Big Law Cogs who've managed to survive round after round of layoffs now are reeling from the latest hit to come their way: a pay cut propelled by the continuing decline in partner profits.
Big Law has announced it will slash associate pay by 10 to 15 percent. For example, many first-year Cogs are seeing their annual compensation roll back from the peak market rates of $145,000 down to around $125,000. By my calculations, that means these latest cuts have reduced the take-home pay of many Cogs by roughly $1,200 to $1,500 per month -- unless, of course, your firm made the cut retroactive and is taking back the first half of this year's salary in the last half of the year, which means your monthly reduction is closer to $3,000. Ouch.
But don't start crying -- partners are feeling the pain too (or so I am told), and even with our redacted paychecks, we Cogs still are making plenty of money. With a few adjustments to your spending habits, you probably won't have to move back into your parents' house.
Many of us Cogs suffer from the common Big Law dilemma of the "Golden Handcuffs." We rewarded ourselves for 20 years of schooling and/or working hard to meet billable-hour requirements with a nice four-bedroom, three-and-a-half-bathroom home in one of Atlanta's finest swim-tennis communities; we upgraded to the latest version of the iPhone even in the midst of a recession; we traded in our Honda Accord for a BMW before the bar results were even announced; and we kept our wardrobe fresh and Big Law-appropriate by purchasing $700 suits and custom-made $200 shirts.
In the good old days of inflated salaries, most of us lost any concept of need versus want. "Of course I need my initials hand-embroidered on my custom-made shirt sleeves! How else will I know it is my shirt? What if someone tries to take it from the dry cleaners?"
If your financial prowess has been stunted by the lack of budgeting skills and dearth of judgment that come from being overpaid at a young, innocent age, here are a few tips to help recoup the $1,500 to $3,000 you are losing each month in salary cuts. Herewith, in no particular order:
1. Get some roommates. No doubt your largest monthly expenditure is the mortgage payment on your five-bedroom mansion in the 'burbs or your two-bedroom condo on the park. What is that monthly tab, anyway? Something like $3,600 a month? (Assuming you refinanced and got a good interest rate.) Many of you young whippersnapper Cogs bought the big house before you had a spouse or kids to help fill it. So given the reality that you will never be able to sell for a profit in this market, reach out to your fellow Cogs and have them rent out one of those big empty rooms. Just start a Cog Commune. A monthly mortgage payment divided by two renters is reduced to $1,200. I just saved you $1,400 a month and got you someone to watch TV with on Saturday night.
2. Put Your Kids in Public School. OK, maybe some of you mid-level and senior Cogs already have a house full of family and no space for renters. Your largest monthly expense may be your kids' private school tuition. Do they really need to learn Latin? Yank 'em out of that stuffy school -- it is only making them learn bad habits -- "Mummy, can I get the new iPhone?" In public school, they will learn the value of a $1 lunch and start appreciating that not everybody goes to the Caymans for Spring Break. Making the switch to public school for even one of your kids (the least grateful, of course) will save you at least $15,000 a year.
3. Tone Down Your Vacations. You see where I am going here right? No more family ski trips to Vail. Load the little ones up in a van and rent a cabin in the mountains. Teach them to build a fire, filter water and hunt wild game. You never know if the economy will improve or if North Korea will nuke us. Firestarting is far more useful than Latin in these scenarios. Georgia mountain vacation with no skiing versus Colorado mountains with snow and skiing equals $7,000 savings.
4. Do Your Own Chores. Are you currently outsourcing all chores to others -- i.e., the yard guy, cleaning lady, pool boy and babysitter? You can pay for your own lawn mower with the money you save from just one week of no yard guy. Your new roommates or your kids can clean their own rooms and pitch in on the dishes and pool. And if you stop dining out at Rathbun's, you will save money on the babysitter AND extravagant dining costs! "But I am a busy Big Law lawyer, I do not have time for manual labor or to rear my own children." Poppycock! The Firm just cut your salary because business is slow. Minimal savings from doing your own chores equals $500 per month.
5. Recycle Your Ride. Take advantage of the federal government's "Cash for Clunkers" program (assuming it's still alive by the time you read this column) by letting Ford "Recycle Your Ride." Heck, the (reduced) tax dollars from your (reduced) salary are paying for this program, so get in on the action. Trade in your gas-guzzling, six-cylinder German sport coupe for a nice fuel- and cost-efficient Ford Focus. After the government rebate and Ford's discounts, I'm pretty sure this car now costs just $2,000. They will PAY YOU to take this car in exchange for your fancy vehicle. You just made $10,000.
6. Brew Your Own. I know we still are sad about the Firm taking away the free Starbucks coffee, but spending $10 a day to have a barista steam and brew your java is a luxury you may need to cut from your revised budget. You may not know it, but somewhere near you there is a discount retail store like Target or Wal-Mart that sells coffeemakers as well as other do-it-yourself items. Brewing your own cup 'o joe equals $300 a month back in your pocket.
7. Highlight Your Own Hair. We all need to look our best at Big Law, but the cost of having that uber-chic hairstylist cut, mousse and touch up your highlights once a month is $175 down the drain. While at Target, pick up a box of Garnier. If it is good enough for Sarah Jessica Parker, it is good enough for Big Law Cogs.
8. Go Off The Grid. Now that the Firm has stopped reimbursing you for your mobile phone and data plan -- why pay for it yourself? Clearly, if they thought it was a necessary work tool they would pay for it, right? What did I hear you just say? "I can't be unplugged. I need to compulsively check e-mails during dinner and update my Facebook status while in church." No, you do not. But if you are addicted for your own personal reasons and it is worth the $100 a month, then try another cost-saving tip. Otherwise, add another $100 to your fattening wallet.
9. Get Netflix. Evaluate your spending on entertainment. Are you subscribing to the platinum-level Direct TV HD package with all available premium cable channels plus NFL Sunday Ticket with Superfan? I am not even going to guess what that is costing you. Maybe instead you should share a Netflix subscription with some fellow Cogs with similar interests to catch up on your favorite movies and use Hulu.com to watch "Family Guy"? And you can always invite yourself over to a partner's house to watch your favorite NFL team. Minimum $75 a month in savings.
10. Miscellaneous. We each have our own spending weaknesses that can be capped. You just need to identify yours: Weekly mani-pedis ($75)? An addiction to online gambling ($100? $1,000?)? Paying for your dogs to have play dates and lavender bubble baths ($15 per day, five days per week equals $300 per month -- woof!)? Spoiling your baby with organic cotton onesies ($28 per onesie multiplied by the number of onesies needed to correct for 18 spit-ups per day, seven days a week ... oh, never mind)? Eating all of your dinners at restaurants that have four-page wine lists and "Creative Cocktail Concoctions" ($100 on drinks alone)?
I'm just saying ... maybe you really don't need bespoke, monogrammed shirts and a bento box lunch delivered by a trained geisha just to get through the workday.
Whatever you decide to cut, it is my sincere hope that some of these money-saving tips will help you scrape by on your six-figure salary during these times of economic crisis.
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