Monday, November 19, 2007

Question from Reader: Should I Take a $67,000 Pay Cut?

Wow, here's a doozie, left as a comment on "Okay I'm Asking":


OK here's a question for MX and all her helpful posters. Currently 102K as unhappy lawyer working 60 hrs/wk (sometimes 80-100). Should I quit for job with 40 hrs/wk where I am likely to be happier? Salary will be 35K so will have to make major lifestyle changes?! SF in big city so living costs currently v high


That is one hell of a pay cut! It's hard to give any advice here, since A) I am not a financial advisor and try not to play one on TV or on this blog, and B) there is a lot of missing information about the questioner's lifestyle, student loan status, etc.

I would tackle this by really analyzing my spending-- what do I actually spend, what can I cut, realistically. $35k doesn't necessarily go that far in a big city. Yes, a person can live on that amount and plenty of people actually do, but those major lifestyle changes might be really, REALLY major if you've been used to a six-figure income! If you're changing jobs to be happier, how is it going to affect your happiness to never be able to eat out in restaurants, or to have to move to a smaller apartment with a longer commute? Is the $35k job the only alternative to your current job as a lawyer? Might there be an in-between alternative with a smaller pay cut? All food for thought...

Anyone else have any ideas?

24 comments:

Anonymous said...

That's too much of a pay cut.

1) Relocate to a smaller city with a better work style (no long hours)
2) Find a better alternative

Anonymous said...

You may want to consider continuing to work as an attorney, but for the state/city/federal government. All will pay less than your current salary (but more than $35k), but will allow you to work a 40 hour work week with great benefits (and probably a pension).

Simone S. said...

Do It!

Carpe Diem!

Anonymous said...

I'd say that they could pretty easily test this...

1) Set up a budget that works on 35K (after taxes!).
2) Move to the place you can afford on 35K
3) Have your employer deposit the difference between your current take-home and your potential take-home in an investment plan/CD or something...
4) Spend a year living on what you'd be making in your new job.

Honestly, I've lived on 35K in a less than major city, it wasn't fun. You should really try it out before you do it. If you don't mind living that way, you'll have some nice financial cusion to make living on 35K easier.

pfodyssey said...

Weigh the pros and cons and make a decision - simple as that. The good news is that even if you make the wrong one, it's still correctable (ex: you will remain a lawyer who can likely command a salary similar to now if the other option proves not to work out)

SandyVoice said...

I live in NYC, where the prices are similar to SF. I am pretty frugal, I like peanut butter, and I don't have a car, but I don't think I could live on $35,000 in 2008. You must be able to get a job as a lawyer that doesn't require so many hours -- you might even find one that pays more, but there's probably no reason to take such a huge pay cut ... unless you have a couple of million dollars stashed away, the new job is exactly what you've always wanted to do, and there's a good probablility of increased income in the near future.

guinness416 said...

Wow, well I sympathize but "I'm likely to be happier" sounds a little vague and unsure to me.

Apart from "testing the budget" I would do a very clear-eyed analysis of what sucks about Current Job, and whether other positions in the law or using the law or other geographic locations could mitigate them. I'd also want to be sure that such a big change is driven by wanting to go to New Job rather than run away from Current Job, or the potential for more misery is always there. Perhaps a vacation is in order, it's hard to do proper thinking about career situations when you're working 60 hours.

Also, is there a significant other in the picture? My husband took an enormous pay cut recently, but I can carry all of our expenses and investments.

Good luck Reader! Tough decision!

Chief Family Officer said...

I live in LA and I gotta say, I couldn't live here on $35K and be happy. I think the "testing" idea is a great one if you're serious about this, though.

Also, as an attorney myself, I like the suggestion of working for the govt. Most govt attorneys I know are pretty happy with the trade-off of lower salary for better quality of life.

I also know of attorneys who make fairly good money working for firms with tolerable billable hours and such. It just seems like there are a lot of other options out there besides this $35K job.

Whatever you decide to do, good luck! And be sure to let Madame X know what you decide, so she can keep us updated!

English Major said...

SandyVoice may not be able to live in NYC on $35,000 a year, but I certainly could: my gross pay was about $32,000 this year, and I've saved over $6K.

I'd advise the poster to spend a couple of years in transition: stepping down the budget, saving as much as humanly possible, getting ready for the big move. If the sacrifices start to feel onerous, that may be part of the answer to the question.

Anonymous said...

I would do a little research before assuming that a particular government attorney job will mean less hours per week. I am a government attorney and I average 70-80 hours a week.

anonymous 10:25 pm again said...

I have heard that in-house is the way to go if you want less hours. Perhaps a commenter who is in-house counsel would dispute that, though...

Anne said...

I really sympathize with this commenter as I am also a very unhappy lawyer. My salary is even higher (more than double) and I'm contemplating a transition out to a job under $50,000/yr.

Right now, I'm focusing on eliminating my student loan debt. This has two benefits: first, of course, I get rid of my debt, which means I'll be able to live on less. But second, while I'm focusing on aggressive debt repayment I'm already living on less. I have no doubts that when my loans are paid off (should be within the next year), I will be mentally prepared to live on less than 50. I do have some doubts as to whether I'll have the strength to leave my high salary behind.

So, that is what I would recommend--reduce your standard of living and reduce your necessary expenses as much as possible. If you have student loans, pay them off. If you have a mortgage, pay it down and maybe even refinance (if you can) to a lower monthly payment. In making a decision, I wouldn't worry about stuff like not being able to afford restaurant meals. Actually, with as many hours as I work now, I dream of having enough time to cook a nice meal at home on a weeknight.

I also agree with the others that this may be a false dichotomy between $102 and $35 and nothing in between. You could perhaps do contract work part-time, or open up a solo practice, or clerk for a judge, or take a number of jobs that would pay something in between, but allow you a better quality of life.

Briar said...

I was a lawyer in the 80s. Guess I still am, technically, though not licensed in the state where I reside. I gave it up to become a college professor and then an academic law librarian. Less money, stress, and liability; more free time, happiness, and fun. Definitely worth it.

Anonymous said...

Having a J.D. would boost my salary by a minimum of $20K. Look into Higher Education. There are many 35 hour/week positions that pay nearly six figures for your qualifications! Don't settle for 35K.

Esme said...

67K is a big pay cut! That probably would be a drastic change in lifestyle.

Like others have suggested, what about an in between alternative? Find something thats less paycut and also consider moving to a less expensive city.

That being said. I think a paycut for a better life style is definitely worth thinking about.

SandyVoice said...

Well, actually, English Major, I lived on a hell of a lot less than 35,000 for a long time. It's not that it couldn't be done, but it was miserable. It is true that I have a lot of medical expenses that others might not have, but you can never tell what kid of situation someone else might be in. I was living gig to gig, and I wouldn't want to do it again. I've gotten to $50,000 this year, and I can tell you it's a lot less stressful.

Mr. M said...

I went from 100K+ to zero in a sudden urge to leave an unhappy job and "take a break". I did this for 6 months, and to be honest I didn't really prepare myself mentally for it. I mean, I had an ideal budget, and had nice daydreams of living off less, simplifying, and making my money count... but in the end, I still spent like I was used to spending; and thank goodness I had a nice savings!

So my advice is, unless you are living like a 35K earner now and training yourself to live they way you predict, you will probably be as miserable, if not more miserable, than when you were working 80+ hours a week making a good six-digit salary. A hefty savings does not hurt in "testing the waters" but you should really be living the life you plan for, otherwise the transition will hurt bigtime.

Shadox said...

I am a lawyer who left the law and went to work for a high tech company. The hours are much better, and the work much more interesting. I am much happier over all. The pay difference should be nowhere near what the poster was asking about. That is unless he is referring to a specific job that he is interested in. In that case, carpe diem is right. Happiness uber alles.

Mike said...

A drastic paycut from $102k to $35k will alone make you depressed enough to wish you were working as a lawyer again. My suggestion would be to work for a smaller law firm. You can work for a firm w/only 1 or 2 partners and a staff of maybe 7-10 and still get paid around $50-60k. Plus it will be a better atmosphere than the high-paced one you're currently in and you'll only have to work 40 hrs/week. You can even find a firm that specializes in something that you're more interested in, like real estate for example.

Anonymous said...

35k is alright in a midwestern city.

Anonymous said...

The pay differential between lawyers in different sectors is a real one. I am a "public interest" lawyer (I work in non-profit legal services and represent clients who are poor) and make about $45K while my former classmates started out at $145K or so. Not to sound all egotistical, but as someone who graduated cum laude from an ivy league top 10 law school, I too could make the big bucks, but I made a career choice to pursue what I wanted to do. Also as a note, ironically these "public interest" jobs are actually more competitive to get (I guess because there are fewer of them). Of course I still wish I made more money because frankly sometimes things are pretty tight. Luckily I now live in Philadelphia where you can have a decent standard of living on this salary. Anyway, my advice is for the person to really think about what makes her/him unhappy, is it the work? the hours? the people?) Because as others have mentioned, there might be other in-between options, such as small firms that still do interesting work and have better hours. I highly recommend informational interviewing to find out if this other job (presumably a public interest law job) is really what he/she wants. If so, there might be ways to lessen the blow, since many law schools offer loan repayment programs, and Congress recently passed a law that supposedly should help public service employees with their loans. Even though I don't get that much, I get paid enough to make a living and I really enjoy what I do, so I'm happy with my choice.

Rob said...

Madame X knows me as the guy who buys special underwear for his jeans (see her thong post), but I actually spend my days working for at a bank as a project manager. There are plenty of companies who need lawyers on staff that would pay close to $100K without the 80 hr work weeks. Our legal and compliance teams have numerous lawyers, who I assume make at least high 5 to 6 figures, and they work the standard corporate 40-50 hr week. That could be an alternative without such a drastic pay cut. I looked at going into non-profit with a $30K cut, and even the most budget conscious will hurt with big cuts like that. You just won't realize what you take for granted (new shoes, dinners out, vacations, a cleaning person, etc.) until it's gone. And the reality is, there is crap everywhere, so you just need to find a job with a managable amount of crap that pays close to what you make now.

Anonymous said...

A number of years ago, I quit my mid-level associate position with a DC law firm (salary approaching six figures) just because I could not see living forever in DC. I had no other job at the time, I had a wife, and we had some savings. But there was nothing about this decision that was wise from a financial standpoint. I had no other job waiting for me. The only thing we did in advance to prepare was move out of a rented house into a cheaper apartment.

After I quit, I picked up some books and taught myself an entirely new trade. After about three or four months, I found someone to hire me. I worked for pennies for a few years but eventually landed a great job with a Fortune 500 company.

In the past few years, believe it or not, I have gone back to practicing law. I got cross-ways with a middle manager and decided that I would never be able to stay in one place geographically in my chosen field, so I opened up my own law office. I am in general practice now with just a few other individuals who I like and respect. My wife and I have children now, too.

When I was in practice in DC it was very hard to see beyond big firm life. But drive down a street sometime and think about how many families are supported by the work that is done in each business you see. It is really an incredible thing to reflect on. There are many, many people out there making a living in an astounding number of ways, and you can find something that makes you happy. I believe that staying in a lifestyle simply because it is safe or convenient or pays well, while it may at times be necessary in terms of meeting responsibilities to other people, is very limiting in terms of personal fulfillment and growth and realizing your true potential.

I never had any regret about leaving the DC firm. Leaving the Fortune 500 company was much more problematic. I have children, and to some extent the decision was reckless. On the other hand, the office I worked in has closed since I left and my colleagues have been laid off. I am still struggling financially, but if I can work through this phase of practice-building and learning (or re-learning) what it means to be in a general practice, I believe my family will have a better life. Said differently, the jury is still out. Were I still single, though, I would not be so conflicted about my last change. That is the time in life when one needs to explore.

The bottom line is that only you can decide whether it is worth it to work for "hard cheese" for a while--maybe for a lifetime--in order to find your niche. But no pay cut is too big if taking it means you can enjoy your life.

I hope this helps.

Anonymous said...

First off - yes it does help and so have all the comments. I have made the decision and have taken the job with the pay cut. Ultimately comes down to what happiness is worth. $67K? $100K? $200K? Note sure I can put a price on my peace of mind/sanity. Just thought I should report back and say to all that I hope to now be working to live rather than living to work. And hope to be more comfortable (if not financially) in future.