Broke Urban Lawyer Calculates Opportunity Cost

Law school is expensive. In addition to tuition, books, and fees, there's also the opportunity cost involved in doing law school instead of something else. That something else could be working or getting another degree. (Or backpacking around the world or raising organic goats or whatever.)

I'm not counting living expenses in the opportunity cost calculation because I would have had to eat and have a place to live whether or not I went to law school.

For a year and a half of law school, I was going to school full-time and either not working at all or working so part-time that it basically only covered my train pass and a little food. The rest of the time I was working full-time and going to school part-time. So I won't count as an opportunity cost the time when I was working full-time because I didn't lose any opportunity as a result of school. (Well, except for sleep and a social life, but I don't know how to put a dollar value on that.)

So, the true cost of my legal education can be measured as opportunity cost + tuition/books/fees + interest on my student loans. Once I know the true cost, I can calculate the break even point. The break even point is when the true cost of my education plus my cumulative salary equals the cumulative salary I would have earned had I not gone to law school.

I'm not really getting into numbers on the blog because I'm still squeamish about being specific about my financial situation, but I ran the numbers privately. It's hard to get an accurate assessment because I can't see into the future to know what my income is going to be going forward.

2017 is the first year I made more money as a lawyer than I would have made doing something I could have done with just my BS.* I'm going to predict that my income going forward will be a bit more than my 2017 income but not hugely more. If I start earning beyond my wildest dreams, then all the calculations will go out the window.

A back of the envelope calculation says that it will take between 5 and 6 years from the time I started out-earning my previous earning power to recover what I paid and what I gave up for law school. So, I should break even by 2022. Hopefully I'll also have my student loans paid off by then, but I'm not holding my breath on that. Even if I'm still making student loan payments, the extra income will offset the debt enough to still count as a break-even point.

I started law school in 2005. My law degree has a 17 year payback time frame. I don't think I'm that much of an outlier among people who graduated around the time I did. This is why one of my public services is talking people out of law school. It really did a number on my finances.

On the other hand, there have been some pretty good intangible benefits. I have a high social standing. Despite all the lawyer jokes, it still does impress people when I tell them I'm an attorney. And I also get a lot of flexibility in my schedule that I wouldn't necessarily be able to get in other fields. I work from home when I'm not in court, and I'm my own boss. I more or less set my own hours. My prior career in HR didn't give me this much freedom.

I'll re-run the calculation in a year or two to see if the numbers change. Until then, I'll just keep on forging ahead. There's not much else to do.

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*That's Bachelor of Science, not Bulls----. Though I did major in Political Science and minor in Philosophy, so insert your own joke here.

Broke Urban Lawyer Returns from Oblivion with Good News

I've been terribly neglectful about blogging here. However, I come bearing good news. I've made incredible progress on my debt. And I mean incredible in the literal sense of the word - impossible to believe!

I've paid off all but one of my credit cards. All I have left in credit card land is a $2900 medical bill from surgery earlier in the year. It's interest-free until next summer, so I'm going to take my time paying that one off.

Oh, and I still have my car loan, a loan from my parents, and my student loans. My debt sentence still has many years left on it. It feels nice to have a little victory, though.

My credit cards represented 20% of my debt burden, so I'm 1/5 of the way toward freedom.

I hesitated about whether to post this on Facebook because I consider money to be a somewhat private topic, but I opted to do so, and the outpouring of support from my friends and family has been amazing. I have a bunch of people cheering me on.