Posted by wlansden |
Filed under commentary, articles, finances, young associate
By James Bowden
I’m a big climber. Not so much a social climber or a climber of the corporate ladder; a real climber. Climbing takes a little bit of muscle and a wee smidge of balance and endurance, but the main ingredient that makes a good climber is head space – how you control your thought process while they are on a wall. So far I’ve found the practice of law to be the same: the list of skills that a lawyer needs is a mile long, and each lawyer has them [in varying degrees], but what it takes to thrive in private practice is head space – how an attorney handles stress, workload, and the balance with the rest of their lives. Keeping the idea of attorney head space in mind, check out U.S. News and World Reports’ article on Money Tips for Young Lawyers. Yes, it would appear that the publication that tells young lawyers-to-be where their oodles of tuition dollars will best be spent each year is concerned whether the folks that follow their advice will be able to afford to subscribe following graduation. This probably shows good foresight, and probably more self-awareness on the part of the U.S. News staff than many rankings critics would like to give them credit.
The article really is quite good, and quite practical. I really like the suggestion that young lawyers pick a few nice things to treat themselves with – material possessions may not be the key to happiness, but splurging a little to make sure that something you need also ends up being something that you enjoy can be a good thing. Also, catching up on retirement savings is a huge one, and retirement savings really isn’t something that attorneys are known for. I’ve heard that partners used to operate with the expectation that the partnership would continue to support them into their golden years; anyone getting in the game today with that kind of expectation should expect to get laughed at, constantly.
It would be out of character for me not to quibble with a few things, though, and I just gotta be me. My first little nit is that the article seems to understate the amount of student debt law school graduates commonly take on. A student financing their entire legal education, including living expenses, should probably expect more than $150,000 in student debt for their law degree alone upon graduation – and that number doesn’t include interest or undergraduate debt. Also, the interests rates on those loans are set by statute, with Stafford loans at 6.8% and GradPLUS loans at 8.5% (which is sheer usury at current market rates of interest). Folks who want to lock in a better interest rate are probably going to have a tough time, too, considering how few institutions are currently offering student loan consolidation and refinancing. The technical legal term for this is “getting hosed.” Oh, and a little note on the “benefits” provided by the 2007 College Cost Reduction and Access Act: the program for public interest loan forgiveness is a good deal … if you stick with it for the full 10 years. If you kick the public interest habit, though, negative amortization and the power of compound interest will leave you with far more debt than they had on graduation. Finally, the idea of spending carrying a balance on a credit card for celebrating at a bar made me cringe. My rule for use of credit cards is that it’s always better to be able to talk about where the money went than when the money went. Here is another highly technical term for folks who carry giant credit balances: they are “screwed.”
Still, I think the most valuable perspective this article provides is to think of finances as a part of your life’s plan, rather than as something to be managed (or, worse, avoided). Think about your life and your goals, and make your plans to match. Getting started as an attorney with big debts is a tough spot to be in; paying attention and making well calculated financial decisions will help decrease stress, and improve your head space. It may even make you a better attorney. Check out the article – it’s got some good hints.
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