Thursday, October 18, 2018

Money Tour: The Clerkship Year

via. I did not clerk in this courthouse.

A recommendation for people who enjoy the Refinery29 Money Diaries concept: Glamour Magazine's Youtube channel puts out some very interesting money-related content. Their first video, from April, about "How One Woman Spends her $95,000 Salary", made a bit of a splash and may have gone a little viral, but they seem to have flown more under the radar since then. As for how the "Money Tours" (and the similar "Honest Accounts") differ from Money Diaries? It's an (anonymized) video interview. The format is somewhat similar, starting with monthly numbers, including paychecks and recurring bills, but generally also adding more information about current savings. Their format is a bit more flexible. Instead of focusing on one week only, many people go through a set of (redacted) credit card statements for a month and explain the bigger or recurring charges. They sometimes also discuss a random-ish sample of some of the person's larger purchases from the past, things like furniture or sports equipment. I've been enjoying these videos a lot!

Separately, I've long wanted to go back and revisit how I approached spending during my clerkship year. As I've often mentioned, clerking requires a significant pay cut, at least if one was otherwise going to be working in biglaw. Measuring the opportunity cost of taking a clerkship would likely result in a shockingly large number, between lost income for that year, extra interest accrued on student loans due to being unable to refinance, and possibly a lost year-end bonus as well, due to the timing of leaving and returning to one's firm. I haven't yet calculated that number for myself, but may do so in a future post.

Yet, I'd go back and clerk all over again again. Heck, I'm even sometimes tempted to do a second one, but financial realities, and how much less practical and useful it likely is as a career move for an attorney further along in their career, mean that it will probably never happen. Clerking a first time was an incredible privilege that I'm grateful for, and it likely was necessary to place me in my current, absolutely wonderful job. Clerking a second time would likely be... irresponsible, all things considered, especially given that it likely wouldn't add much to my career prospects.

Recent events, including with Kozinski and some of the smaller news items surrounding the Kavanaugh confirmation, have really forced me to think about the institution of clerkship hiring (diversity is, let's just say, not a strong point) and the role of clerkships. In order to fully analyze some of the other questions on my mind, it's important to get an accurate sense of the "cost of clerking", and whether it's a financial choice that is equally accessible to all who are qualified (it isn't). To the extent that it is a bit of an elitist institution, that has implications for diversity in the profession, as clerkships may be a necessary (though not sufficient) prerequisite for certain jobs.

Overall Numbers: The Clerkship Year
  • Savings at the Time: (My student loan balance was still over $180k throughout the year.)
    • Cash Savings: $15,000, an emergency fund accumulated during my first year in biglaw, I never touched this until my accident
    • 401(k): ~$11,500, accumulated during the approximately nine months that I was eligible to contribute while in biglaw (with no employer match, as is standard for us). Term clerks also can't contribute to the federal government equivalent of a 401(k). 
    • Roth IRA: ~$2,200, and I put in another $2,000 during my clerkship year, but that was the only longer-term savings I could add to during that year. 
  • Total Salary: ~$83,500/year, as a JSP-12. Link is to a current-year PDF for the NYC metro area. They get a tiny cost of living increase most years, so the current number is a little higher.
  • Paycheck (BiWeekly): $2039.50. For the two "three paycheck" months a year, I usually put the third paycheck entirely into savings or student loans. 
  • My Share of Rent and Public Transit Cards: ~$2250/month total (numbers combined to protect my anonymity).
    • Commute: As I've sometimes alluded to, I had an extremely long and somewhat complicated commute, and monthly transit expenses (using both NYC transit and a commuter train) were a shockingly large percentage of my take-home pay.*
    • Rent: K and I stayed in the same apartment from when I was in biglaw. Given the location of our jobs and the start and end dates of our lease and for my clerkship and prior and subsequent jobs, moving out of NYC solely for the clerkship was never a realistic option. As I sheepishly mention somewhat often, we feel like we really splurge on rent, and that's worth it to us. So while I was clerking, that was also a shockingly large percentage of my take-home pay. 
  • Student Loans: ~$445/month minimum payments. I occasionally put in more, but not in amounts large enough to make much of a dent. 
    • The bulk of my loans, borrowed directly from the Federal Government, were on income-based repayment ("IBR") for a monthly minimum payment of ~$220 dollars/month.  
    • ~$225/month represented the actual 10-year repayment minimum payments associated with my other tiny (and lower-interest, 5% as opposed to ~7%) loans borrowed from my undergraduate school and a Perkins Loan from law school. These loans couldn't be put on IBR as easily. 
  • Utilities: ~$70/month on average for my half. Water and heat are included in our rent, but we pay for electricity, including to run A/C in the summer. Numbers vary greatly throughout the year. 
  • Internet: ~$32/month for my half.
  • Subscriptions: ~$25/month on average. I pay for Netflix for my mom, sister, and I. I also split Amazon Prime and Spotify Family expenses with my sister. 
* One thing I learned while clerking: People and their significant others end up needing to make eclectic, seemingly impossible, and unsustainable sacrifices in terms of commuting and where to live, in order to accommodate clerkship locations (which are highly inflexible). I spent more than 4 hours a day commuting in total and didn't even have the toughest commute out there. (People who drive, even if it's for significantly less time, definitely have it harder.) When one wants to clerk, you go where you're able to get one. Only the rare true superstars among us generally have the luxury of only applying in one city or one location and knowing they'll definitely find one on the schedule they want. 

That left me with ~$1252 to spend each month, and I'd reliably spend it all (including, sometimes, on a very small extra student loan payment). Technically I was living "paycheck to paycheck" during this time, and with no significant contributions of any kind to longer-term savings, it may have been less sustainable than many other "paycheck to paycheck" situations. It was such a short time in my career however, that... I wasn't really worried about the sustainability of my finances at the time. To be able to approach it that way is an incredible luxury and privilege, which I'm so grateful for. Oh, and because the student loan payments obviously weren't enough to keep up with the interest that was accruing (at a rate of ~$990/month), my total balance increased while I was clerking, undoing pretty much all of the repayment work I did while in biglaw the previous year.

Please follow the link below for a tour of some of my typical spending choices during a typical month of my clerkship year! I took all my credit card statements from a random month, April 2017, and got the numbers from there.

Food expenses, including restaurants, groceries, and coffee shops, were always my biggest single spending category each month. As always, I'm too ashamed to name the actual total because it'd be shockingly extravagant by the standards of almost any other location in the US. Instead, let's run through some individual line items in that category!

First up is several charges for a total of ~$45 dollars that month at coffee shops, including two $15 refills of my Starbucks card and a few other one-off purchases, some in NYC and some at my clerkship location. I even feared that the number would be higher because I eventually fell hard into the habit of, er, getting a latte or cappuccino from a coffee shop... practically every morning. Holy latte factor! But that must have set in sometime after April. Also, I think my memories of that habit were a bit exaggerated because I felt so guilty about it.

$16.55 at [Restaurant Name Redacted]: There was this delightful and affordable Italian restaurant near-ish the courthouse that the we went to together almost twice a month. The lasagna was so good, all others since then have been a profound disappointment. We were... not great at math and splitting bills as a general rule (the judge was always kind enough to cover significantly more than their actual share). On this particular day, I put in $16.55, a little more than usual. That must have meant it was someone's birthday, or us clerks were chipping in to treat a law student intern to lunch.

$34.50 at Maison Kayser for dinner with some law school friends: That's a fair bit more than I'd typically spend there. I must have ordered a prix fixe menu, probably because I wanted French onion soup and a quiche, and of course I had to have a pastry too. There was also another time I wanted French onion soup and beef bourguignon (it was quite good there!) and a pastry, but that would have cost more. I separately charged another $12.50 at Maison Kayser that evening, probably to bring home a pastry or two for K and I to share later.

During my clerkship year, I generally cooked most of my weekday meals, including by doing a weekly meal prep for lunches to bring to the office. Some weekdays, I would be too tired to figure out dinner, in which case I'd generally go to Chipotle, for anywhere from $9.00 to $12.50, if I was splurging for the luxury of guacamole. I still ate out fairly often with my friends or with K on the weekends because, for us, it's an important way of hanging out and relaxing. (Our apartments are *cough* all generally not presentable to have guests most of the time.) Among other occasions, I spent $33.75 at Ikinari Steak (we both indulged in rather large portions that day) for my half of the bill for dinner with K and $20.60 at Nickel and Diner (they have a very cute space!) for a light brunch and matcha latte while hanging out with a friend.

$63.39 at Trader Joe's: This is a fairly typical charge for my weekly grocery run at Trader Joe's, which includes ~$20.00 spent on meal prep ingredients for 4-5 servings of kale caesar.  I'd typically also buy ingredients to cook at least one meal for K and I that weekend (which K would reimburse me partially for), and then some other items for myself, to make dinner throughout the week. A few times a month, I'd also drop by other grocery stores sometimes if I'd run out of something or was craving something specific. I spent $8.78 at Whole Foods once that month after a dermatologist appointment, probably for some strawberries and smoked gouda. At some point, probably on a weekend, I spent $9.28 at Murray's Cheese, most likely for a single piece of some very fancy cheese.

As for shopping for clothes and accessories, April 2017 was a very light shopping month for me, with only one purchase at Ann Taylor for $35.93. At other times during my clerkship year, however, shopping was a much bigger part of my monthly expenses.

Some of the miscellaneous charges for the month included: $68.64 at 1-800-Flowers to order Mother's Day flowers for my mom (my sister would have reimbursed me for half). These days, I order from a local florist in my hometown, where my mom still lives. I spent $15.17 at for our subscription orders of Kleenex and Emergen-C (K would have reimbursed me half for his share). I'm actually surprised we didn't spend more at Target that month, as we usually end up needing to restock a lot more items. I also spent $20.00 on laundry to recharge our laundry card, as we didn't have in-unit laundry at the time. Washing and drying a single load of laundry costs around $5.70 at our building's communal machines. Oh and because my credit card statements also cover some of May 2017, there's a charge for $36.98 at Fandango for K and I to watch Guardians of the Galaxy 2 on opening weekend (he would have reimbursed me for his share). We generally watch movies in theaters maybe 3-4 times a year, usually for the biggest Marvel releases and Star Wars.

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