Personal Finance 101 for Young Lawyers Forum

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The Lsat Airbender

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Re: Personal Finance 101 for Young Lawyers

Post by The Lsat Airbender » Mon Feb 08, 2021 11:55 am

nealric wrote:
Mon Feb 08, 2021 11:42 am
The current yield to maturity is 1.1%, which is what it should theoretically return if there are no changes to interest rates or other market forces impacting the bond market. If you are looking at past year returns, they are likely to be higher.
Ah, for sure, you're right of course. I'm still pretty happy with my setup. I have enough cash for emergencies, most of my net worth is in equities, and these bonds form a small firewall between them - money I won't need to access in the foreseeable future but which I might want to use to bankroll a career change or long vacation or something, and want to be able to draw on without reference to how the stock market is doing.

Honestly it's more a psychological defense-in-depth strategy to discourage myself from selling stocks in a downturn. And since it's only a few thousand dollars (so implied cost of ca. $300/year in foregone returns) it's way cheaper than actually hedging against a downturn.

In case I wasn't clear above, I don't at all recommend that people go long on bonds as an investment strategy unless they're within a decade of retiring. For young people they only make sense as a personal guardrail to help you keep a grip on your equity exposure.

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Re: Personal Finance 101 for Young Lawyers

Post by jsnow212 » Mon Feb 08, 2021 6:49 pm

The Lsat Airbender wrote:
Mon Feb 08, 2021 11:55 am
nealric wrote:
Mon Feb 08, 2021 11:42 am
The current yield to maturity is 1.1%, which is what it should theoretically return if there are no changes to interest rates or other market forces impacting the bond market. If you are looking at past year returns, they are likely to be higher.
Ah, for sure, you're right of course. I'm still pretty happy with my setup. I have enough cash for emergencies, most of my net worth is in equities, and these bonds form a small firewall between them - money I won't need to access in the foreseeable future but which I might want to use to bankroll a career change or long vacation or something, and want to be able to draw on without reference to how the stock market is doing.

Honestly it's more a psychological defense-in-depth strategy to discourage myself from selling stocks in a downturn. And since it's only a few thousand dollars (so implied cost of ca. $300/year in foregone returns) it's way cheaper than actually hedging against a downturn.

In case I wasn't clear above, I don't at all recommend that people go long on bonds as an investment strategy unless they're within a decade of retiring. For young people they only make sense as a personal guardrail to help you keep a grip on your equity exposure.
This is a great explanation.


New investors must find a way to get comfortable with the strategy they are running to ensure they stay with it, even for inevitably long periods of time where it will seem like it isn't working. For you, having bonds helps you sleep at night and keep with the plan, so that's great even if it isn't mathematically optimal. For others, it may be having higher-than-necessary emergency savings or paying off low-interest debt far ahead of schedule, etc.

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Re: Personal Finance 101 for Young Lawyers

Post by Anonymous User » Sun Feb 14, 2021 7:16 pm

What would you all suggest for current law students who have some of their summer money left over, either 2Ls who worked at a firm 1L summer or 3Ls who still have some extra cash barring everything they need for the post-grad move. Throw a couple grand into an IRA or what?

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Re: Personal Finance 101 for Young Lawyers

Post by Anonymous User » Mon Feb 15, 2021 2:17 pm

Anonymous User wrote:
Sun Feb 14, 2021 7:16 pm
What would you all suggest for current law students who have some of their summer money left over, either 2Ls who worked at a firm 1L summer or 3Ls who still have some extra cash barring everything they need for the post-grad move. Throw a couple grand into an IRA or what?
Recent grad: I used my leftover 1L summer money for IRA contributions and for spending money during my 2L year (to avoid borrowing above pure tuition). I used my leftover 2L summer money, thanks to that baseline, to (1) pay my fall tuition bill and (2) again as spending money for the school year.

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Re: Personal Finance 101 for Young Lawyers

Post by BiggyLaws » Wed Feb 17, 2021 9:49 pm

Anonymous User wrote:
Mon Feb 15, 2021 2:17 pm
Anonymous User wrote:
Sun Feb 14, 2021 7:16 pm
What would you all suggest for current law students who have some of their summer money left over, either 2Ls who worked at a firm 1L summer or 3Ls who still have some extra cash barring everything they need for the post-grad move. Throw a couple grand into an IRA or what?
Recent grad: I used my leftover 1L summer money for IRA contributions and for spending money during my 2L year (to avoid borrowing above pure tuition). I used my leftover 2L summer money, thanks to that baseline, to (1) pay my fall tuition bill and (2) again as spending money for the school year.
Consider funding a 529 with some of your summer money to avoid some state tax, particularly if you worked in NY. You could just withdraw it after the short holding period (I think it's 10 days for NY).

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Re: Personal Finance 101 for Young Lawyers

Post by wwfeds » Thu Feb 18, 2021 11:14 am

BiggyLaws wrote:
Wed Feb 17, 2021 9:49 pm
Anonymous User wrote:
Mon Feb 15, 2021 2:17 pm
Anonymous User wrote:
Sun Feb 14, 2021 7:16 pm
What would you all suggest for current law students who have some of their summer money left over, either 2Ls who worked at a firm 1L summer or 3Ls who still have some extra cash barring everything they need for the post-grad move. Throw a couple grand into an IRA or what?
Recent grad: I used my leftover 1L summer money for IRA contributions and for spending money during my 2L year (to avoid borrowing above pure tuition). I used my leftover 2L summer money, thanks to that baseline, to (1) pay my fall tuition bill and (2) again as spending money for the school year.
Consider funding a 529 with some of your summer money to avoid some state tax, particularly if you worked in NY. You could just withdraw it after the short holding period (I think it's 10 days for NY).
This is only useful if you plan on using it for education-related expenses, which is broad and should cover rent during school etc., but would double check before.

Not sure I would advise doing anything that would put restrictions on it. Maybe just invest in an equity / bond mix and hope for some gains over the next couple years without too much risk.

Putting it into an IRA will basically lock it up until you retire. Even though you can withdraw Roth IRA contributions without penalty, everyone is going to advise you not to take it out early. Contributing to an IRA makes more sense (IMO) once you have started working and have a better sense of your take home pay check and cash flow and long term plans.

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lolwutpar

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Re: Personal Finance 101 for Young Lawyers

Post by lolwutpar » Wed Mar 03, 2021 6:57 pm

My firm is going to roll out an automatic conversion to do a backdoor ROTH through our 401k plan - hugely underrated benefit.

showusyourtorts

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Re: Personal Finance 101 for Young Lawyers

Post by showusyourtorts » Wed Mar 03, 2021 11:41 pm

lolwutpar wrote:
Wed Mar 03, 2021 6:57 pm
My firm is going to roll out an automatic conversion to do a backdoor ROTH through our 401k plan - hugely underrated benefit.
Do you mean like an automatic mega backdoor Roth? I.e., being able to do a normal $19,5000 (whether traditional or post-tax) and then be able to contribute up to an additional $37k or so of after-tax non-Roth 401(k) contributions that then automatically transfer over as an in-service distribution to your Roth IRA? If so, that's awesome. I have to fill out a form every time that I do it (though I'm just happy my firm allows the after-tax contributions at all, FWIW).
Last edited by showusyourtorts on Thu Mar 04, 2021 12:02 am, edited 1 time in total.

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Re: Personal Finance 101 for Young Lawyers

Post by showusyourtorts » Wed Mar 03, 2021 11:48 pm

wwfeds wrote:
Thu Feb 18, 2021 11:14 am
BiggyLaws wrote:
Wed Feb 17, 2021 9:49 pm
Anonymous User wrote:
Mon Feb 15, 2021 2:17 pm
Anonymous User wrote:
Sun Feb 14, 2021 7:16 pm
What would you all suggest for current law students who have some of their summer money left over, either 2Ls who worked at a firm 1L summer or 3Ls who still have some extra cash barring everything they need for the post-grad move. Throw a couple grand into an IRA or what?
Recent grad: I used my leftover 1L summer money for IRA contributions and for spending money during my 2L year (to avoid borrowing above pure tuition). I used my leftover 2L summer money, thanks to that baseline, to (1) pay my fall tuition bill and (2) again as spending money for the school year.
Consider funding a 529 with some of your summer money to avoid some state tax, particularly if you worked in NY. You could just withdraw it after the short holding period (I think it's 10 days for NY).
This is only useful if you plan on using it for education-related expenses, which is broad and should cover rent during school etc., but would double check before.

Not sure I would advise doing anything that would put restrictions on it. Maybe just invest in an equity / bond mix and hope for some gains over the next couple years without too much risk.

Putting it into an IRA will basically lock it up until you retire. Even though you can withdraw Roth IRA contributions without penalty, everyone is going to advise you not to take it out early. Contributing to an IRA makes more sense (IMO) once you have started working and have a better sense of your take home pay check and cash flow and long term plans.
I don't understand this argument. Roth IRAs are use it or lose it. The reason that people advise you to not take money out of your Roth IRA is because it's a fantastic place to park your investments, and not because there are any financial penalties associated with withdrawing your contributions (besides, of course, losing out on having a fantastic place to park your investments). You can always opt out -- you can contribute money today and distribute those contributions literally next week without any penalty. But you can't turn back time to opt in in the first place.

If OP (1) isn't going to fund a 529; (2) plans to otherwise invest that money (in any mixture of equity or bonds); and (3) plans to at least save some money for retirement (such that losing the ability to withdraw just their interest prior to retirement isn't an issue), then I think it's a slam dunk to use the IRA versus a taxable brokerage account.

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lolwutpar

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Re: Personal Finance 101 for Young Lawyers

Post by lolwutpar » Thu Mar 04, 2021 12:18 am

showusyourtorts wrote:
Wed Mar 03, 2021 11:41 pm
lolwutpar wrote:
Wed Mar 03, 2021 6:57 pm
My firm is going to roll out an automatic conversion to do a backdoor ROTH through our 401k plan - hugely underrated benefit.
Do you mean like an automatic mega backdoor Roth? I.e., being able to do a normal $19,5000 (whether traditional or post-tax) and then be able to contribute up to an additional $37k or so of after-tax non-Roth 401(k) contributions that then automatically transfer over as an in-service distribution to your Roth IRA? If so, that's awesome. I have to fill out a form every time that I do it (though I'm just happy my firm allows the after-tax contributions at all, FWIW).
Correct, it's automatic every time you make a contribution for the after-tax dollars (so, every paycheck for me). Also glad they even offer the ability to mega-backdoor (previous firms didn't), but the automatic thing is cluuuutch.

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Re: Personal Finance 101 for Young Lawyers

Post by Anonymous User » Sat Mar 13, 2021 12:43 pm

Looking for some advice. I know jack shit about personal finance.

Just started big law as a first year late last year. My question is, is there any reason I shouldn’t save as much as possible with the goal of paying off my student loans immediately?

Have about 20k cash saved and have made max 401k contributions. Don’t have an HSA because I was scared of the high deductible, I opted for the more expensive premium health plan without an HSA.

I have about 80k in federal student loans, that are obviously deferred right now. Should I continue saving as much cash as possible with the goal of paying them off ASAP? Can someone explain if there is a more optimal option?

Thank you

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Re: Personal Finance 101 for Young Lawyers

Post by masterherm » Sat Mar 13, 2021 1:57 pm

The optimal route is to invest in a low-cost mutual fund, which will average about a 7-9% annual return in the long run, rather than throwing money at a loan currently accruing 0% interest. You're essentially making a free 7-9% ROI with that decision. If you are more risk averse, it's still better to park the money in a high yield savings account (such as Ally), which can get you a 0.5% return, rather than paying off a 0% deferred loan. You'll have the money safe, FDIC-insured, and ready to throw at the loan the second it exits deferral and starts costing you interest, but until that time you'll earn a return. The only reason to pay off a loan generating 0% interest is for peace of mind; it will never be the optimal decision to take a guaranteed 0% return over an average annual 7-9% return through mutual funds or even a 0.5% return through a HYSA.

I'd recommend reading r/personalfinance on reddit, there's a lot to know about personal finance but the big picture is pretty simple. Set up an emergency fund (you've done that), max out 401k (check), pay off high interest loans (skip while in deferral), and invest in low-cost mutual funds from Vanguard like VTSAX, or even a target retirement date fund if you prefer to set it and forget it.

I made the same mistake as you re: health insurance my first year, but be sure to switch to the high deductible plan going forward. It gets you access to an HSA, which is the best tax-advantaged vehicle you can have and you can max it out every year along with your 401k (don't use it for medical expenses, just load money into it). Chances are, if you do the math between the high deductible plan's total annual cost + max deductible and compare it to the more expensive plan + max deductible, they come out roughly even. The HSA is a great savings tool for big law since you can afford to max it out and not touch it.

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Re: Personal Finance 101 for Young Lawyers

Post by Anonymous User » Sat Mar 13, 2021 2:01 pm

masterherm wrote:
Sat Mar 13, 2021 1:57 pm
The optimal route is to invest in a low-cost mutual fund, which will average about a 7-9% annual return in the long run, rather than throwing money at a loan currently accruing 0% interest. You're essentially making a free 7-9% ROI with that decision. If you are more risk averse, it's still better to park the money in a high yield savings account (such as Ally), which can get you a 0.5% return, rather than paying off a 0% deferred loan. You'll have the money safe, FDIC-insured, and ready to throw at the loan the second it exits deferral and starts costing you interest, but until that time you'll earn a return. The only reason to pay off a loan generating 0% interest is for peace of mind; it will never be the optimal decision to take a guaranteed 0% return over an average annual 7-9% return through mutual funds or even a 0.5% return through a HYSA.

I'd recommend reading r/personalfinance on reddit, there's a lot to know about personal finance but the big picture is pretty simple. Set up an emergency fund (you've done that), max out 401k (check), pay off high interest loans (skip while in deferral), and invest in low-cost mutual funds from Vanguard like VTSAX, or even a target retirement date fund if you prefer to set it and forget it.

I made the same mistake as you re: health insurance my first year, but be sure to switch to the high deductible plan going forward. It gets you access to an HSA, which is the best tax-advantaged vehicle you can have and you can max it out every year along with your 401k (don't use it for medical expenses, just load money into it). Chances are, if you do the math between the high deductible plan's total annual cost + max deductible and compare it to the more expensive plan + max deductible, they come out roughly even. The HSA is a great savings tool for big law since you can afford to max it out and not touch it.
Thanks a ton. Could you give me an example of a mutual fund to invest in? Also is there any penalty to withdrawing that money at any time? Say in September when deferral is set to expire?

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masterherm

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Re: Personal Finance 101 for Young Lawyers

Post by masterherm » Sat Mar 13, 2021 2:13 pm

VTSAX covers the entire US stock market; it's what I use. You can invest in it through Vanguard. Most personal finance thinking recommends having some exposure to international stocks as well, ranging from 20-40%. I use VTIAX for that. So you can probably go for something like 80% VTSAX, 20% VTIAX. Or just go 100% target retirement date for 2055 or whatever. Target retirement funds automatically rebalance as you approach the retirement year to increase exposure to bonds and decrease exposure to stocks, so you can just throw money into it and forget about it if that's your style.

When you invest, you want the money invested at least a year because then when you withdraw, you only have to pay 15% tax on the profits (long term capital gains). If you have to withdraw in less than a year, your profits will be taxed as ordinary income (much higher than 15%). There is never a penalty to the principal amount you invest with, only the profits. If you incur a loss when you withdraw your investment you can offset that against your taxable income, this is called tax loss harvesting and is limited to $3k/year. Ideally you are long term investing and not touching the money anytime soon. If you know you'll need the money, better to keep it in a HYSA because of the heavy taxation for short term capital gains.

EDIT: I would recommend looking into refinancing options, since you can probably get a much lower rate if you're in big law. You don't need to pull the trigger until deferment ends, but get a quote so you have an idea of your potential interest rate. For example, if you do a 5-year variable loan on Sofi, you could get a sub-2% interest rate (mine is like 0.17% right now). The government loans are rip offs. Message me for more details.

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nealric

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Re: Personal Finance 101 for Young Lawyers

Post by nealric » Tue Mar 16, 2021 5:44 pm

masterherm wrote:
Sat Mar 13, 2021 2:13 pm
VTSAX covers the entire US stock market; it's what I use. You can invest in it through Vanguard. Most personal finance thinking recommends having some exposure to international stocks as well, ranging from 20-40%. I use VTIAX for that. So you can probably go for something like 80% VTSAX, 20% VTIAX. Or just go 100% target retirement date for 2055 or whatever. Target retirement funds automatically rebalance as you approach the retirement year to increase exposure to bonds and decrease exposure to stocks, so you can just throw money into it and forget about it if that's your style.

When you invest, you want the money invested at least a year because then when you withdraw, you only have to pay 15% tax on the profits (long term capital gains). If you have to withdraw in less than a year, your profits will be taxed as ordinary income (much higher than 15%). There is never a penalty to the principal amount you invest with, only the profits. If you incur a loss when you withdraw your investment you can offset that against your taxable income, this is called tax loss harvesting and is limited to $3k/year. Ideally you are long term investing and not touching the money anytime soon. If you know you'll need the money, better to keep it in a HYSA because of the heavy taxation for short term capital gains.

EDIT: I would recommend looking into refinancing options, since you can probably get a much lower rate if you're in big law. You don't need to pull the trigger until deferment ends, but get a quote so you have an idea of your potential interest rate. For example, if you do a 5-year variable loan on Sofi, you could get a sub-2% interest rate (mine is like 0.17% right now). The government loans are rip offs. Message me for more details.
VTI is the ETF equivalent and has a marginally lower expense ratio for smaller purchases (below the "Admiral Shares" threshold). At many brokerages (including mine), ETFs are free trades but you are charged for mutual fund purchases.

There's a raging debate about how much international exposure you should have. A significant portion of the F500 revenue is from abroad already. If you do go with international funds, make sure you know what you are getting. "International" funds are often mostly Europe. "Emerging Markets" may sound like it gets you exposure to true developing countries, but is often mostly China/Inda/Brazil (sometimes even Korean shares get included in these funds).

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Re: Personal Finance 101 for Young Lawyers

Post by lawposter10000 » Thu Mar 25, 2021 10:51 am

Hello, learned a lot from this thread in the past.

What are y'all using for something slightly riskier than a high yield savings account, i.e. something overall safe but with a little upside beyond the bare minimum? I have a pot of money set aside for some big expenses I know I will be incurring 6-18 months from now. Normally I would keep this in something low risk but with some growth, like a short term corporate bond ETF. However, at least at Vanguard, those have basically either lost a little money recently or not grown at all. What have y'all been using for a similar timeline/risk profile?

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nealric

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Re: Personal Finance 101 for Young Lawyers

Post by nealric » Thu Mar 25, 2021 11:12 am

lawposter10000 wrote:
Thu Mar 25, 2021 10:51 am
Hello, learned a lot from this thread in the past.

What are y'all using for something slightly riskier than a high yield savings account, i.e. something overall safe but with a little upside beyond the bare minimum? I have a pot of money set aside for some big expenses I know I will be incurring 6-18 months from now. Normally I would keep this in something low risk but with some growth, like a short term corporate bond ETF. However, at least at Vanguard, those have basically either lost a little money recently or not grown at all. What have y'all been using for a similar timeline/risk profile?
Right now, bond yields are such that there aren't a lot of attractive options in this space. You could put a portion of the money in equities if you are looking for growth, but there's really nothing out there that will provide completely safe growth. Chasing risk by finding higher yield debt investments can result in piling on a lot of risk without adding much upside.

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Re: Personal Finance 101 for Young Lawyers

Post by showusyourtorts » Thu Mar 25, 2021 1:12 pm

Does anyone have recommendations for where to set up a taxable brokerage account? What are the common options?

I'm not sure I understand the differences (if there are any) between things like E*TRADE, Robinhood, Betterment, Vanguard, Fidelity, etc..

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Re: Personal Finance 101 for Young Lawyers

Post by Chrstgtr » Thu Mar 25, 2021 4:43 pm

showusyourtorts wrote:
Thu Mar 25, 2021 1:12 pm
Does anyone have recommendations for where to set up a taxable brokerage account? What are the common options?

I'm not sure I understand the differences (if there are any) between things like E*TRADE, Robinhood, Betterment, Vanguard, Fidelity, etc..
Depends. What are you going to invest in? Individual stocks, ETFs, and/or MFs? If you follow the standard advice of just investing in MFs or ETFs, Vanguard is the place to go to buy Vanguard MFs without any transaction fees. Vanguard has a patent on its MFs that allows them to be treated the same as ETFs. This means that you can buy, set to reinvest dividends, set automatic regular investments, and forget about it.

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Re: Personal Finance 101 for Young Lawyers

Post by tlsguy2020 » Thu Mar 25, 2021 5:00 pm

showusyourtorts wrote:
Thu Mar 25, 2021 1:12 pm
Does anyone have recommendations for where to set up a taxable brokerage account? What are the common options?

I'm not sure I understand the differences (if there are any) between things like E*TRADE, Robinhood, Betterment, Vanguard, Fidelity, etc..
If you want to buy to hold long-term, probably go with vanguard, fidelity, or Schwab. They generally have lowest fee structures for mutual funds etc and good customer support. Something like Robinhood is too shiny and easy-to-use for buying and holding. App makes it too easy to make impulsive decisions. Something like Betterment i think is a robo-advisor. The robot would just buy whatever mutual funds/ETFs you’d buy in vanguard and charge you a tiny fee for it.

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Re: Personal Finance 101 for Young Lawyers

Post by Anonymous User » Thu Apr 08, 2021 10:20 am

First-year in biglaw who is totally new to personal finance and feeling very overwhelmed.

I have no debt, I live with my partner (not married), my partner has ~20k student loans, and we don't have kids. My partner makes ~55k. I have saved ~50k so far as an emergency fund which is sitting in my savings account for quick access. Our current rent is ~3k, which we split 66/33.

My main goal, and reason for posting, is that I want to start saving for home-ownership. Right now, I'm still living where I went to law school and I hate that later this year (as the firm brings us back in office) I am going to have to relocate to NYC to pay even higher rent for a smaller place to do the same work I'm doing now. I've been overpaying rent since the pandemic started because I moved into a huge home to make being home all day tolerable - I could easily relocate within my current city and pay half this rent. Anyway, I can see myself doing two or three years in NYC and then moving back here and buying a ~500k house, lateralling or taking a major pay cut.

I have a few totally stupid questions and really would appreciate any guidance.

*Should I be maxing out my 401k? Firm doesn't match, as is standard it seems. Unclear on whether I should use the firm's 401k or do something like a backdoor Roth, though I admittedly have no idea how to do that.

*How much money, or what percentage of my net, should I be setting aside each month so that I can build toward homeownership? Should I dump this money into a special type of savings account?

*Right now, I do all of my banking through Bank of America. I had created a checking, savings, and credit card with them back in high school. I am getting totally fleeced now that I'm making actual money (the savings interest rate is pennies per year, I don't earn points or awards on the credit card). Does anyone have a bank recommendation where I can manage all of my money at once with multiple accounts, including a credit card? Is there a good "beginner" credit card for someone who isn't used to having points/rewards? (Despite having a credit score over 800).

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Re: Personal Finance 101 for Young Lawyers

Post by Anonymous User » Thu Apr 08, 2021 3:15 pm

Anonymous User wrote:
Thu Apr 08, 2021 10:20 am
*Should I be maxing out my 401k? Firm doesn't match, as is standard it seems. Unclear on whether I should use the firm's 401k or do something like a backdoor Roth, though I admittedly have no idea how to do that.
Yes, max out your 401K and do a backdoor roth. Just google "backdoor roth vanguard" and there should be posts that walk you through it. If you had income last year, you should do a roth ASAP so you can max out your 2020 contribution. The window to do this will close soon
Anonymous User wrote:
Thu Apr 08, 2021 10:20 am
*How much money, or what percentage of my net, should I be setting aside each month so that I can build toward homeownership? Should I dump this money into a special type of savings account?
The easy answer is to aim for the amount that you think you will need and then put away that much in whatever rate you want. So if you want your savings amount to be spread out each month and you think your down payment will be 100K in 2 years then you should save $4,116 a month ($100K/24 months). There are reasons to not do it this way (i.e. you'll get a raise next year so you save less now and save later) but this is the easiest way.

If you must buy a home in 2-3 years then a HYSA is the way to go. If you would be fine taking more risk (i.e. investing the money to get a higher return) and are prepared to put off buying a home if the market crashes then you should put the money into a brokerage account and invest it. This makes sense if you think you might lose your job in a downturn and consequently be less likely to buy a home. For most people, however, a HYSA is the way to go.
Anonymous User wrote:
Thu Apr 08, 2021 10:20 am
*Right now, I do all of my banking through Bank of America. I had created a checking, savings, and credit card with them back in high school. I am getting totally fleeced now that I'm making actual money (the savings interest rate is pennies per year, I don't earn points or awards on the credit card). Does anyone have a bank recommendation where I can manage all of my money at once with multiple accounts, including a credit card? Is there a good "beginner" credit card for someone who isn't used to having points/rewards? (Despite having a credit score over 800).
There are a bunch of everyday banks that are basically identical. Ally is a good one. But interest rates are so low that it won't really matter. Best credit card is going to depend on your credit score and spending habits. I would go to reddit's r/creditcards subreddit to post your information and see what they say. As far as places that do both good bank AND CC, I think that only leaves you with Capital One. But their bank isn't that great. And their CCs aren't either. It's really easy to just set up a auto-payment function for a CC so it shouldn't matter where you bank. Also, having a good bank doesn't really matter right now because of low interest rates.

Sorry accidental anon: Chrstgtr

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Re: Personal Finance 101 for Young Lawyers

Post by Anonymous User » Fri Apr 09, 2021 3:13 pm

Anonymous User wrote:
Thu Apr 08, 2021 10:20 am
*Right now, I do all of my banking through Bank of America. I had created a checking, savings, and credit card with them back in high school. I am getting totally fleeced now that I'm making actual money (the savings interest rate is pennies per year, I don't earn points or awards on the credit card). Does anyone have a bank recommendation where I can manage all of my money at once with multiple accounts, including a credit card? Is there a good "beginner" credit card for someone who isn't used to having points/rewards? (Despite having a credit score over 800).
There are a bunch of everyday banks that are basically identical. Ally is a good one. But interest rates are so low that it won't really matter. Best credit card is going to depend on your credit score and spending habits. I would go to reddit's r/creditcards subreddit to post your information and see what they say. As far as places that do both good bank AND CC, I think that only leaves you with Capital One. But their bank isn't that great. And their CCs aren't either. It's really easy to just set up a auto-payment function for a CC so it shouldn't matter where you bank. Also, having a good bank doesn't really matter right now because of low interest rates.

Sorry accidental anon: Chrstgtr
[/quote]

Just wanted to highlight that bank of america has a really useful program for folks who hold a lot of money with them (checking/savings/merrill brokerage). https://www.bankofamerica.com/preferred-rewards/
r/ creditcards often doesn't capture this type of thing, since most folks don't have the income stream of biglaw. Since savings rates are pretty universally low at the moment, I would ignore that boost and just check out the appealing credit card rewards bonus, especially if you're not interested in maximizing returns by shuffling multiple cards. If you're able to get enough money to camp out in the platinum honors tier, the "premium rewards" card lets you have a nice 2.625% return on all non bonus spending (and 3.5% on dining/travel, but it's easier to exceed that with other cards).

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BmoreOrLess

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Re: Personal Finance 101 for Young Lawyers

Post by BmoreOrLess » Sat Apr 10, 2021 9:41 am

Thoughts on using a 401k loan to help fund a down payment for a house? Won’t have enough cash to get 20% down on anything reasonable until year end bonus time, and a 401k loan seems like the best option to bridge the gap and avoid PMI (I’m about as comfortable as I could be with job security at my firm).

Still trying to press the wife to rent for another year, but I think buying is really the only option to get into the burbs and get the outdoor space my wildchild kid needs (and also significantly reduce our daycare costs). I’m guessing the move would save us about $1k a month in fixed costs even taking everything in (e.g., needing a second car).

cheaptilts

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Re: Personal Finance 101 for Young Lawyers

Post by cheaptilts » Sat Apr 10, 2021 11:03 am

BmoreOrLess wrote:
Sat Apr 10, 2021 9:41 am
Thoughts on using a 401k loan to help fund a down payment for a house? Won’t have enough cash to get 20% down on anything reasonable until year end bonus time, and a 401k loan seems like the best option to bridge the gap and avoid PMI (I’m about as comfortable as I could be with job security at my firm).

Still trying to press the wife to rent for another year, but I think buying is really the only option to get into the burbs and get the outdoor space my wildchild kid needs (and also significantly reduce our daycare costs). I’m guessing the move would save us about $1k a month in fixed costs even taking everything in (e.g., needing a second car).
Why can’t you just wait until year end bonus time? I would think of the 401k as just totally off limits absent catastrophe even as a loan. Wouldn’t want to unnecessarily break that mental seal. But that’s just me.

Seriously? What are you waiting for?

Now there's a charge.
Just kidding ... it's still FREE!


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