Above the Law

Being financially conscious requires a disciplined mind and willpower similar to what you would need to succeed at losing weight. You’re not going to lose those 10 pounds by carving out an exception, for say, your daily caramel latte from Starbucks. No ifs, ands or buts when it comes to meeting financial goals. If you’re ready for the challenge, here are some ideas for New Year’s resolutions that you can tailor to your personal financial needs.

1. Aim for quarterly progress in paying down your law school loans.

Think of your loans as a financial obstacle that needs to be confronted on a quarterly basis. It’s easier to pay down to a specified amount for the year when you dissect the amount into smaller sums and check your progress each quarter. For example, let’s say that you owe $50,000.00 and you make automatic payments of $1,500.00 each month. You want to be realistic while having to reach a little, so here the 1Q mini goal should be $45,000.00. You would normally pay $4,500.00 over three months and thus you will need to work for the extra $500.00. This money could come from side hustles like selling clothes on eBay or from making frugal adjustments like fewer dinners out with friends.

You can also adapt each quarter’s goal to any expected windfalls like a tax refund. So the 2Q mini goal can be $38,000.00 if your tax refund will be $2,000.00 and you continue making the same monthly payments. Again the extra $500.00 will be the “reach” part. Technically, you didn’t have to work too hard because the tax refund gave you a boost, but the idea is that you’ve become more active in paying down your loans.

2. Research and pick a new stock to add to your portfolio (or to start one if you’re a newbie).

As lawyers, I think that we tend to be more risk averse as a whole. It’s safe to stick your money in CDs and index funds where the gain is slow and steady but guaranteed. However, you can resolve to get out of your comfort zone and play the stock market (more often). Read up on companies that might IPO, companies with a reputation for solid products, and companies whose products you personally enjoy. Pick a new stock and diversify yourself.

3. Figure out the next step in your life and save for it.

Milestones cost money. Getting married, buying a home, having kids – unfortunately, getting to the next step isn’t cheap. The good news is that it’s never too early to be prepared for the big stuff in life. Set a target amount that will be tough but doable, like $25,000.00 for a down payment. If this is a joint life goal, enlist your partner’s help in growing your nest egg and make this resolution together.

Also, the next step doesn’t have to be so traditional. If you’ve been thinking of tackling your own start-up, this is the perfect opportunity to build capital and help alleviate the initial costs. Or maybe you want to spend a month trekking through South America but don’t have a good chunk of money set aside to do so. Make your dream a financial reality.

4. Evaluate your habits and cut out a financial vice.

None of us are perfect financial creatures. Take a moment to think about your possible bad habits, which may include one of the following: making late payments on your credit cards, shopping to the detriment of not saving, paying for cable when you don’t use it. Conversely, a financial vice doesn’t have to involve mismanaging or wasting money. I think being miserly with other people can also be a financial vice, e.g. consistently under-tipping for good service, skimming a few dollars off what you owe when the check comes for a group dinner. Unfortunately, we all know at least one person like this and maybe you’re that one person.

Once you’ve identified your vice, work to correct it. For the late payments example that I used above, you can easily set up reminders to pay your credit cards through automatic emails sent by the company or alerts/events on your calendar. Set up multiple reminders, for say a week in advance and then a few days before the due date, to allow time cushions in case you still forget to pay. A bad financial habit will hurt you, even if you can’t physically see the damage.

5. Beef up your retirement or get started if you’re late to the game.

Surprisingly or not, there are lawyers making $160,000.00 plus who don’t take advantage of maxing out (or even contributing to) their 401ks or IRAs. Everyone has their personal reasons for not prioritizing retirement, but it’s a financial task that you do need to start prioritizing at some point. We’re not getting any younger. So make a resolution to start contributing to your retirement funds or to increase the amount that’s currently being taken out of your paycheck. If you’re already maxing out your retirement contributions through your employer, find other retirement accounts through which you can additionally save or invest your money. Win the game and you may find yourself retired nice and early.

In sum, making financial New Year’s resolutions takes a slightly different approach. Sure, you want to set lofty goals for yourself, but think about what you can realistically achieve within a year. Forget the old saying about shooting for the stars and then landing on the moon because you might end up lost in space. Rather, take baby steps and ensure that you do end up walking on the moon someday.

Sunny Choi is the 2013 Writers in Residence Coordinator for Ms. JD. She is a former participant in the Writers in Residence program, where her monthly column Legally Thrifty focused on beginners personal finance advice for law students and professionals. A graduate of the University of Michigan Law School, she currently practices commercial litigation and creditors’ rights while freelance writing and blogging in her spare time. She can be reached at contentdirector@ms-jd.org.