Personal Finance 101 for Young Lawyers

(On Campus Interviews, Summer Associate positions, Firm Reviews, Tips, ...)
Forum rules
Anonymous Posting

Anonymous posting is only appropriate when you are revealing sensitive employment related information about a firm, job, etc. You may anonymously respond on topic to these threads. Unacceptable uses include: harassing another user, joking around, testing the feature, or other things that are more appropriate in the lounge.

Failure to follow these rules will get you outed, warned, or banned.
User avatar
Barry grandpapy
Posts: 214
Joined: Tue Sep 06, 2016 12:04 am

Re: Personal Finance 101 for Young Lawyers

Postby Barry grandpapy » Wed Feb 22, 2017 5:31 pm

.
Last edited by Barry grandpapy on Tue Jun 13, 2017 2:48 pm, edited 1 time in total.

User avatar
kellyfrost
Corn Crown Contender
Posts: 4392
Joined: Mon Nov 09, 2015 3:58 pm

Re: Personal Finance 101 for Young Lawyers

Postby kellyfrost » Wed Feb 22, 2017 5:47 pm

grandpapy360 wrote:
kellyfrost wrote:My 401k is up 8.15% YTD. This is awesome because I have had stretches of time where it was only up 1-2% sometimes less.
This is due to the performance of the market, but does anyone have any suggestions on changes or make to my spread of funds?
60% - Large U.S. Equity - Vanguard Institutional Index Plus
20% - Mid cap U.S. Equity - T Rowe Price Midcap Growth
20% Small Cap. U.S. Equity - T Rowe Price New Horizons
10% International - T Rowe Price International Growth


Bro, you're all in stocks on the eighth year of a rally. Put at least 10-15% in bonds. Up the bond distribution with each successive year this rally continues so that you cash in some gains. Other than that it looks good.


I see what you are saying. Makes a lot of sense. Thanks.

Anonymous User
Posts: 287543
Joined: Tue Aug 11, 2009 9:32 am

Re: Personal Finance 101 for Young Lawyers

Postby Anonymous User » Wed Feb 22, 2017 6:08 pm

bk1 wrote:
Anonymous User wrote:Currently the total investment value of the policy is ~$4600, but I pay a ~$3k "surrender charge" if I try to get out now.

I started with an initial investment of $2k. I've been paying $200/month for the last year or so, of which $67/month is for insurance costs. I've expressed my concerns to the financial adviser regarding what appears to be just a very large fee in the form of insurance costs, and he has assured me that the tax benefits of this policy will far outweigh the insurance costs in the long run. I think I've been had.

The real question is what to do about it. I don't think throwing good money after bad is worth it. First, stop investing the $133 additional dollars each month. Second, I think it's worth eating the surrender fee. I don't know the details of your policy but generally the surrender fee doesn't go away for a number of years. At this point, you will pay 3k in costs in under 4 years anyways so it seems better to eat it. But it really is contingent on the details of your policy. I would not trust your adviser to get you out of it with the least expense. Get the details of your policy and figure it out yourself or have someone you trust figure it out for you.

And some general follow up advice:
  • Don't get an adviser unless you are very wealthy (even then, I think it's questionable). If you do get one, make sure they are fiduciary.
  • Decide the purpose of your investment and then choose the vehicle based on that purpose.
  • Do you have dependents and want to make sure they are okay if you die? Get term life insurance (you don't need whole life because once the dependent is no longer financially dependent on you, you no longer need life insurance).
  • Do you want to save for retirement? 401k/IRA invested in index funds.
  • Do you want to save for a non-retirement goal on a long time horizon (5+ years)? Regular brokerage account invested in index funds.
  • Do you want to save for a non-retirement goal on a short time horizon (<5 years)? Savings account/CDs/etc, just find a safe account that gives you the best return.


I agree with most of this post (and especially the advice not to get life insurance or a financial adviser), but I think a conservative investment vehicle (a bond fund, VASIX, etc.) is a much better choice for short term savings than a savings account or CD.

User avatar
Tiago Splitter
Posts: 17141
Joined: Tue Jun 28, 2011 1:20 am

Re: Personal Finance 101 for Young Lawyers

Postby Tiago Splitter » Wed Feb 22, 2017 6:13 pm

Anonymous User wrote:
bk1 wrote:
Anonymous User wrote:Currently the total investment value of the policy is ~$4600, but I pay a ~$3k "surrender charge" if I try to get out now.

I started with an initial investment of $2k. I've been paying $200/month for the last year or so, of which $67/month is for insurance costs. I've expressed my concerns to the financial adviser regarding what appears to be just a very large fee in the form of insurance costs, and he has assured me that the tax benefits of this policy will far outweigh the insurance costs in the long run. I think I've been had.

The real question is what to do about it. I don't think throwing good money after bad is worth it. First, stop investing the $133 additional dollars each month. Second, I think it's worth eating the surrender fee. I don't know the details of your policy but generally the surrender fee doesn't go away for a number of years. At this point, you will pay 3k in costs in under 4 years anyways so it seems better to eat it. But it really is contingent on the details of your policy. I would not trust your adviser to get you out of it with the least expense. Get the details of your policy and figure it out yourself or have someone you trust figure it out for you.

And some general follow up advice:
  • Don't get an adviser unless you are very wealthy (even then, I think it's questionable). If you do get one, make sure they are fiduciary.
  • Decide the purpose of your investment and then choose the vehicle based on that purpose.
  • Do you have dependents and want to make sure they are okay if you die? Get term life insurance (you don't need whole life because once the dependent is no longer financially dependent on you, you no longer need life insurance).
  • Do you want to save for retirement? 401k/IRA invested in index funds.
  • Do you want to save for a non-retirement goal on a long time horizon (5+ years)? Regular brokerage account invested in index funds.
  • Do you want to save for a non-retirement goal on a short time horizon (<5 years)? Savings account/CDs/etc, just find a safe account that gives you the best return.


I agree with most of this post (and especially the advice not to get life insurance or a financial adviser), but I think a conservative investment vehicle (a bond fund, VASIX, etc.) is a much better choice for short term savings than a savings account or CD.

Probably won't happen again but a lot of people got badly burned in the ultra-short bond fund crisis in 2007-2008. If the price of your super short term bond fund moves by more than a penny or two GTFO.

User avatar
bk1
Posts: 19472
Joined: Sun Mar 14, 2010 7:06 pm

Re: Personal Finance 101 for Young Lawyers

Postby bk1 » Wed Feb 22, 2017 6:24 pm

Anonymous User wrote:I agree with most of this post (and especially the advice not to get life insurance or a financial adviser), but I think a conservative investment vehicle (a bond fund, VASIX, etc.) is a much better choice for short term savings than a savings account or CD.

That's fair. My personal opinion is that if you have some definite expense that's going to happen at a specific time (e.g., you have to buy a car in June because you need one after you graduate), then it doesn't make sense to risk a large drop in your investment that can happen in something like VBTLX/VASIX/etc. But if you're saving for something that is a few years out that is okay to push out further if something happens (e.g., you want to buy a house in 5 years, but are okay if it happens in 7 years), then it can make sense to be more aggressive if you're okay with that downside risk.

And I don't think I'd ever advise an e-fund in something like that.

User avatar
kalvano
Posts: 11921
Joined: Mon Sep 07, 2009 2:24 am

Re: Personal Finance 101 for Young Lawyers

Postby kalvano » Wed Feb 22, 2017 6:56 pm

kellyfrost wrote:My 401k is up 8.15% YTD. This is awesome because I have had stretches of time where it was only up 1-2% sometimes less.
This is due to the performance of the market, but does anyone have any suggestions on changes or make to my spread of funds?
60% - Large U.S. Equity - Vanguard Institutional Index Plus
20% - Mid cap U.S. Equity - T Rowe Price Midcap Growth
20% Small Cap. U.S. Equity - T Rowe Price New Horizons
10% International - T Rowe Price International Growth


I'm jealous that you can use the New Horizons fund - that one is stellar.

User avatar
kalvano
Posts: 11921
Joined: Mon Sep 07, 2009 2:24 am

Re: Personal Finance 101 for Young Lawyers

Postby kalvano » Wed Feb 22, 2017 6:59 pm

grandpapy360 wrote:
kellyfrost wrote:My 401k is up 8.15% YTD. This is awesome because I have had stretches of time where it was only up 1-2% sometimes less.
This is due to the performance of the market, but does anyone have any suggestions on changes or make to my spread of funds?
60% - Large U.S. Equity - Vanguard Institutional Index Plus
20% - Mid cap U.S. Equity - T Rowe Price Midcap Growth
20% Small Cap. U.S. Equity - T Rowe Price New Horizons
10% International - T Rowe Price International Growth


Bro, you're all in stocks on the eighth year of a rally. Put at least 10-15% in bonds. Up the bond distribution with each successive year this rally continues so that you cash in some gains. Other than that it looks good.


Kelly, how old are you? If you have a 25 or 30+ year horizon on the investments, all or substantially all equities isn't a bad place to be (even accounting for the market drops). The allocation to bonds becomes more important the closer you get to retirement, but if you have a long timeframe, you can stand to weather the dips for the much better returns you get from equities.

Wipfelder
Posts: 664
Joined: Wed Jul 09, 2014 3:26 am

Re: Personal Finance 101 for Young Lawyers

Postby Wipfelder » Wed Feb 22, 2017 7:08 pm

kalvano wrote:
grandpapy360 wrote:
kellyfrost wrote:My 401k is up 8.15% YTD. This is awesome because I have had stretches of time where it was only up 1-2% sometimes less.
This is due to the performance of the market, but does anyone have any suggestions on changes or make to my spread of funds?
60% - Large U.S. Equity - Vanguard Institutional Index Plus
20% - Mid cap U.S. Equity - T Rowe Price Midcap Growth
20% Small Cap. U.S. Equity - T Rowe Price New Horizons
10% International - T Rowe Price International Growth


Bro, you're all in stocks on the eighth year of a rally. Put at least 10-15% in bonds. Up the bond distribution with each successive year this rally continues so that you cash in some gains. Other than that it looks good.


Kelly, how old are you? If you have a 25 or 30+ year horizon on the investments, all or substantially all equities isn't a bad place to be (even accounting for the market drops). The allocation to bonds becomes more important the closer you get to retirement, but if you have a long timeframe, you can stand to weather the dips for the much better returns you get from equities.


Truth.

User avatar
kellyfrost
Corn Crown Contender
Posts: 4392
Joined: Mon Nov 09, 2015 3:58 pm

Re: Personal Finance 101 for Young Lawyers

Postby kellyfrost » Wed Feb 22, 2017 7:51 pm

kalvano wrote:
grandpapy360 wrote:
kellyfrost wrote:My 401k is up 8.15% YTD. This is awesome because I have had stretches of time where it was only up 1-2% sometimes less.
This is due to the performance of the market, but does anyone have any suggestions on changes or make to my spread of funds?
60% - Large U.S. Equity - Vanguard Institutional Index Plus
20% - Mid cap U.S. Equity - T Rowe Price Midcap Growth
20% Small Cap. U.S. Equity - T Rowe Price New Horizons
10% International - T Rowe Price International Growth


Bro, you're all in stocks on the eighth year of a rally. Put at least 10-15% in bonds. Up the bond distribution with each successive year this rally continues so that you cash in some gains. Other than that it looks good.


Kelly, how old are you? If you have a 25 or 30+ year horizon on the investments, all or substantially all equities isn't a bad place to be (even accounting for the market drops). The allocation to bonds becomes more important the closer you get to retirement, but if you have a long timeframe, you can stand to weather the dips for the much better returns you get from equities.


I do have quite a bit of time. I'm 31. Thanks for the input.

User avatar
kellyfrost
Corn Crown Contender
Posts: 4392
Joined: Mon Nov 09, 2015 3:58 pm

Re: Personal Finance 101 for Young Lawyers

Postby kellyfrost » Wed Feb 22, 2017 7:52 pm

kalvano wrote:
kellyfrost wrote:My 401k is up 8.15% YTD. This is awesome because I have had stretches of time where it was only up 1-2% sometimes less.
This is due to the performance of the market, but does anyone have any suggestions on changes or make to my spread of funds?
60% - Large U.S. Equity - Vanguard Institutional Index Plus
20% - Mid cap U.S. Equity - T Rowe Price Midcap Growth
20% Small Cap. U.S. Equity - T Rowe Price New Horizons
10% International - T Rowe Price International Growth


I'm jealous that you can use the New Horizons fund - that one is stellar.


The New Horizon fund has done great. Thinking I might put more in it.

User avatar
kalvano
Posts: 11921
Joined: Mon Sep 07, 2009 2:24 am

Re: Personal Finance 101 for Young Lawyers

Postby kalvano » Thu Feb 23, 2017 12:30 am

kellyfrost wrote:
kalvano wrote:
kellyfrost wrote:My 401k is up 8.15% YTD. This is awesome because I have had stretches of time where it was only up 1-2% sometimes less.
This is due to the performance of the market, but does anyone have any suggestions on changes or make to my spread of funds?
60% - Large U.S. Equity - Vanguard Institutional Index Plus
20% - Mid cap U.S. Equity - T Rowe Price Midcap Growth
20% Small Cap. U.S. Equity - T Rowe Price New Horizons
10% International - T Rowe Price International Growth


I'm jealous that you can use the New Horizons fund - that one is stellar.


The New Horizon fund has done great. Thinking I might put more in it.


All of those funds are good. Vanguard and T Rowe Price are two of my top three fund management companies to go to. If you have access to anything by Primecap, I would look at those as well. Top-notch management.

Anonymous User
Posts: 287543
Joined: Tue Aug 11, 2009 9:32 am

Re: Personal Finance 101 for Young Lawyers

Postby Anonymous User » Fri Feb 24, 2017 9:14 am

My debt is currently 75K (on track for 100K at grad)
SO debt is currently 60K (on track for 100K at grad - will be a public school teacher so PSLF is possible if we file MFS in the future)
Married young (both under 25 still), straight from UG to Law/grad school with no familial support or funds to help, I'll be a 2L SA (market pay, expensive city), currently no emergency fund available

What's the best option for my SA funds? Should I avoid further debt? What's a good emergency fund to start out or where can I look to learn basics of finances like this? I'm just now realizing how lost I am on more advanced and long-term planning. I can effectively budget and live under means, but going into make these types of decisions has blown my mind the past few weeks.

User avatar
buckiguy_sucks
Posts: 2838
Joined: Fri Jan 30, 2015 12:07 pm

Re: Personal Finance 101 for Young Lawyers

Postby buckiguy_sucks » Fri Feb 24, 2017 12:38 pm

tag

User avatar
AVBucks4239
Posts: 917
Joined: Wed Feb 10, 2010 11:37 pm

Re: Personal Finance 101 for Young Lawyers

Postby AVBucks4239 » Fri Feb 24, 2017 12:42 pm

grandpapy360 wrote:
kellyfrost wrote:My 401k is up 8.15% YTD. This is awesome because I have had stretches of time where it was only up 1-2% sometimes less.
This is due to the performance of the market, but does anyone have any suggestions on changes or make to my spread of funds?
60% - Large U.S. Equity - Vanguard Institutional Index Plus
20% - Mid cap U.S. Equity - T Rowe Price Midcap Growth
20% Small Cap. U.S. Equity - T Rowe Price New Horizons
10% International - T Rowe Price International Growth


Bro, you're all in stocks on the eighth year of a rally. Put at least 10-15% in bonds. Up the bond distribution with each successive year this rally continues so that you cash in some gains. Other than that it looks good.

This is a terrible post. Kelly--don't listen to this. Nobody has any idea how long this "rally" will take place. The market could tank tomorrow, it could tank in 5 years, it could continue to rise all the way to 36,000 before it dips. Nobody actually knows.

So to pretend to know a "rally" is about to be over, and consequently move money into bonds, is catastrophically dumb (if you are not close to retirement).

kellyfrost wrote:The New Horizon fund has done great. Thinking I might put more in it.

You are checking your investments too much if you are thinking about moving shit from one fund to another based on an individual fund's short term performance.

Picking up on the upper half of my post, put all of your 401k in the S&P 500 index, then stop worrying about it until you are 5-10 years from retirement.
Last edited by AVBucks4239 on Fri Feb 24, 2017 12:50 pm, edited 1 time in total.

User avatar
kellyfrost
Corn Crown Contender
Posts: 4392
Joined: Mon Nov 09, 2015 3:58 pm

Re: Personal Finance 101 for Young Lawyers

Postby kellyfrost » Fri Feb 24, 2017 12:46 pm

AVBucks4239 wrote:
grandpapy360 wrote:
kellyfrost wrote:My 401k is up 8.15% YTD. This is awesome because I have had stretches of time where it was only up 1-2% sometimes less.
This is due to the performance of the market, but does anyone have any suggestions on changes or make to my spread of funds?
60% - Large U.S. Equity - Vanguard Institutional Index Plus
20% - Mid cap U.S. Equity - T Rowe Price Midcap Growth
20% Small Cap. U.S. Equity - T Rowe Price New Horizons
10% International - T Rowe Price International Growth


Bro, you're all in stocks on the eighth year of a rally. Put at least 10-15% in bonds. Up the bond distribution with each successive year this rally continues so that you cash in some gains. Other than that it looks good.

This is a terrible post. Kelly--don't listen to this. Nobody has any idea how long this "rally" will take place. The market could tank tomorrow, it could tank in 5 years, it could continue all the rise all the way to 36,000 before it dips. Nobody actually knows.

So to pretend to know a "rally" is about to be over, and consequently move money into bonds, is catastrophically dumb (if you are not close to retirement).

kellyfrost wrote:The New Horizon fund has done great. Thinking I might put more in it.

You are checking your investments too much if you are thinking about moving shit from one fund to another based on an individual fund's short term performance.

Picking up on the upper half of my post, put all of your 401k in the S&P 500 index, then stop worrying about it until you are 5-10 years from retirement.


Thanks, and I agree about the poster who commented on the rally. You are correct, I do check my 401k account way too often. Usually every day.

User avatar
ponderingmeerkat
Posts: 1859
Joined: Fri Oct 03, 2014 11:24 am

Re: Personal Finance 101 for Young Lawyers

Postby ponderingmeerkat » Fri Feb 24, 2017 1:11 pm

Anonymous User wrote:My debt is currently 75K (on track for 100K at grad)
SO debt is currently 60K (on track for 100K at grad - will be a public school teacher so PSLF is possible if we file MFS in the future)
Married young (both under 25 still), straight from UG to Law/grad school with no familial support or funds to help, I'll be a 2L SA (market pay, expensive city), currently no emergency fund available

What's the best option for my SA funds? Should I avoid further debt? What's a good emergency fund to start out or where can I look to learn basics of finances like this? I'm just now realizing how lost I am on more advanced and long-term planning. I can effectively budget and live under means, but going into make these types of decisions has blown my mind the past few weeks.


The textbook advice is that you should have between 3 and 6 months of "gotta-have-it-to-sustain-life/shelter" money stashed in a highly liquid account (probably a savings account). The purpose of this is to keep you from a crisis situation where you balloon your total debt number by credit carding your emergency expenses away.

Also, let me also highlight something important: your emergency fund doesn't go into the market. That's not its role. You should never be looking to put your emergency fund cash into stocks/bonds/mutual funds. So, don't let there be any confusion on that front. Savings account!

So, what I recommend is you sit down with your spouse and hash out a no-shitter, this is what we need to bare bones our way through three months budget. Then, go get a savings account at a local credit union and put that total in there--never touch it unless you're in a literal jam (car accident, medical expenses, etc.) Then, if you have any additional funds remaining, you have a couple options:

Option 1 (most conservative): You could plus up that emergency fund closer to a 6 month total and give yourself some real peace of mind.

Option 2 (Moderately conservative): You could pay down some of the highest-interest-rate debt you currently have.

Option 3 (Not conservative): use the extra cash to fund your lifestyle for a handful of 3L months and thereby reduce your overall debt. (I call this not conservative because a lot of people see, for instance, $5K sitting in an account and go crazy buying shit. If you can avoid this temptation...this is another good use of the cash. Just be aware of the urge to lifestyle inflate because the cash is there and no one will say no.)

Finally, if you have some free time during 3LOL, there are a couple good resources for info about smart investing you'll want to be aware of come first-year associate time.

Good websites: boggleheads.com (have a "getting started" section, a forum, and a wiki), reddit.com/r/financialindependence (will put you in touch with hundreds of folks with a passion for saving/investing smartly/reducing expenses or frills)

Good books: A Random Walk Down Wall Street, Your Money or Your Life

That should get you on the right track. Good luck! 8)

Anonymous User
Posts: 287543
Joined: Tue Aug 11, 2009 9:32 am

Re: Personal Finance 101 for Young Lawyers

Postby Anonymous User » Fri Feb 24, 2017 1:48 pm

ponderingmeerkat wrote:So, what I recommend is you sit down with your spouse and hash out a no-shitter, this is what we need to bare bones our way through three months budget. Then, go get a savings account at a local credit union and put that total in there--never touch it unless you're in a literal jam (car accident, medical expenses, etc.) Then, if you have any additional funds remaining, you have a couple options:

Option 1 (most conservative): You could plus up that emergency fund closer to a 6 month total and give yourself some real peace of mind.

Option 3 (Not conservative): use the extra cash to fund your lifestyle for a handful of 3L months and thereby reduce your overall debt.



Thanks for the advice. We currently have open a MMA that is intended to be our emergency fund, but holds virtually nothing (not even one month) so filling that out will be first and relatively quick considering 1 week's pay will be more than our monthly use currently.

As far as Option 1 v Option 3, we don't have any debt outside what will be our student loans. Is it better to cushion that emergency fund/start saving for an accidental child or larger apartment in the future (we would like to move out of the extremely small space after grad) or is it better to use the money to reduce overall debt? I understand the origination fees and such are killer on student loans, but my gut tells me I'm better off having the debt and saving for the future than I am reducing the debt and putting myself in a potential cage.

User avatar
ponderingmeerkat
Posts: 1859
Joined: Fri Oct 03, 2014 11:24 am

Re: Personal Finance 101 for Young Lawyers

Postby ponderingmeerkat » Fri Feb 24, 2017 2:04 pm

Anonymous User wrote:
ponderingmeerkat wrote:So, what I recommend is you sit down with your spouse and hash out a no-shitter, this is what we need to bare bones our way through three months budget. Then, go get a savings account at a local credit union and put that total in there--never touch it unless you're in a literal jam (car accident, medical expenses, etc.) Then, if you have any additional funds remaining, you have a couple options:

Option 1 (most conservative): You could plus up that emergency fund closer to a 6 month total and give yourself some real peace of mind.

Option 3 (Not conservative): use the extra cash to fund your lifestyle for a handful of 3L months and thereby reduce your overall debt.



Thanks for the advice. We currently have open a MMA that is intended to be our emergency fund, but holds virtually nothing (not even one month) so filling that out will be first and relatively quick considering 1 week's pay will be more than our monthly use currently.

As far as Option 1 v Option 3, we don't have any debt outside what will be our student loans. Is it better to cushion that emergency fund/start saving for an accidental child or larger apartment in the future (we would like to move out of the extremely small space after grad) or is it better to use the money to reduce overall debt? I understand the origination fees and such are killer on student loans, but my gut tells me I'm better off having the debt and saving for the future than I am reducing the debt and putting myself in a potential cage.


Sounds like, if one month's expenses = one week's SA income, you'll definitely have enough to do a full 6-month E-fund and still have some left over. If I were in your shoes I'd go that route--but, disclaimer alert, I'm fairly conservative. If your personality is a little more aggressive, I could see the argument for leaving 3 month's expenses in the MM as "good enough" and getting aggressive paying down debt. After a solid E-fund is established, there's no textbook answer and it becomes more shades of grey and personal preference.

Ultimately, I'd emphasize that "paying down debt" = "investing" for someone in your shoes. By chipping away at that principle, you're guaranteeing yourself X% return on your investment. (Basically, you should view interest avoided as equivalent to return on investment. So, hypothetically, if your loans are structured so that you're paying 6.5% interest, paying down principle gives you a 100% chance of getting a 6.5% return, which compares favorably with an 80/20 stocks/bonds portfolio that has a 75% chance of returning 9%.)

Point being, after you crush that E-fund creation this summer, I'd go nuts on that 200K albatross around your neck. Avoid the temptation to lifestyle inflate (move into a larger apt) and definitely take steps to prevent an "oopsie" pregnancy until you're free of that massive debt bondage (as a guy who's been married for eight years and has no kids, I promise you it can be done).

Cheers.

User avatar
buckiguy_sucks
Posts: 2838
Joined: Fri Jan 30, 2015 12:07 pm

Re: Personal Finance 101 for Young Lawyers

Postby buckiguy_sucks » Fri Feb 24, 2017 2:16 pm

ponderingmeerkat wrote:
Option 2 (Moderately conservative): You could pay down some of the highest-interest-rate debt you currently have.

Option 3 (Not conservative): use the extra cash to fund your lifestyle for a handful of 3L months and thereby reduce your overall debt. (I call this not conservative because a lot of people see, for instance, $5K sitting in an account and go crazy buying shit. If you can avoid this temptation...this is another good use of the cash. Just be aware of the urge to lifestyle inflate because the cash is there and no one will say no.)



in the event that you can avoid the go crazy buying shit temptation is there any reason to value #2 over #3 assuming the highest interest debt one has is just student loans?

User avatar
ponderingmeerkat
Posts: 1859
Joined: Fri Oct 03, 2014 11:24 am

Re: Personal Finance 101 for Young Lawyers

Postby ponderingmeerkat » Fri Feb 24, 2017 3:50 pm

buckiguy_sucks wrote:
ponderingmeerkat wrote:
Option 2 (Moderately conservative): You could pay down some of the highest-interest-rate debt you currently have.

Option 3 (Not conservative): use the extra cash to fund your lifestyle for a handful of 3L months and thereby reduce your overall debt. (I call this not conservative because a lot of people see, for instance, $5K sitting in an account and go crazy buying shit. If you can avoid this temptation...this is another good use of the cash. Just be aware of the urge to lifestyle inflate because the cash is there and no one will say no.)



in the event that you can avoid the go crazy buying shit temptation is there any reason to value #2 over #3 assuming the highest interest debt one has is just student loans?


I value #2 over #3 because avoiding interest now is better than avoiding interest in the future (effects of compounding, time-value-of-money, and all that). But we are probably talking about the difference of, at most, a few hundred bucks here so, ultimately, not that big of a deal.

On the other side, there are those who advocate for maintaining higher levels of liquidity due to flexibility concerns. "Once you've sent that money off into the void, it's gone and if you need it, Sally Mae ain't givin' it back." And, I get this on some level. But if OP maintains a three to six month E-fund I think this is less likely to be an issue. And, in this case, it's probably time to start building good "muscle memory" and throwing the kitchen sink at those loans.

Internationalist
Posts: 24
Joined: Wed Jul 09, 2014 3:46 pm

Re: Personal Finance 101 for Young Lawyers

Postby Internationalist » Sun Feb 26, 2017 4:42 pm

Anyone have any thoughts on the Acorns app? It's apparently free for 4 years if you have a functional .edu address.

User avatar
bk1
Posts: 19472
Joined: Sun Mar 14, 2010 7:06 pm

Re: Personal Finance 101 for Young Lawyers

Postby bk1 » Sun Feb 26, 2017 5:28 pm

Internationalist wrote:Anyone have any thoughts on the Acorns app? It's apparently free for 4 years if you have a functional .edu address.

For what? An IRA? A brokerage account?

If you want a robo-adviser, I'd lean towards something with more benefits than Acorns like Wealthfront or Betterment (Wealthfront is free for amounts under 15k). If you don't want a robo-adviser, I'd lean towards something with more options that doesn't charge you fees like Vanguard/Fidelity/etc.

Anonymous User
Posts: 287543
Joined: Tue Aug 11, 2009 9:32 am

Re: Personal Finance 101 for Young Lawyers

Postby Anonymous User » Sun Feb 26, 2017 6:50 pm

bk1 wrote:
Internationalist wrote:Anyone have any thoughts on the Acorns app? It's apparently free for 4 years if you have a functional .edu address.

For what? An IRA? A brokerage account?

If you want a robo-adviser, I'd lean towards something with more benefits than Acorns like Wealthfront or Betterment (Wealthfront is free for amounts under 15k). If you don't want a robo-adviser, I'd lean towards something with more options that doesn't charge you fees like Vanguard/Fidelity/etc.


As a robo-advisor/place to let smaller amounts of money grow. Acorns appears to have the lowest fees (at least until you have many thousands of dollars invested) https://www.policygenius.com/blog/bewar ... vestments/

I'm basically using acorns to put small amounts of money into until I accumulate enough savings to qualify for the more attractive mutual funds and ETFs while I pay off my massive debt.

dabigchina
Posts: 1073
Joined: Mon Jan 13, 2014 2:22 am

Re: Personal Finance 101 for Young Lawyers

Postby dabigchina » Sun Feb 26, 2017 6:51 pm

bk1 wrote:
Internationalist wrote:Anyone have any thoughts on the Acorns app? It's apparently free for 4 years if you have a functional .edu address.

For what? An IRA? A brokerage account?

If you want a robo-adviser, I'd lean towards something with more benefits than Acorns like Wealthfront or Betterment (Wealthfront is free for amounts under 15k). If you don't want a robo-adviser, I'd lean towards something with more options that doesn't charge you fees like Vanguard/Fidelity/etc.

Can someone give a tl;dr of what the exact benefits of a robo advisor are? It seems like if you just throw everything in a portfolio of index funds you would get pretty much the same exact result?

User avatar
bk1
Posts: 19472
Joined: Sun Mar 14, 2010 7:06 pm

Re: Personal Finance 101 for Young Lawyers

Postby bk1 » Sun Feb 26, 2017 7:04 pm

dabigchina wrote:Can someone give a tl;dr of what the exact benefits of a robo advisor are? It seems like if you just throw everything in a portfolio of index funds you would get pretty much the same exact result?

Generally, (1) automated rebalancing, and (2) automated TLH.




Return to “Legal Employment”

Who is online

The online users are hidden on this forum.