school faster, you could pay off the living expenses you could pay for more. You would be more secure. So I’m not saying you have to take off six years. You could take off two years. And in two years, could you pay for a year of law school that would make all the difference in your future? It’s not just about the law loans either. It’s about the interest that they tack on. It’s also about the fact that you have to take out a bar loan just to be able to take the bar exam. Most people don’t talk about that, but after you’ve taken out all these student loans and you’re drowning in debt at the end, how are you going to pay your rent while you study for the bar exam for a few months, and you can’t really work.
Speaker 1 (10:41):
It’s not just the cost of the bar exam. It’s the cost of the bar exam course that you’re going to take and the rent, all those things add up to a lot of money, 10 or more thousand dollars. And so people end up taking out this law loan at the very end of their law school experience that they weren’t planning on taking out. So with those gap years, could you save up money for that? So you don’t have to take out that extra loan. Let’s talk for a moment about when I say, can you save half of a $50,000 paycheck? Is that possible? There’s ways to save that much. There’s ways to save even more. Okay. Can you live at home? That is one way to save almost all of your paycheck. Can you live off a thousand dollars a month and save three quarters of that paycheck?
Speaker 1 (11:31):
Or if you’re only making a little bit, right? If you’re only making $30,000, then can you save half of that paycheck? Living at home, I was making $25,000. This was a million years ago and I lived at home and I saved half of my paychecks. And I literally lived off a thousand dollars a month and I saved the other half to pay for law school. Megan from episode one, she made like 35,000. She was not living at home for the majority of her DAP years and she still saved a thousand dollars a month. So I know you can save a thousand dollars a month. You just got to find that space in the budget there. And if you live at home, it makes it 10 times easier to save even more. And again, keep in mind, it’s not just about a nine to five job.
Speaker 1 (12:20):
It’s about, can you work overtime or can you work a side job again, just for a while so that you can save up as much as possible to avoid as much debt as possible. The reason gap years are so great aside from saving up this money, is it really adds to your resume. Most internships, love students. Who’ve taken a few gap years and actually had some work experience. They understand what office politics are like. They understand what it’s like to be the low man on the totem pole. So they just are better workers. So there are firms that actually look for people who’ve taken gap years. And I read a statistic that said that actually students who go straight through used to be the norm, but now they’re actually becoming the non-traditional student. And what was typically called a non-traditional student, those who took gap years are now actually the majority.
Speaker 1 (13:20):
So don’t be afraid that life’s passing you by or that you’re gonna be behind other people. You’re okay. Lots of people take gap years, even just a few gap years. They live life. They save up money and you know, if you’re burnt out by your senior year of college, you’re going to be super burnt out in your one L year. Taking a few gap years can really reset your brain clock make you excited to study again make you not so worried to give up that one year or three years of your life, you really are just more focused. You’re more dedicated. You’re more excited about it. Honestly, having those scap peers can really just help you in so many ways. It also gives you the opportunity to live. I mean, to actually go out and see concerts travel a little bit again, you’re saving up that money.
Speaker 1 (14:13):
So be a little careful on that, but really just to live life a little bit. There’s nothing wrong with enjoying life. All right? And if you actually find a career path that you love and you end up not going to law school, well, then you have a career path that you love and you have some money saved up. You can buy a nice car, you can buy a house, things that other people maybe can’t afford because they weren’t so driven to save up that money. And again, let’s say 10 years down the road, you change your mind again and you want to go to law school. That’s fine. It’s always there. If you want to hear more about taking gap years and saving up money, help someone listen to episode one of this podcast where Megan, she dropped out after her first year of law school, but she walked away without any debt because she had saved up.
Speaker 1 (15:04):
She had been planning to pay for a year and a half of law school. And so she actually walked away with some money. One last thing I’ll say about gap years is it’s a good opportunity to explore other interests. So let’s just say you have a couple different interests try of working in those other interests rather than trying to work for a law firm. Or let’s say you are interested in, let’s say environmental law, go and try and find an environmental nonprofit to work for again, you may not do anything related to law, but if you have environmental experience, it just makes you so much more attractive to future internships and employers. Even if you do something adjacent, like working in a real estate office, you have a better understanding of real estate and land use, and that is all relevant to environmental law. So anything that’s even close to what your area of interest is without directly trying to work for a law firm, I think is so much better than working in a law firm.
Speaker 1 (16:05):
If you’re interested in nonprofit work and you end up in a IP firm or a personal injury firm, you might think that’s great because it’s a law firm, but really it’s so much better if you actually worked in the area you’re interested in again, even if it has nothing to do with law. Alright, so the next thing to do, to make sure that you can survive off $60,000 income, right? Is one again, make sure you know what the income actually is going to be. Do those informational interviews, find out what people in your city, in your area of law made when they first graduated. If you can find out what they’ll make later in life. That’s great too, but that might be a hard question to ask people. You can always ask them what they hire newbies at or what they made when they were a newbie.
Speaker 1 (16:55):
All right, the way I like to look at student loans is like a house. So home mortgages are typically 30 years. A lot of student loans are 20 years when they get to this size and for a home loan, you shouldn’t be taking out more than three times your income. So if you make $50,000, your home loan should be $150,000. That’s the general rule of thumb. So I apply the same thing to law loans or to all your loans combined. So if you’re going to be making $50,000 again, your total LA loans or student loans should be $150,000. That means undergrad and law school. So if you have $50,000 from undergrad debt, you should only take out another hundred thousand dollars. Now here’s the problem with this. Once you already have a house sized loan, how are you ever going to be able to afford to buy a house?
Speaker 1 (17:54):
It’s going to be really hard. So while you can use this as your rule of thumb, as your maximum really consider that you need it to be a lot less. If you really want to buy a home someday, especially if your spouse is in the same boat, as you taking out all these loans, or maybe they didn’t get this advice. So they’re even worse off. So if you’re taking out $150,000 in student loans, and you’re only making $50,000 and you’re repaying this over 20 years, again, that’s even harder than the 30 year home mortgage. So it’s really a problem. Now I have a calculator that you can use to see how much interest impacts your student loans, because that’s something you need to factor in as well. So go to legal learning center.com forward slash calculator. And you’ll see how oftentimes we take out a lot more interest than we realize.
Speaker 1 (18:52):
In fact, it’s anywhere from 20 to 80% of the loans we took out. So using an average of 50%, right? I that’s the number I like to use. It’s nice and round. And it’s also somewhere in that middle. If you take out a hundred thousand dollars in student loans, you’re probably paying back over 20 years, $150,000 in student loans. Now, what that means is that the average student who takes out $150,000 and law loans is actually paying back over $200,000 in loans. And again, that doesn’t include their undergrad. So when you add that all up, that’s why lawyers are broke. That’s why lawyers can’t afford anything because they’re not getting paid that much. And they’re taking out a lot more than they even realize a lot more than people are advising them. They’re taking out. No one really talks about that interest. That’s another reason those gap years are so important because if you’re avoiding $50,000 in student loans, you’re avoiding $75,000 worth of payback.
Speaker 1 (20:00):
It’s exponential the benefit you’ll get from taking gap years and actually saving up that money. So again, even if you can just save up for one year of law school, you will save tens of thousands of dollars, even a hundred thousand dollars. It’s significant and it’s important and it impacts your future and your ability to do what you want to do when you’re paying so much money to do something you want to do it. You don’t want to be stuck in just some other area of law that you weren’t interested in. Okay? So let’s look at scholarships because that’s another way that you can save money. This is not my favorite way to save money. I don’t feel like it’s the most efficient, to be honest, I feel like you have a better chance of saving more money by just taking a couple of gap years than you do for applying for all these scholarships.
Speaker 1 (20:50):
But every single person’s different, you each have different traits and qualifications. So it’s up to you. And of course you can always do both so scholarships. I had a guest on this show a few weeks ago, that’s Ashley Hill, episode 36. And she talked about ways to kind of get more return on that investment to succeed better at scholarships. Basically you need to create your own personal brand. You need to kind of know what you stand for and what your best traits are. And she can really help you with that. She has a book. If you want to do it yourself, but need a little guidance or she can actually do it for you. So you might want to check out that episode and just check out her in general. I don’t have a lot of personal information on scholarships. I will just say that.
Speaker 1 (21:42):
I feel like they do take a lot of time. And oftentimes I always found, I got the small scholarships, not these big, you know, $50,000 type scholarships, which again, two gap years equals a $75,000 scholarship. Right? All right. So since we’re talking about non-profits, let’s talk about student loan forgiveness. I personally hate this program because I feel like you’re asking me to trust the federal government, that I will take a low paying job after taking out tons of debt. And I will most likely do an income driven repayment plan. So I’m not paying that much, which means it’s kind of ballooning at the tail end and I’m going to pay for 10 years. And then you promise to pay the rest.
Speaker 1 (22:34):
I don’t know. I just don’t trust the federal government like that. Now, as it turns out, my mistrust is well-placed because lots of people have engaged in this program and not seeing that return. They just missed a little check box. Their job didn’t actually qualify. Even though I don’t know, maybe it was a nonprofit or something like that, it just didn’t work out. Now, lots of people have qualified. It has worked. I’m not saying it never works. I’m just saying, if you’re going to do this, I highly highly recommend that you work with a professional to make sure you’re doing everything right. That before you sign up for an income driven repayment plan, that you’re doing everything right, because there are some tax consequences here with the pay off and all that kind of stuff. And you want to make sure you’re prepared for it.
Speaker 1 (23:23):
Because again, if you’re not making that much money and you need every cent, how are you going to pay an enlarged tax bill let’s make a plan. So episode 12, I had Jessica Medina. Who’s an ex big law attorney, turned financial advisor for or financial coach for lawyers. Go check out that episode. She talks a lot about student loan forgiveness. I would recommend you follow her on social media because she does give speeches every once in a while about student loan, forgiveness. That’s really something she’s very familiar with. And again, I wouldn’t just plan on the government taking care of me, make sure you’re doing everything you need to do so that the government does come through for you. And of course, if something were to happen that you already kind of have a backup plan. Now, the last thing I want to tell you about, and this is good for everybody, whether you’re making good money or not is refinancing your student loans.
Speaker 1 (24:23):
So if you have private student loans in particular, this can also apply to federal student loans. But again, I would talk to a financial advisor first, but definitely for private loans, this could be your plus loans. If your parents took out a plus loan for you or your own private loans, you could refinance them at any time as often as you would like. And that is our sponsor Juno. So you’ve probably heard me talk about Juno if you’ve been listening to the podcast. But the reason I talk about them, the reason they’re our sponsors, because they help students save thousands of dollars on their student loans. So if you’ve got student loans, they can refinance you multiple times a year and save you thousands each time. So it’s well worth looking into, if you have private student loans. Also, if you’re taking out private student loans, you should look into Juneau as well for that because they offer usually lower interest rates than anyone else.
Speaker 1 (25:26):
And the reason that they get that rate is because they buy in bulk. So basically if you’re a student from, let’s say Florida, and you’re going into law school and you have a credit score of 700, they put you into a group of other law students who have a credit score of 700 and from Florida, right? So it’s regional, it’s credit base. It’s all of that. And they negotiate in book with the lenders and the lenders give them better rates for giving them more clientele. And so you get lower interest rates than usually what the federal government offers. So it’s much better than most of the private loans out there. In fact, they guarantee it and there’s no origination fees, which is unique and they usually provide cash back. So you’re really going to get the best deal out there. So go to advisor.legal learning center.com forward slash Juneau, as you’ve probably heard me say a million times, but there’s a reason I say it.
Speaker 1 (26:28):
And you can find out if they can give you a good deal on your student loans, which again, if you’re looking for private loans, they can, but if you’re looking to refi again, they can. So keep that in mind for the future after law school. All right. And now finally, let’s talk a moment about financially free aspiring attorneys. I mentioned earlier, you should invest in yourself for that L sat because the return on investment will be tens of thousands of dollars. The same is true for financially free aspiring attorneys. It is going to be on sale next week, and it offers lots of tips and strategies to help you save money, starting in college, going through the application process through law school and even after law school, right? I just mentioned Juno and being able to refi after you graduate, that’s a tip that takes place after you graduate.
Speaker 1 (27:20):
The strategies that I talk about in the course are things like how to manipulate your gap years so that you really save tens, even hundreds of thousands of dollars or how to move things around in college so that you have more time. So that then when you have more time, you can make money with that free time. And then you save money. You don’t have to take out as much as student loans or you have more time to study. So then you get better grades. So you get into a better school, or again, you save money because you’ve got scholarships to schools that you weren’t going to get otherwise. And the list goes on and on. So really I highly recommend you check out our website. It’s legal learning center.com forward slash financially hyphen free. And again, that goes on sale this week. It’s for about 10 days only.
Speaker 1 (28:13):
So check it out. Don’t miss out. It’s a limited time offer. Only if you have any questions, feel free to email me jolene@legallearningcenter.com. That’s J O L E N E. And really I want to get into a top takeaway for today. I don’t usually do that on my own podcasts, but my top takeaway for you is that there are so many ways to save on your legal journey, starting in college, going through law school. And it’s not just the typical you know, try to avoid loans. And I don’t know, try to apply for scholarships and get the best L sat scores. That’s not it there’s so much more you can do to save money. And if you really want to practice in the area of law that you want to practice in, you have to find the ways to save money. You can’t just take out the loans and hope it all works out in the end.
Speaker 1 (29:12):
Cause it won’t. It happens every year. The students go to law school with a particular career field in mind and they don’t do it. They end up taking the first job they can and they kind of get stuck because they need that money. We all need that money to survive. How are you going to make it happen for you? How are you going to work in that nonprofit? That’s what I want for you is to work in a nonprofit. But when you go to nonprofit, let me tell you what you hear, because this is what I have heard in the past. I worked in big law. I saved a lot of money and I bought a car. I bought a wardrobe and then I moved back home with my parents. That’s not, I can afford to live off $50,000. Let’s make a plan. So that from day one, you can afford whatever the salary is in your chosen career. All right. As always, I wish you the best on your legal journey.
