Strange Bird is the author of I Am Running With Scissors. While she’s not in law school yet, she’s already contemplating how to leave law school with as little debt as possible. From what I’ve read on her blog, it looks like she’s already doing a great job in mitigating her law school debt.
1. How much student debt have you racked up during undergrad? How much more do you plan on taking on during law school?
I attended a public university for undergrad, and with the help of a big scholarship and some part-time jobs I was able to get my B.A. without any debt. For law school I will again be attending a public institution on a scholarship, so I expect that my debt will be less than most law students’, but not insubstantial. The University of California law schools are almost as pricey as some of the private law schools now.
2. What actions are you taking now to mitigate your law school debt?
There are three major ways I’m working now to mitigate my law school debt. The first was negotiating with the law school on my financial aid package, which will save me at least $25,000. Another is saving what I can now, before I start, to minimize my borrowing in the first year. The third is educating myself and planning accordingly. It’s one thing to know that law school is expensive, and another to know exactly how much extra per month living alone would cost me once my loans are in repayment. I think it’s a matter of establishing priorities.
3. When would you like to pay it off your student loans? How do you plan on reaching your goal?
I hope to pay off my loans within five years of graduating law school, which I wrote about here. I would have to adjust my goals if I were to take a public interest job or work for a year or two as a judicial clerk, but assuming I were to work at a typical large law firm right away in my hometown, it wouldn’t be impossible. That is, of course, provided I am able to resist the temptation of expanding my lifestyle to match my salary and diligently pay my loans instead of splurging because “I deserve it.” I would deserve it! But that’s not a good enough reason to blow the bank when I have other goals I want to meet.
4. What other personal financial goals have you set for yourself?
Aside from paying off all student loans by 2015, I expect to also be able to buy a home within five years of graduating. My other goals are a bit softer–saving 10-15% for retirement, living below my means, and retiring early enough to enjoy the fruits of my labor!
5. What is your weakness in regards to your personal finances and how do you think you can improve it?
I think I have a few big weaknesses in regards to personal finances. I’m a bit of a hoarder. It feels really reassuring to have a lot of money sitting in the bank (in a higher-yield online savings account, but still!), but I know that’s not the best way to make it work for me, because I neither can spend it to enjoy it, nor can I invest it properly. I’m also a little bit of a control freak, which makes the idea of investing money (where I can’t control what will happen to it) seem really daunting. I think the only way to get past this is to become more informed. The more I learn about personal finance and investing, the less intimidating it seems, and hopefully at some point I’ll reach the threshold where I no longer feel like stuffing cash under my mattress (figuratively speaking, of course).
6. How do you manage your finances? Is there a particular software you use to keep track of your money?
I use Quicken for the budget and expense tracking features. When I see that I’ve spent 50% of my budget for eating out for the month and it’s only the 8th, I get back on track really quickly. It keeps me a lot more honest than just watching the balance on my account fall. I don’t necessarily recommend that everyone run out and buy Quicken, though–I could just as easily do this with Excel, but a trial version was installed on my computer when I bought it in 2002. I don’t even know what features I can’t access, but I don’t seem to miss them.
7. What do you think is the biggest money mistake or misconception a future law student make?
Since I’m still only a future law student myself, it’s hard to say–I may be making that biggest mistake!–but I’m pretty sure the most dangerous trap to fall into is not really considering the costs of attending law school and living expenses before signing the promissory notes. For example, at my law school, the Loan Repayment Assistance Program will only cover $60,000 of your loans, but the total cost of attendance is closer to $150,000. If someone plans to become a public defender after graduating from a UC law school, she will have to come up with some creative ways to finance her education in order not to be overly burdened by the debt (and live frugally, besides!). Even someone making a salary of $100,000 or more per year will have to make some sacrifices in order to pay back that kind of debt. So it makes sense to be aware, and not live like you’re earning the money instead of borrowing it, because everything you buy will cost that plus 6.8-8.5% (or more!) interest afterwards. Most things won’t be worth it, in retrospect, so forget retrospect and just don’t buy it.
8. Do you have any suggestions to other future law students regarding their personal finances?
KNOW WHAT YOU ARE GETTING YOURSELF INTO. Whatever is motivating you to go to law school, you should be aware of the financial consequences, because they are not inconsequential. People will tell you that a law degree will pay itself off, but it won’t–YOU will pay it off. Make sure that you know exactly how much it will cost, how you will pay for it, and if you are willing to make the sacrifice.
Thanks, Strange Bird, for that awesome interview! Stop by Strange Bird’s blog, I Am Running With Scissors, today to read some of her great content on saving money on law school before you start law school.
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[tags]law school, debt, saving, money[/tags]