Personal Finance

Everyone smile and say “certiorari”!

The opinions released by the Supreme Court this morning were not super-exciting. The good news, pointed out by Professor Rick Hasen on Twitter, is that “[t]here are no likely boring #SCOTUS opinions left.” (But see Fifth Third Bancorp v. Dudenhoeffer, noted by Ken Jost.)

So let’s talk about something more interesting than today’s SCOTUS opinions: namely, the justices’ recently released financial disclosures. Which justices are taking home the most in outside income? How robust are their investments?

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Between 2008 and 2012, the median debt burden for newly minted JDs increased by 54 percent, from $83,000 to $128,000. (That compares with a 22 percent increase in medical student debt.) It is the responsibility of every aspiring law student to understand the implications of taking on such a financial commitment. For law grads who have already accumulated the debt, there may be options for you to better manage repayment. Thanks to our friends at DRB, today’s infographic takes a look at law student debt, including the possible benefits of refinance or consolidation. Click here for more details.

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Upon reaching my mid-thirties with a wife, a kid, and a dog, it became apparent that the “dream” of renting a tiny box on the island of Manhattan was over. My family and I decided against the Brooklyn half-step, because paying Manhattan rent for a slightly bigger box that would itself be too small for our family in ten seconds seemed stupid. So we zeroed in on buying in Westchester because: Grand Central >> the holding pen at Gitmo >> buying a mule >> Penn Station >> Chernobyl >> Port Authority.

The problem of course with buying property in Westchester is that we’re poor. Not “poor” in the “I need government assistance” sense (though, more on that later). Not even poor in the “I’m a salaried employee and don’t mind when Charles Barkley makes fun of my city” sense. I mean poor in that uniquely NYC/LA/London sort of way that makes you feel “How IN THE F**K do I not make enough money to afford this?”

The other problem was that I’ve spent the better part of the last six years screaming at people to avoid crushing debt obligations. To buy a house, I’m going into more debt than I’ve ever been before, and we know that things didn’t go so smoothly the first time.

But… kids man, what are you going to do? As part of my ongoing attempts to make egregious mistakes and then write about them, here are five things I didn’t really understand about the house-buying process. Note, I had my lawyer hat on, which means I wasn’t flummoxed by things like “taxes” or “closing costs.” Still, there’s a bunch of stuff that doesn’t come up in Real Property or Trusts and Estates…

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Some people go to law school not in the hope of making buckets of cash, but to bring justice to their communities. With long hours and low pay, being a government attorney is a noble pursuit. The catch is that some of these poor souls didn’t know just how poor they’d actually be.

To that end, they certainly didn’t expect that they’d be paid a lower salary than the courthouse custodian, and they had no clue that they’d be members of the working poor.

Which state is allowing entry-level government attorneys to live in squalor?

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Back in March, we brought you news on the law schools with the most heavily indebted graduates. It was quite shocking to witness the depths to which these poor souls went to finance their legal educations. Take, for example, the average graduate from Thomas Jefferson School of Law, who has $180,665 in debt — and also has a 29 percent chance of working as an attorney nine months after graduation. That’s absolutely terrifying.

But in a world where the average class of 2013 law school graduate carries a debt load of $108,815 (up from an average of $108,293 for the class of 2012), there must be a few schools out there that won’t destroy a would-be lawyer’s financial footprint forever.

Which law school graduates have the least debt of all? U.S. News has a ranking for that…

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The Associated Press reports today that the indebtedness of over 37 million American graduates now tops $1 trillion. That’s more than the total American debt load from credit cards. It’s more than the debt load associated with car purchases. And somewhere there is probably some politician touting how college is now “affordable” for every child.

And, as usual, the plight of law students in debt is a great case study in how debt is crippling a generation’s ability to generate wealth…

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Some of the study’s more eye-popping statistics pertained to law school students, whose job prospects are famously declining. The level of indebtedness for this group rose by more than $50,000 from 200[4] to 2012, with the typical law student now owing $140,000, the study found — a jump that’s unprecedented in any other field, including medicine.

Molly Hensley-Clancy of BuzzFeed, discussing a recent report by the New America Foundation about the student debt crisis.

Whenever the government gets involved with “helping” students suffering under crushing debt obligations, I wonder if “the government” even partially understands how students think.

There is a new proposal in the budget that would bring significant changes to the student loan forgiveness program. Specifically, the “Public Sector Loan Forgiveness” program. Currently, students with massive amounts of debt can sign up for income-based repayment of their student loans. Their payments are capped at 10% of “discretionary” income. If they work in the public sector or for a designated non-profit, the government forgives the rest of their loans after ten years. For those playing along at home, that means that taxpayers pick up the rest of the bill.

Critics on both sides of the aisle (including me) argue that the current system encourages schools to charge whatever they want for tuition, while discouraging students from making cost-conscious choices about their debt. It’s far from ideal, and this new proposal seeks to do something about it.

But since Congress is involved, the thing they want to do to “fix it” is stupid and will ultimately hurt student borrowers even more….

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Ed note: This is the latest installment in a series of posts from the ATL Career Center’s team of expert contributors. Today, Ann K. Levine, a law school admission consultant and owner of LawSchoolExpert.com, offers helpful tips for law school applicants.

Law schools have been increasing their scholarship opportunities in order to lure applicants. Why? Because law school applicants are in demand. Applications are down yet again, and law schools are scrambling to fill their seats. (See TaxProf Blog for exact numbers and trends, year over year.)

As law schools compete for qualified applicants with better scholarships, it may be easier to consider criteria like debt alongside rank and prestige when choosing a law school. As part of this new trend, law schools are adding on scholarship programs to make attending law school more affordable. Villanova Law recently announced an initiative to add 50 full-tuition scholarships for three years, and in-state students at Penn State are being offered $20,000 per year as part of a new scholarship program.

Continue reading at the ATL Career Center…

Where The Wild Things Are (affiliate link)

Grover Cleveland’s excellent book of career advice for young lawyers has a delightful title: Swimming Lessons For Baby Sharks (affiliate link). It nicely captures the competitive nature of the legal profession today.

But the cutthroat competition isn’t for everyone. One high-powered lawyer, coming up on partnership at a top-tier law firm, decided he didn’t want to swim with grown-up sharks. He’d rather go swim with blue whales — quite literally. He’d rather be where the wild things are — and by “wild things,” we aren’t talking about cute drunken paralegals at a post-closing party.

Let’s look at this lawyer’s departure memo — great opening line, or greatest opening line? — and find out how he made enough money to break out of Biglaw’s golden handcuffs….

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