i The Frugal Law Student | 2008 | January

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What To Do With Those Loan Refunds…

Written by Tony Marrone

Most of us have the great burden of having to finance our own higher education, and based on the rising cost of private graduate education, many law students are graduating with student loan debt reaching or exceeding the $200,000 mark.

The demanding course-load most law students endure makes it difficult (read: impossible) to go to school and work full-time. In order to help pay monthly expenses and survive with a decent standard of living during law school, I depend on my student loans refund at the beginning of each semester to help the fiancee and I survive.

The question is, how should you allocate the funds?

The Frugal Law Student’s Guide to Getting the Most From Student Loan Refunds

  • Step One: Budget your refund. You’re going to need to decide at the outset how much of your money you can allocate to expenses each month, and make sure your total expenses are less than your refund. I personally use You Need A Budget, I like the fact that it works on both Mac and PC (I use a MacBook, but the fiancee uses a Gateway and an HP). Whatever you decide to use, you won’t get far into the semester if you haven’t budgeted at the outset.
  • Step Two: Place the bulk of your money in a high-interest savings account. ING is running a promotion where you get $25 instantly placed into your account, when you open an account with an initial deposit of $250. (See link here). I use ING because I like their customer service. There are certainly plenty of other banks out there that offer higher interest rates.
  • Step Three: Take advantage of opportunities for free money from banks for opening accounts. The math is simple here: if ING is offering $25 for you to open an account by depositing $250, and Etrade is offering $25 for you to open an account by depositing $100, and you have well over $1,000 in your checking account “doing nothing”, go ahead and open an ING and Etrade account. Most of the promotions only require you to keep your cash in the bank for 30 days if you decide later to close the account.
  • Step Four: Only borrow what you need to live on. I’m not advocating you max-out your Grad Plus and Stafford loans so that you can invest your money in a 4% savings account. Based upon the time-value of money and the high-interest rates we pay on education loans, borrowing more than you need is a losing proposition. Even if you borrow excess money through your loans and invest aggressively and are successful, you’re really only talking about a nominal return, not even taking account the true value of the money you are borrowing (i.e., adjusting for inflation).

You need to plan ahead and be conservative when deciding how much money to borrow to finance your education costs. However, it is even more important to store the borrowed money wisely (not in canisters or buried inside your mattress) so that you can ease the pain that will later be brought on by high-interest rates during repayment.

Save Time By Depositing Money Through Your ATM (or Who In the Hell Deposits Money in an ATM?)

Written by Brett McKay

 atm.jpg

I love ATM machines. Whenever I need cash, my money is just a few clicks away. But there’s one service on ATMs that I haven’t taken advantage of: deposits. And it looks like I’m not alone. While a staggering 90% of American households use ATMs to withdrawal money, only 29% take advantage of the deposit service at ATMs.

I don’t know what it is. Something about putting my cash or a check from my grandpa in an envelope and placing it in a machine gives me pause. What happens if I deposit money and some jerk drives a beat up Chevy van into the ATM in order to steal my birthday money? I don’t think I’m the only one who has that fear. However, like most fears, I’m sure it’s irrational. I haven’t read about any ATM busts in the paper since…. come to think of it, I’ve never heard of an ATM deposit heist. I guess the robbers think no one else uses ATM deposits either.

Another reason I think people don’t take advantage of the ATM deposit service is that their money won’t be available as quickly if you do your deposit with a flesh and blood teller. Thankfully, banks are working on technology that should speed the time you deposit money into an ATM and the time it appears in your account.

I really need to get over my angst over ATM deposits. I hate going to the bank. Whenever it’s open, I’m busy and whenever I’m free, it’s closed. When I do get a chance to get over to the bank, the line is huge. So, I wait 20 minutes so I can do a transaction that takes 2 minutes. Depositing at an ATM could really save me some time.

How to make an ATM deposit

OK, we all want to make deposits using the ATM. How do we do it? Here’s a short little guide to losing your ATM deposit virginity.

1. Find which ATMs have deposit service. Because so few people take advantage of ATM deposits, many banks have limited or completely gotten rid of the service. Call your bank to find out if they still have the service at their ATM’s and if so at which ones.

2. Swipe your ATM card and enter your PIN.

3. Instead of selecting WITHDRAWAL, select DEPOSIT. I know. It’s going to be hard after years of muscle memory training selecting withdrawal. That’s why focus is so important here.

4. Get an envelope and fill out the requisite information.

5. Insert cash in envelope.

6. Place envelope in deposit compartment.

7. Select complete transaction.

8. Walk away.

Total time: 2 minutes. 3 if you accidentally hit WITHDRAWAL the first time.

So, I’m curious. How many of you make use of the deposit service at the ATM? Please take part in this little poll I’ve set up:

{democracy:2}

Image by m.gifford

A New Blog and Some Help For A Friend

Written by Brett McKay

A new project

I wanted to let everyone know that I’ve started a new blog called The Art of Manliness. Don’t worry, I’m not abandoning FLS. I’m just preparing for the day when I’ve graduated law school and can no longer honestly be called The Frugal Law Student. I’m going to need a new blog to devote myself to. However, I’ll continue to blog here at FLS.

There are a few reasons I’m starting The Art of Manliness. First, I’m concerned for men my age. Let’s face it. Most of us are a bunch of slackers. We don’t take our lives seriously. 1/3 of Generation Y males are still living with their parents with no plans for the future. Some start college, but don’t finish it. Many are taking on huge amounts of debt to finance lavish lifestyles. Basically, Generation Y males aren’t growing up. So, I hope to provide some motivation for these guys.

Second, I wanted to make a men’s publication that I would enjoy reading. I enjoy reading Men’s Health, Men’s Journal, GQ, and Askmen.com All of these publications provide stellar articles that touch on all aspects of men’s lives. My problem with them is they have a lot of stuff I don’t like.

Take Askmen.com. Everyday they publish awesome tips on how to excel in your career and improve your health. The problem is that the site’s main focus is on women and their cleavage. The same goes with Men’s Health. Each month, each magazine is jammed packed with the amazing articles. Of course, they have to intersperse the magazine with almost naked women. I hate how we as a society objectify women. The Art of Manliness will be a publication that your wife or girlfriend wouldn’t mind you reading.

My other problem with men’s publications is they promote a lifestyle that is not within reach of the average man. I hate it when Men’s Health or GQ puts together wardrobe suggestions that cost a thousands bucks. Seriously. What average guy can afford to drop $400 for a dress shirt. In The Art of Manliness, I plan on giving dressing and grooming suggestions that a guy like me can afford.

In conjunction with the launch of The Art of Manliness, I’ve created an Ebook called “The Art of Manliness Guide to Being A Gentleman in 2008.” The book is completely FREE to those who subscribe to The Art of Manliness. Please consider subscribing to the Art of Manliness and download the Ebook. The Ebook is freely distributable, so go ahead and forward it to as many people as you want.

I’d also appreciate your help in promoting The Art of Manliness. If you Digg or use del.icio.us, please consider bookmarking a few of the articles over there. Also, if you have a blog, a link to the free ebook offer would be much appreciated.

Help for a friend

Finally, my good friend Leo has his blog, Zen Habits, nominated for “Best Overall Blog of the Year” at Performancing. Please take two seconds to vote for Zen Habits. Leo is a great guy, has a super blog, and has helped a lot of people. He deserves to win. If you haven’t ever heard of Zen Habits, then you’re definitely missing out. Stop by the site and subscribe. You won’t regret it.

15 Minutes Could Save You 15% or more…

Written by Tony Marrone

On your next cell phone, cable, internet or home phone bill.

Like any good frugal law student, I’ve been crunching the prospective numbers for 2008 and determined that I pay far too much for all of the above services. In light of the upcoming wedding and our desire to be in a new house before graduation next year, it seemed that it was time to dust off the old negotiating tactics and take to the phones.

Cut Back on Your Cable/Internet/Home Phone Costs
First up on the list was good ‘ole Time Warner. The media conglomerate has been charging a monthly fee which hovers dangerously close to fraud-like levels. After haggling with the representative and vowing to switch my cable/internet/home phone service to a DirectTV/Verizon Fios combination, I finally was rewarded by having my monthly bill reduced 27% and only giving up four HD channels we never watch.

Streamline your Cell Phone Bill
After conquering Time Warner, I moved on to Verizon in an effort to lower our wireless bill. I chose to take a non-confrontational approach with the Verizon representative. After a brief review of the usage numbers, we were able to reduce our monthly cell phone bill by approximately 22%. However, when I asked if she could throw in some free text-messages for the next couple of months, the representative admitted that if I had called and threatened to cancel my service, she could have done this no problem. Who says it pays to be kind?

Eliminate Pesky Old Accounts via Technicality
Finally, I was prepared to begin what I felt would surely be a battle to cancel two old Sprint PCS lines that have been hanging around. BFP posted today about cashing in on a great offer usually only distributed to Sprint employees. Unfortunately, the great offer is not available to existing Sprint customers, and the two lines remaining of what used to be my family plan are not eligible for conversion to the cheap SERO plan.

However, there is a loophole for all of you wanting to get out of your Sprint contracts without paying the hefty $200 early termination fee. Sprint sent a letter to its current customers about fee changes effective January 1, 2008. What Sprint does not disclose in the letter is that the cancellation of the Federal E911 fee of 40 cents per line and the Federal Local Number Pool and Portability fee of 15 cents per line and the addition of the two new fees actually results in a “net increase in fees”. Technically under most contracts, the net increase in fees creates a loophole which allows you to cancel your contract and forces Sprint to waive the Early Termination Fee.

After I went back-and-forth with the representative, she agreed I was right, and could get out of the two-line account and save the $400 in Early Termination Fees, but would have to call back when I received the bill in order for her to apply the credit. I made sure to get the representative’s identification number before I hung up.

All told, with a little bit of time on your hands and the willingness to have customer service representatives try to convince you why only Time Warner can deliver you the best in high-speed internet or ESPN HD service, you can successfully trim your cable/internet/phone budget by at least 20%. That’s not bad for just 15 minutes…

Tax Refunds Will Be Delayed: Plan Accordingly

Written by Tony Marrone

If you’re like me, you would be monitoring the mail every single day waiting for the W-2 from your summer employer. The painful memory probably still creeps into your mind, you opened your first summer paycheck to find that the federal government had taken their share from your meager earnings. Thankfully, most students do not have much income, even those among us with cushy summer associate positions, so we are likely to receive most of the money withheld from our payroll check back this time of the year when we file our taxes.

However, as I noted at my other blog, The Taxman Cometh the IRS is experiencing serious delays in updating its computers to accommodate several forms that were revised at the end of the year, one of those forms being the Education Credit Form 8863 that most students will fill out in order to reduce their taxable income and qualify for a tax rebate.

What you should plan for if you are usually timely with your taxes (because you want the cash back) is to not be able to even file your federal returns until February 11th. Then, the IRS is cautioning that any rebate may take several weeks longer than usual to process.

There is good news amidst all this inconvenience, and it involves saving money. If you are in the habit of purchasing TurboTax or some other tax-preparation software each year in order to navigate through the myriad of deductions and exemptions you claim when filing your taxes, do not purchase the software this year. If you earned less than $54,000 in 2007, the IRS will help you file your taxes for free at their website. This should save you the cost of purchasing the software (generally at least $30) plus the fees the software providers charge in order to file your returns electronically (generally at least $20).

The pitfall with this plan is that most states that have income taxes (like New York) do not offer a corresponding free filing for state taxes. I recommend using an inexpensive tax preparation software; Complete Tax is the cheapest I could find ($14.95 with free e-filing).

The lesson in all of this is that students should definitely take advantage of the FreeFile offer by the IRS, but don’t count on your refund coming to your bank account electronically within 10 to 14 days. The delay could extend several weeks or months, depending on when you file your taxes.

Introducing A New Frugal Law Student Contributor, Tony Marrone

Written by Brett McKay

I’m happy to announce FLS will be adding a new contributor to the site. Tony Marrrone is a second year law student from Syracuse. and authors the blog The Taxman Cometh. Tony is interested in personal finance and its intersection with students. I’m looking forward to reading his content. Let’s give a warm FLS welcome to Tony!