Recently a reader wrote in asking about advice around expenses surrounding a bar trip. It’s getting to be so long since I had the opportunity to take a bar trip that I had nearly forgotten such things existed. Specifically, this reader is considering taking on some credit card debt and enjoying the “little freedom you have left” vs taking an earlier start date and hitting the ground running.
For those that aren’t familiar, law students graduate in May and typically take the bar exam in July. Many won’t start working until September or October, thus giving you a couple of months of freedom. Historically law students took advantage of this time off by taking a “bar trip” as a last hurrah before beginning the grueling work of being a first-year associate at a firm.
In my personal experience, bar trips died a quick and painful death in the fall of 2008 with the implosion of the US economy during the Great Recession. I remember the graduates from the classes of 2006 and 2007 sharing stories of epic bar trips (likely funded with credit cards). And then the bottom fell out of the economy and law students started worrying exclusively on whether they’d have a job at all.
When I graduated in 2009, the few lawyers that had jobs were facing long deferments. It wasn’t unusual for people to spend an entire year working at a nonprofit / government agency supported by the law firm while everyone waited for the economy to recover. While I’m sure some people did take bar trips, nobody talked about it. With blood on the floor it hardly seemed appropriate to be talking about seeing the Taj Mahal.
But times have changed. We might not be back to the roaring mid-2000s, but fresh faces have arrived at the gates of the bar trip and I’m sure many are planning on taking some fun trips with borrowed funds.
Should I take a bar trip?
First, it’s your money so you should do with it as you please! We’re all making financial decisions and trade offs, so there can’t be a right answer. Personal finance is personal.
I’ll argue that it’s probably foolish to borrow money at 18% to fund such a trip but I don’t have to live your life, so you’ll have to make your own decision here.
The problem with a bar trip (and a delay in your start date as mentioned by the reader) is that you’re putting off the process of getting your financial life in order. By delaying this ultimate reckoning, you’re tightening the noose around your neck. If you already thought working in Biglaw would rob you of your freedom, you’re really going to feel that way when you have a few extra thousand dollars on a credit card and more interest accumulating on your student loans.
The other strong reason to skip a bar trip is that while you might think you’re “enjoying your freedom”, you’re probably limiting your consumption in the long run. Who wants that? Sacrificing total lifetime consumption to achieve a quick hit of consumption today is a recipe for shortchanging yourself over the long run and is a dangerous precedent going forward.
The problem is that it’s difficult to know how much your bar trip is costing you in the long run, so let’s play with an example.
Example. The bar trip costs $3,000. You have $200,000 in student loans earning an average 7% interest rate. For the ease of the math, let’s assume that your start date is the same either way. Let’s also assume that you pay off your $3,000 trip in two months at an approximate rate of 18% interest. In rough numbers, your bar trip costs $90 in credit card interest (($3000 x 18% / 12) x 2). But because you didn’t use that $3,090 to pay off your student loans, you’ll be carrying that amount for an additional 5 years until you pay off your loans for an extra $1,081.5 in interest ($3090 x 7% x 5 years). Of course that extra interest didn’t get invested. If you hadn’t paid it to the student loan company, you could have put it into an index fund over 30 years at, let’s say, 9.71% interest. Over 30 years that extra interest paid to the student loan company would have turned into $17,434.64.
If you don’t like my calculations (perhaps because you refinanced your law school loans), feel free to use your own numbers, but suffice to say that the long term cost can be quite steep (some observers might comment that this is true no matter what the expense – the $1000 iPad that you buy today would be approximately $17K in 30 years).
For these reasons, when you’re “worse than broke” as they say, I’d strongly consider skipping the bar trip until you can right the financial ship. You don’t even know how you’re going to react to working at a firm. Would you really want to put yourself in a situation where you’re obligated to work an extra couple of months to fund a trip that lasted for a couple of weeks?
But I like to travel!
I like to travel as much as the next person and have been fortunate enough to take some great trips. The ones I paid for in cash were a lot more fun because I never felt guilty for spending the money.
I managed to take those trips while working in Biglaw (yes, you too will be able to get away).
Don’t think that your last and final chance to travel is the few months before you begin your career. In fact, there’s likely to be two other times during the early part of your career when you’ll be able to take an epic trip if that’s what you want to do.
Lateral Moves. Many lawyers switch firms at some point in their career. If you do, you’ll probably build in a few weeks (or an entire month) between when you leave the old job and start the new job. Employers often want you to show up refreshed anyway, so it’s a great time to take a break for yourself (in the worst case scenario, tell the new firm you’re working on some big projects and need to give four weeks notice – tell the old firm that the new firm wants you to start right away and give them two weeks notice). During this lateral move, you’ll have the money to take a great trip AND you’ll want it more than ever after putting in a few years of long hours. The trip will be that much sweeter.
Leaving Biglaw. The other moment for a great trip will happen when you inevitably leave Biglaw. Take the opportunity then to rest or go on a fantastic adventure vacation. Again, you’ll have the funds to do so and thoroughly enjoy it since it’ll be on the tail end of your Biglaw career.
But I recognize that these arguments may not be convincing to you – after all, you have a lot of freedom right now and it doesn’t sound too appealing to stay at home. Just understand that it’s a tradeoff with real consequences either way (either missing out on this one trip or paying for it with borrowed funds). You can afford anything but you can’t afford everything. Make the decision that aligns with what you want in the long run.
Joshua Holt is a former private equity M&A lawyer and the creator of Biglaw Investor. Josh couldn’t find a place where lawyers were talking about money, so he created it himself. He knows that a good law school budget will set you on the right path to financial independence and that if you want to get smart on personal finance you can read his weekly email.
If you love to travel (and you have a job lined up for when you get back), I think a bar trip is worth it. Once you start working, unless you’re between jobs, it isn’t realistic to take a month of vacation at once.* I take 2 weeks at a time, and get looked at askance even for that–most people don’t take more than a week. Plus, traveling when you’re in your mid-20s is a different experience than traveling later in life, even than traveling in your 30s. You’re more willing to backpack–you might sleep in a 50 bed hostel dorm where you make friends with locals and fellow travelers, who tell you about this cool town you should visit/thing you should do, and from there it spirals into an adventure that you couldn’t have planned for. When you’re older (and also have more money), it’s harder to access that backpacker culture, and you’re more likely to be more risk averse and to make choices that isolate you from those experiences–like, staying in a hotel or private room, renting a car instead of taking a train, etc.
If that doesn’t sound appealing to you–if you’ve already graduated to more “grown-up” vacations, then there’s probably no harm in skipping a bar trip. But if you’re like me and bumming around foreign countries is one of your favorite things in the world to do, once you enter BigLaw your opportunities for doing so will dwindle.
I say this with the caveat that I graduated before 2008, had a job lined up, and took a shoestring bar trip that I funded with part of the bar stipend my firm gave me and a credit card that I knew I would be able to pay off with my first paycheck. I had also planned out a savings/debt payment strategy and I was confident I could pull it off. If I were facing the same numbers used in the example, I would make the same choice (but I would definitely also plan ahead).
* The exception is your honeymoon–you can probably get away with taking more time for that.
Thanks for sharing your experience and perspective Meg. I agree that it’s unlikely you’ll get to take a month off while you’re working. Two weeks seems like a pretty good stretch. When I transitioned between firms I took an entire month though. I ended up only taking a small trip during that time and spent most of it at home. Although I like to travel, the time off was more valuable!
I took a bar trip as did most of my colleagues in my class of 2010, despite many being either deferred, underemployed, or just flat out unemployed. The difference is that most were relatively frugal; for instance, my then girlfriend and I drove from our home in the midwest to my friend’s NJ family beach house. Sure we had to drive out there but I dont believe we spent all that much money other than that simply because we bought beer at the grocery store, bbq’d and laid on the beach, neither of which is overly costly (or at least not any more costly than normal life). I have other friends who went camping or other fun things like that.
I would not recommend a big blow out vacation (although to each there own), but if done intelligently, I think it is smart to do something…especially since you probably havent spent any meaningful time outside in quite a while, and once you start working, your freedom is greatly curtailed.
Your bar trip sounds perfect. Since I was deferred, I had about 6 months from the end of the bar to the beginning of work. Like you I took advantage of whatever cheap options I had available, which mainly involved spending most of my time in England. Other than the airfare, I had accommodations taken care of, so just kept my spending low during that time. Thanks for sharing your experience Michael.
Absolutely, positively do the bar trip (and do it for as long as you can).
I graduated in 2009, intentionally deferred a clerkship that I had the option to start right away, and went to South America for 4 months, then Europe for a month. After the clerkship, I asked my firm to delay my start date by two months so I could go to Thailand.
It’s now 2017 and I’ve hardly traveled in the past 6 years. Biglaw will consume all of your time and you’ll regret not taking the opportunity when you had it. I now make more $$ in a month than the total cost of all of those trips combined. Trust me, you won’t miss the money — you’ll regret not taking the trip.
If you are worried about the money, be extra diligent about being frugal your first year or two at the firm. I had roommates my first year at the firm, I drove an old truck until just last year, etc.
Just my two cents.
Another vote for taking the bar trip. Thanks Tom! This is exactly the sort of discussion I hoped to encourage with this post.
If you’re comfortable sharing, can you share a little as to how you funded 7 months of world travel? I spent 6 months in England and definitely didn’t regret it but did it fairly cheaply. It sounds like you did something similar.
I’m definitely of the view that experiences are better than things but when you don’t have the money for either, it’s a little harder to justify. If I were to update this article I’d make it clearer that the choice probably isn’t “going on a trip” or “not going on a trip” but is instead whether you should go on an epic expensive trip or a backpacking trip. Since we graduated in the same year, I’m sure you have a lot of memories of peers going on pretty epic expensive trips all in anticipation of using those first paychecks to pay it off. Again, that’s a personal decision, but I’ve had some pretty fantastic trips while in Biglaw and I also had the money in the bank to pay for them.
Good question. Like many, all my pre-BigLaw trips were funded by a credit card. As context for my decision: I had approx. $80k debt from school and no income or other outside funds coming in when I left. The only certainty was a clerkship that would pay me about $50k when I returned.
You are correct that the trips were relatively cheap. I backpacked through South America staying in hostels, eating cheaply and taking buses (about 6k) stayed with friends in Europe (another 2k or so) and then stayed in cheap bungalows in Thailand (approx. 3k).
A tip on credit cards: I took the money as a balance transfer directly to my checking account at a fee of approx. 3%. It’s usually pretty easy to get a balance transfer that doesn’t require repayment for at least a year, so you are essentially getting a 3% loan with a balloon payment. If you can’t pay that off in time, just do another balance transfer from another card and repeat as necessary.
It’s also worth noting that I had my entire law wardrobe hand tailored in Thailand for about $1.5k. Not “cheap” but way less than I’d pay in the US. That “investment” has paid me back in spades, and with hand tailored suits you tend to stand out in a crowd of your associate peers.
A final note: when I was sitting in Argentina 3 months into my first trip, I decided I needed some cash. So I went on Craigslist, found a lawyer who needed help drafting a summary judgment brief, and negotiated a deal to draft it remotely. I did most of the work at a beautiful public library in Europe over a few days, and that paid for most of my Europe trip. In my experience, you can always find the money if you want, you’ll just have to hustle a little.