Personal Finance 101 for Young Lawyers

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bk1
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Re: Personal Finance 101 for Young Lawyers

Postby bk1 » Sun Feb 26, 2017 7:06 pm

Anonymous User wrote: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.

The article quotes Wealthfront as cheaper in all circumstances (though OP gets 4 years of Acorns free), but it has a $500 minimum.

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Re: Personal Finance 101 for Young Lawyers

Postby Anonymous User » Mon Feb 27, 2017 2:21 pm

Are there any reasons not to take a salary advance for a 2L summer?

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bk1
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Re: Personal Finance 101 for Young Lawyers

Postby bk1 » Mon Feb 27, 2017 2:23 pm

Anonymous User wrote:Are there any reasons not to take a salary advance for a 2L summer?

Only if you think you can't be responsible with it. Otherwise it's an interest free loan.

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swampthang
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Re: Personal Finance 101 for Young Lawyers

Postby swampthang » Wed Mar 15, 2017 10:47 pm

bk1 wrote:
Anonymous User wrote:Are there any reasons not to take a salary advance for a 2L summer?

Only if you think you can't be responsible with it. Otherwise it's an interest free loan.


Though you might have bigger problems if that's the case.

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bk1
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Re: Personal Finance 101 for Young Lawyers

Postby bk1 » Wed Mar 15, 2017 10:51 pm

swampthang wrote:Though you might have bigger problems if that's the case.

Yea but if you have bad tendencies, controlling yourself with gimmicks is still worthwhile. Saying "just exert more self-control, bro" isn't really responsive to people who realize they lack self-control.

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North
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Re: Personal Finance 101 for Young Lawyers

Postby North » Thu Mar 16, 2017 4:15 pm

So I'm going to open a savings account to start building an emergency fund. Never had "savings" before. BOA is offering me a Money Market Savings account (0.03% interest) or a Regular Savings account (0.01% interest). Neither seems like a great rate. I'm planning on building up between 10 to 15k as the emergency fund. Is there CW on which is better to keep it in? Or should I go with the slightly better rate and call it a day?

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unlicensedpotato
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Re: Personal Finance 101 for Young Lawyers

Postby unlicensedpotato » Thu Mar 16, 2017 4:19 pm

North wrote:So I'm going to open a savings account to start building an emergency fund. Never had "savings" before. BOA is offering me a Money Market Savings account (0.03% interest) or a Regular Savings account (0.01% interest). Neither seems like a great rate. I'm planning on building up between 10 to 15k as the emergency fund. Is there CW on which is better to keep it in? Or should I go with the slightly better rate and call it a day?


GS Bank is 1.05%.

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AVBucks4239
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Re: Personal Finance 101 for Young Lawyers

Postby AVBucks4239 » Thu Mar 16, 2017 5:02 pm

North wrote:So I'm going to open a savings account to start building an emergency fund. Never had "savings" before. BOA is offering me a Money Market Savings account (0.03% interest) or a Regular Savings account (0.01% interest). Neither seems like a great rate. I'm planning on building up between 10 to 15k as the emergency fund. Is there CW on which is better to keep it in? Or should I go with the slightly better rate and call it a day?


I personally use Ally. Interest rate is around 1%, app is super easy to use, great customer service.

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dailygrind
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Re: Personal Finance 101 for Young Lawyers

Postby dailygrind » Thu Mar 16, 2017 6:55 pm

I use Barclays. About 1% is the best you'll get without going to a thrift.

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swampthang
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Re: Personal Finance 101 for Young Lawyers

Postby swampthang » Thu Mar 16, 2017 9:09 pm

Capital One Money Market here. Also 1%. So I would say the CW is to go with the 100x better rate and just open any of the aforementioned online accounts. CapOne sometimes offers new customer bonuses-- I think that's why I opened a checking account with them in the first place. Would be worth some quick googling to see if you can get a free $100 or so out of opening your new e-fund savings account.

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bk1
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Re: Personal Finance 101 for Young Lawyers

Postby bk1 » Thu Mar 16, 2017 10:32 pm

North wrote:So I'm going to open a savings account to start building an emergency fund. Never had "savings" before. BOA is offering me a Money Market Savings account (0.03% interest) or a Regular Savings account (0.01% interest). Neither seems like a great rate. I'm planning on building up between 10 to 15k as the emergency fund. Is there CW on which is better to keep it in? Or should I go with the slightly better rate and call it a day?

As others have noted, around 1% is generally the best easy savings rate you can get.

There are some places where you can get more (e.g., 3%) on certain balance amounts (e.g., below 15k) if you jump through hoops (e.g., make X debit transactions per month). LMCU's Max Checking is one example (https://www.lmcu.org/banking/checking/checking_max.aspx).

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North
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Re: Personal Finance 101 for Young Lawyers

Postby North » Fri Mar 17, 2017 8:28 am

Wow how does BOA get away with offering such garbage rates. I'll open one with GS I think. Thanks guys.

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Re: Personal Finance 101 for Young Lawyers

Postby Winter is Coming » Fri Mar 17, 2017 9:45 am

North wrote:Wow how does BOA get away with offering such garbage rates. I'll open one with GS I think. Thanks guys.


BOA is absolute garbage until you're a preferred client (which isn't that hard to do because they count Merrill IRAs into the balance requirements). Their savings accounts are a joke, but credit cards and their billon ATMs make it an okay bank to use for direct deposits and your primary checking. But any type of real short term savings should be in GS, CapitalOne 360, Ally or any other bank offering around 1% interest on savings accounts right now.

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Re: Personal Finance 101 for Young Lawyers

Postby Anonymous User » Fri Mar 17, 2017 7:46 pm

Can someone offer some insight? 60k in debt so far, have a 2L SA lined up. With my 30k from the summer I will make, I am thinking of using 25k (blowing other 5k I presume) toward fall semester tuition. That way I won't have to take out loans for fall, but rather only spring of 3L. Does this make sense? Using my SA money for tuition, so I don't have loans gaining interest on me while I would have 30k in the bank? [Or is it better to reduce my already accruing 60k loans??]

Thank you in advance!!! (fyi loan interest is 6%)

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Re: Personal Finance 101 for Young Lawyers

Postby RaceJudicata » Fri Mar 17, 2017 8:57 pm

Anonymous User wrote:Can someone offer some insight? 60k in debt so far, have a 2L SA lined up. With my 30k from the summer I will make, I am thinking of using 25k (blowing other 5k I presume) toward fall semester tuition. That way I won't have to take out loans for fall, but rather only spring of 3L. Does this make sense? Using my SA money for tuition, so I don't have loans gaining interest on me while I would have 30k in the bank? [Or is it better to reduce my already accruing 60k loans??]

Thank you in advance!!! (fyi loan interest is 6%)



You do know that you have to pay taxes, right? You won't make 30k... That said, its still a boat load of cash, and its a pretty sweet gig.

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PeanutsNJam
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Re: Personal Finance 101 for Young Lawyers

Postby PeanutsNJam » Fri Mar 17, 2017 9:07 pm

If he's in Texas, 5k total tax liability + another 5k of living expenses for 3 months sounds reasonable.

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Re: Personal Finance 101 for Young Lawyers

Postby RaceJudicata » Fri Mar 17, 2017 9:40 pm

PeanutsNJam wrote:If he's in Texas, 5k total tax liability + another 5k of living expenses for 3 months sounds reasonable.


Brain still on that 3k per week rate. You are correct.

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Re: Personal Finance 101 for Young Lawyers

Postby Anonymous User » Sat Mar 18, 2017 1:14 am

RaceJudicata wrote:
Anonymous User wrote:Can someone offer some insight? 60k in debt so far, have a 2L SA lined up. With my 30k from the summer I will make, I am thinking of using 25k (blowing other 5k I presume) toward fall semester tuition. That way I won't have to take out loans for fall, but rather only spring of 3L. Does this make sense? Using my SA money for tuition, so I don't have loans gaining interest on me while I would have 30k in the bank? [Or is it better to reduce my already accruing 60k loans??]

Thank you in advance!!! (fyi loan interest is 6%)



You do know that you have to pay taxes, right? You won't make 30k... That said, its still a boat load of cash, and its a pretty sweet gig.


I will pay a total of like $200 in federal income tax [no state tax]. 30k total over 10 weeks, minus deductions, plus the 2k lifetime learning credit, equals almost zero tax liability.

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Tiago Splitter
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Re: Personal Finance 101 for Young Lawyers

Postby Tiago Splitter » Sat Mar 18, 2017 2:05 am

Anonymous User wrote:
RaceJudicata wrote:
Anonymous User wrote:Can someone offer some insight? 60k in debt so far, have a 2L SA lined up. With my 30k from the summer I will make, I am thinking of using 25k (blowing other 5k I presume) toward fall semester tuition. That way I won't have to take out loans for fall, but rather only spring of 3L. Does this make sense? Using my SA money for tuition, so I don't have loans gaining interest on me while I would have 30k in the bank? [Or is it better to reduce my already accruing 60k loans??]

Thank you in advance!!! (fyi loan interest is 6%)



You do know that you have to pay taxes, right? You won't make 30k... That said, its still a boat load of cash, and its a pretty sweet gig.


I will pay a total of like $200 in federal income tax [no state tax]. 30k total over 10 weeks, minus deductions, plus the 2k lifetime learning credit, equals almost zero tax liability.

FICA and FUTA alone is 2295 on 30k.

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Re: Personal Finance 101 for Young Lawyers

Postby Anonymous User » Sat Mar 18, 2017 2:39 am

Tiago Splitter wrote:
Anonymous User wrote:
RaceJudicata wrote:
Anonymous User wrote:Can someone offer some insight? 60k in debt so far, have a 2L SA lined up. With my 30k from the summer I will make, I am thinking of using 25k (blowing other 5k I presume) toward fall semester tuition. That way I won't have to take out loans for fall, but rather only spring of 3L. Does this make sense? Using my SA money for tuition, so I don't have loans gaining interest on me while I would have 30k in the bank? [Or is it better to reduce my already accruing 60k loans??]

Thank you in advance!!! (fyi loan interest is 6%)



You do know that you have to pay taxes, right? You won't make 30k... That said, its still a boat load of cash, and its a pretty sweet gig.


I will pay a total of like $200 in federal income tax [no state tax]. 30k total over 10 weeks, minus deductions, plus the 2k lifetime learning credit, equals almost zero tax liability.

FICA and FUTA alone is 2295 on 30k.


Have already met w/ CPA to discuss. If anyone has input as to the original post please comment

Wipfelder
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Re: Personal Finance 101 for Young Lawyers

Postby Wipfelder » Sat Mar 18, 2017 9:07 am

Anonymous User wrote:
Tiago Splitter wrote:
Anonymous User wrote:
RaceJudicata wrote:
Anonymous User wrote:Can someone offer some insight? 60k in debt so far, have a 2L SA lined up. With my 30k from the summer I will make, I am thinking of using 25k (blowing other 5k I presume) toward fall semester tuition. That way I won't have to take out loans for fall, but rather only spring of 3L. Does this make sense? Using my SA money for tuition, so I don't have loans gaining interest on me while I would have 30k in the bank? [Or is it better to reduce my already accruing 60k loans??]

Thank you in advance!!! (fyi loan interest is 6%)



You do know that you have to pay taxes, right? You won't make 30k... That said, its still a boat load of cash, and its a pretty sweet gig.


I will pay a total of like $200 in federal income tax [no state tax]. 30k total over 10 weeks, minus deductions, plus the 2k lifetime learning credit, equals almost zero tax liability.

FICA and FUTA alone is 2295 on 30k.


Have already met w/ CPA to discuss. If anyone has input as to the original post please comment


I think holding on to the cash until you start your real, post law school job is the way to go. Treat it like a giant emergency fund. Who knows what bullshit may come up in the next year or so. You'll take a hit on interest accumulation, because that money would have paid down your principle, but think of it as "paying for flexibility".

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swampthang
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Re: Personal Finance 101 for Young Lawyers

Postby swampthang » Sat Mar 18, 2017 2:01 pm

Wipfelder wrote:I think holding on to the cash until you start your real, post law school job is the way to go. Treat it like a giant emergency fund. Who knows what bullshit may come up in the next year or so. You'll take a hit on interest accumulation, because that money would have paid down your principle, but think of it as "paying for flexibility".


Really depends what your current vs. prospective interest rates are, as well as your future cash flows until you start working.

To illustrate, if the interest rates for your 2L and 3L loans are the same, then you're indifferent between paying off old loans vs. avoiding loans. However, if now that you have SA income and a good prospect for high earnings post-grad, you qualify for private loans with lower interest rates, it would be preferable to pay off old loans and then take out private loans for 3L at the lower rate. Likewise, I found my bar loans had lower rates than my school loans, so I maxed those out to ensure flexibility over the summer and used the excess to pay off the higher rate loans.

The other piece is your future cash flows. Does your firm bring any SAs back to work part-time during the year (rare, but not unheard of)? Do they offer an advance? If so, when, how much, interest free? How time-constrained are your student loan disbursements (i.e., if you find yourself short on cash in March, can you take out an extra G from the Fed?)? The ability to take out bar loans (I believe the max is typically around 15k) definitely also mitigates cash flow concerns. My lean would be to check around to see what kind of rates you're going to qualify for, and if you save a couple points by going private, pay down as much as you can, live a student lifestyle, and supplement with additional loans as needed.

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nealric
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Re: Personal Finance 101 for Young Lawyers

Postby nealric » Tue Mar 21, 2017 5:00 pm

Wipfelder wrote:
Anonymous User wrote:
Tiago Splitter wrote:
Anonymous User wrote:
RaceJudicata wrote:
Anonymous User wrote:Can someone offer some insight? 60k in debt so far, have a 2L SA lined up. With my 30k from the summer I will make, I am thinking of using 25k (blowing other 5k I presume) toward fall semester tuition. That way I won't have to take out loans for fall, but rather only spring of 3L. Does this make sense? Using my SA money for tuition, so I don't have loans gaining interest on me while I would have 30k in the bank? [Or is it better to reduce my already accruing 60k loans??]

Thank you in advance!!! (fyi loan interest is 6%)



You do know that you have to pay taxes, right? You won't make 30k... That said, its still a boat load of cash, and its a pretty sweet gig.


I will pay a total of like $200 in federal income tax [no state tax]. 30k total over 10 weeks, minus deductions, plus the 2k lifetime learning credit, equals almost zero tax liability.

FICA and FUTA alone is 2295 on 30k.


Have already met w/ CPA to discuss. If anyone has input as to the original post please comment


I think holding on to the cash until you start your real, post law school job is the way to go. Treat it like a giant emergency fund. Who knows what bullshit may come up in the next year or so. You'll take a hit on interest accumulation, because that money would have paid down your principle, but think of it as "paying for flexibility".


I used my SA money to pay my living expenses for 3L year- I borrowed only for tuition. At the time, not borrowing was better than repaying existing loans because there was a 1% origination fee on the student loans. Not sure if that's still the case. If it is, your best bet it to hold onto enough cash to pay your living expenses through when the firm generally pays salary advance/signing bonus- whatever is left over can be used to pay tuition- but make sure to give yourself a cushion. You will want more cash in the event of a no-offer or if you change your mind and decide not to do biglaw for whatever reason.

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SplitMyPants
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Re: Personal Finance 101 for Young Lawyers

Postby SplitMyPants » Tue Mar 21, 2017 6:03 pm

I am did the same thing (used a lot of my 2L money to pay for 3L living). Also, don't forget that you can change your loan disbursement at any point through out the year. Just this week I decided to pull out the $11k i had left on the table. Now, I have 180 days within which to pay it back, origination-fee/interest free... It's basically a free loan to see how things shape up as I approach my NYC apartment hunt this fall and get ready to settle in as I wait for my start date.

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buckiguy_sucks
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Re: Personal Finance 101 for Young Lawyers

Postby buckiguy_sucks » Sat Mar 25, 2017 10:30 pm

Is the "private banking" that law firms list as a benefit on their NALP page basically just higher fees to be told to invest in index funds or is it like relationship rates on mortgages and savings accounts and stuff?




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