Retire With $3 Million at 30, Start A Law Practice
With stories like this, the concept of having a year in savings before starting a firm doesn't seem all that intimidating.
Recently a Facebook friend of mine turned me on to the vast number of early retirement / frugality-on-steroids blogs that teach readers how to save money like crazy so they can retire in their early 30s. The blogs all offer a bit of a different spin on the subject. Mr. Money Mustache, the first “early retirement” blogger, left the work world along with his wife in 2005 as a 30-something. Adventuring Along recounts the stories of two married teachers who retired after 8 years of teaching and now travel the globe with their young child. Root of Good is another 33-year-old retiree, this one with three kids and plans to ensure they all go to college loan-free. And Power of Thrift is a Biglaw expat who managed to pay down $100k in loans and still save $700k working five years on her Biglaw salary. With stories like this, the concept of having a year in savings before starting a firm doesn’t seem all that intimidating.
So how’d these bloggers do it? Initially, I was skeptical — I thought that they were former traders or investment bankers who lucked out with a couple of upper-six-figure bonuses. Or that at the very least, they graduated from school debt-free and didn’t have loans to repay. But that’s not true for most of these situations: it seems that each of these bloggers built their portfolios through ordinary work and power saving.
A couple of common threads run through these blog posts. First, with the exception of the Biglaw attorney who is single, the other bloggers are not just married, but apparently married young. As a result, not only did they avoid all of the costs associated with dating and being single, but if nothing else, they could live on one income and stash the rest in savings.
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In addition, the Mr. Money Mustache and Root of Good couples worked in engineering or tech, so they probably made decent salaries right out of school. Presumably the two teachers earned less, but they also had a side gig that enabled them to boost their savings: living in Nevada, they bought a couple of foreclosed properties during the real estate downturn with the intention of selling when the market recovered. Initially, their plans proved wrong — and they wound up paying the bulk of their combined income on mortgage payments while living on $23k a year. Since they were able to hold on to the property, they could ride out the downturn and wait for the value of their holdings to skyrocket — which they did when the real estate market bounced back. (Note: the teachers’ experience could have gone either way. I had a friend who invested in the Florida real estate market with the same intentions, but wound up in bankruptcy instead. So luck does play a role).
Finally, having mastered frugality and retired at a young age, most of these bloggers found another source of part-time income so that they don’t deplete their nest egg: writing about early retirement for others.
I’ve never really believed that skipping a daily coffee could produce enormous savings, and I’ve always thought that it made more sense to spend money to save time — such as summoning an Uber instead of waiting two hours for the dysfunctional D.C. Metro when pressed for time or hustling to get to a court call on time. But these blogs have persuaded me that small savings everywhere can make a big difference. Of course, these blogs also endorse more extreme solutions, like relocating to cheap cities or living on so little as to qualify for Affordable Care Act subsidies (which I’ll confess is a bit offensive, when a guy with a $1.7 million portfolio is able to pay $125/month for insurance premiums for a family of six, while my bill is $950/monthly premium with two six-figure tuition obligations).
Also, for some of these bloggers, power-saving to retire early is hard work – work that continues after retirement. These bloggers saved money by buying fixer-upper homes and doing renovations themselves, and they spend hours comparing costs to find the least expensive option, whether for food or trips. They also trade time for money: for instance, one blogger is planning a 9-week family vacation to Europe where they’ll travel around partly by bus — which takes two to three times as long as the train but is much less expensive.
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In a way, early retirement requires a different kind of entrepreneurship. Instead of making money off building something new, the early retirement crowd makes money by figuring out ways to squeeze as much as they can out of what they have. The entrepreneurial streak is evident in the fact that most have turned their blogs into revenue-generating ventures or come up with other side gigs (Mr. Money Mustache’s wife now makes soap for sale at a successful Etsy store).
Still, these bloggers prove that big savings are possible even on modest incomes. And so why couldn’t their methods work for lawyers starting their own firm — or even leaving law to launch a legal tech startup? They could avoid the experiences discussed in this rather depressing article — about new solos and legal tech entrepreneurs and their financial struggles after they downsized from their Biglaw salaries. All of the lawyers described in this piece had crushing student debt — but at the same time, they may not have been willing to make the same sacrifices as the former Biglaw associate at Power of Thrift, who wore her older sisters’ cast-offs to her job, bunked with a roommate to save $750/month, and took advantage of free dinners by working late at the office. We always see law schools criticized for not teaching students to be entrepreneurial — but maybe they ought to teach them frugality lessons from these bloggers — so that they have more options when they graduate. (Of course, law professors have a built-in savings mechanism — free college tuition for their kids!)
One last point. Even if lawyers could manage to pay off loans and live off their savings for the rest of time, would they start a law firm at all — or flee the profession entirely? That’s the proverbial $3 million question.
Carolyn Elefant has been blogging about solo and small firm practice at MyShingle.com since 2002 and operated her firm, the Law Offices of Carolyn Elefant PLLC, even longer than that. She’s also authored a bunch of books on topics like starting a law practice, social media, and 21st century lawyer representation agreements (affiliate links). If you’re really that interested in learning more about Carolyn, just Google her. The Internet never lies, right? You can contact Carolyn by email at [email protected]or follow her on Twitter at @carolynelefant.
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