Student Loan Debt and Returning to School

Ok, here goes. I have over one hundred twenty five thousand dollars in student loan debt. I feel like it’s some kind of dirty secret, like I should be ashamed of it. Or maybe I’m just scared of it.

This humongous debt load is largely due to law school, though I did use student loans to pay for my final year of undergrad, as the money my parents had saved up had been used at that point. I can’t imagine the debt load I would be dealing with had my parents not been so generous. Add my parent’s contribution to my education to the fact that I paid half the tuition I should have for my law school education because I was lucky enough to receive a scholarship, and the ridiculous cost of higher education becomes…incredibly depressing.

Keep in mind I went to a state school for both law school and undergrad. This isn’t Harvard tuition. I feel I have been very lucky getting through law school with only 125k in student loans. People who have no family resources to draw on suffer much more than I have with their debt load, especially if they pursue graduate degrees. But that’s a problem for another post.

My minimum payments on a standard repayment plan are over $1000 a month. It is unlikely I will be able to negotiate a salary higher than $30,000 a year, due to the fact that I plan on going to business school after working a year. First year attorneys are never worth their salaries, especially at small law firms. Since I am unlikely to stay for the long haul, few firms would consider hiring me since they will lose on the “investment”. The one that is willing to hire me will probably not pay me as much as the typical first year associate salary in my area (40k a year). It’s a bummer, but I chose to be honest with my possible employer and I think that will serve me well in the long run. However, this means that I’m going to have to choose a non-traditional repayment plan for my student loans.

The first thing I’m going to do is consolidate. I cannot imagine keeping up with 15 or 16 loans every month and not screwing it up, so consolidation is going to have to happen for me to keep my sanity. Consolidation has the added benefits of keeping my subsidies and slightly lowering my interest rate. When the debt is over 100k even a drop of only 1% is big savings. Also, after the MBA program I can roll any federal student loans I may incur into the consolidated loan. The second thing I’m going to have to do is defer. This is necessary for two reasons – I will have an outstanding higher interest, non-deferrable private bar loan, and I would only be paying six months on the consolidated loan before I went back to school and deferred anyway. If I can defer for the whole year, I can apply any of the payments I would have been making on the federal loans to the private loan with the higher interest rate. Since my income will be limited this makes a lot of sense for me. A very useful blog post on this “tactic” can be found here. I would probably take online Japanese or Chinese courses in order to get the deferment, since I seriously need to brush up on my languages after three years of not using or studying them at all.

I would also like to be able to pay for the interest on my consolidated loan while it is in deferment, in order to prevent the interest charges from being rolled into the principal at the end of the year. I think that this is probably going to be impossible. I’m calculating my income next year very conservatively because I have no idea what I will be making, but even if I give myself a higher income than I expect I don’t think I can simultaneously pay down the higher interest private bar loan and the interest on my deferred federal loans. The bar loan is obviously the priority – as part of one of the business programs I am applying to I would spend over a year abroad in Tokyo. I do not want to be making payments on this loan while I am there, so I hope to have it paid off by the time I leave the country.

Roommates and Personal Finance

I don’t have roommates because I like living with people. I have roommates because it’s essentially a passive source of income for me. Or semi-passive. I am lucky enough to have a roommate who mostly stays in his room (WOW addict), but I have not been so lucky finding another roommate. I had a girl stay for about nine months until cleaning issues and who was the one responsible for cleaning up became too difficult to work out. Then there was a guy who stayed about six months. I actually had to ask him to leave last week. He had an alcohol problem and peed in the hallway less than a week after passing out naked two steps from his bedroom door.

I was both lucky and unlucky this time. The ex-roommate destroyed the carpet in both his bedroom and the hallway, and it has to be replaced. Adding insult to injury, the carpet originally installed in the house has been discontinued. So I’m going to put a a close but not perfect match in the bedroom, but wood in the hallway. I had originally wanted wood floors throughout, and it’s less of a waste of money to do the hallway now and not put a mismatched carpet down that will have to be replaced before I sell the house again. But, I was lucky in two ways – I found a renter to replace him immediately, and I had enough of an emergency fund built up that I could afford to replace the carpet without credit, and still feel like I had an adequate cushion.

So basically, roommates can be both a blessing and a curse, but for many of us they’re a necessity.

The GMAT, otherwise known as the bane of my existence….

If I want to have a chance in hell of getting a 700 on the GMAT I need to buck up on the math. My reading comprehension or whatever it is score is going to be fine, it’s the math part that’s going to sink my overall score. So. Here’s the schedule –

MPRE review – last week of February
MPRE (exam required for the bar) – early March
GMAT – second week of March?

I have three commercial GMAT prep books, and when it comes to me and math, the more I practice the better. My goal is to go through all of those books and identify what types of problems I have trouble with. Once I have the types of problems I suck at I can practice the math I’m screwing up.

This is going to blow. And by blow, I mean make my life a living hell.

On Roommates…

Roommates are a good idea for me right now. Since I’m broke. Roommates are also a bad idea for me right now, since I have three cats. Oh, and my boyfriend has two. Which means that the pool of possible renters shrinks to about 1 in 100. And I get that. And I do the vacuuming and litter box cleaning to back up how much I get it.

So I have two male roommates and my boyfriend living with me. And not normal male roommates and boyfriend, no, I have the “Almost thirty but moved in to get out of his parent’s house roommate” and the “I am a professional blogger” roommate. In case you haven’t guessed both are underemployed, but manage to more or less pay their rent on time. So I put up with them, since finding another poor schmuck renter willing to put up with five cats is going to take time, no matter how much I vacuum.

But the downside to these kind of renters is that they are stupid. And not developmentally challenged stupid, common sense stupid. As in “the toilet won’t flush, instead of asking the landlord who lives with me to fix it I’ll just continue using it and not flush”. As in I spend a day running around the house thinking a sewer line broke and what in god’s name is that smell!?!?! As in live here for a year, borrow plates and eat in their room and forget about them until I ask wtf happened to all of my dishes and then just dump them in the sink and expect me to take care of it, stupid. Yea. THAT kind of stupid.

THAT kind of stupid is very unfortunate for a law student. I’m gone everyday from 8 am to 7 or 8 pm. I really don’t have a lot of time to clean up behind other people. And yet, here I am, on Sunday, cleaning up behind people who have about three times as much free time as I do. Incidentally the same people I would not trust with bleach anywhere near my flooring. Or clothes. Or anything, really. If you’d had the facepalm conversations I’ve had with these guys, you wouldn’t trust them with the vacuum (broken. thrice.) or a broom (lost for all eternity).

So instead of murdering them all, including the boyfriend, who by the way is COMPLETELY capable of cleaning but not capable of thinking about cleaning without a girl standing in front of the TV with her arms crossed threatening to pawn the PS3, I’m just going to annoy them to death.

It’s 3:30 on a Sunday and they are asleep. All three. And I have a vacuum, a loud dishwasher, and a washer and dryer next to the bedrooms. Do not think I am it for one second.

P.S.: OMG I think one of the roomies uses some sort of perfumed bath powder of some sort because it’s still in the vacuum cleaner.

P.P.S.: UGH IT’S ALL OVER AND IT SMELLS LIKE ASS! GIRLY GRANDMA ASS NOT OLD SPICE ASS!

State of the Resume!

Ah, the career question. Or path. I think it’s supposed to be a path but it’s unfortunately still a question for me. I have a B.A. in international studies from a lower ranking tier I school, and in a few months will have a J.D. from a state law school. And I am favoring going to get an MBA. And I can just hear the disbelief. Law degrees aren’t a free ride to moneyville, come to find out. Your first year grades dictate who you work for. If you don’t have straight As that first year of law school the chances of you working for an international law firm at some point in your life is about 1%. They have a GPA cutoff, even for people who have been in practice for 10 years.

Now I could get a job at a government agency or a small firm, and actually do have a firm that I am about 80% sure would hire me after graduation if I wanted the job. But I want to do something international. I want to travel and make enough to support my horse. I want to work with people and try and solve problems. A small law firm will not make this possible. Two government agencies may, and I am considering applying to them. But there’s another factor. I studied abroad in Tokyo for about a year during college. I LOVED it. I loved the city, I loved the language, I loved the culture. I want to go back and get my fluency certification in Japanese. Only one of those government agencies would make that language acquisition goal possible – and they only accept 1200 people a year. It will take a few years of trying to get in, most likely.

So the other option is getting an internationally focused MBA. MBAs have a much broader applicability than a JD. More positions are available The schools I am considering are either in a foreign country where I could learn the language while I was there, or have a language requirement and the study abroad or classroom resources to back it up. I am very excited about these programs, but getting in will take some effort since I don’t have work experience. I also need to work very hard on reviewing the math tested on the GMAT, since math is not a strength of mine.

So the plan is to take the GMAT in March. I would be unable to matriculate to most of the US schools this year anyway, due to the bar exam’s schedule. So I’ll try and find a job for that year, and save money for when I go back to school. That gives me time to take a stab at a pretty awesome scholarship to Japan, which would pay all of my expenses to go get an MBA there. The applications process is in depth and includes a language test, an entrance exam, and several rounds of interviews both in the US and Japan. The application process takes about six months. If I get the scholarship I go to Japan on purely financial calculus. If I don’t I still get an MBA that allows me to focus on language acquisition. It’s a win/win situation, but takes a ton of work.

2010 Career Goals:

Score a 700 or better on the GMAT (this will be a challenge).
Apply to a US International MBA program.
Apply to the Monbukagakusho scholarship.
Finagle some sort if income during that year!
Apply to foreign MBA programs.
Research comparative value of a foreign versus domestic MBA.

State of the Closet!

I’m not a very fashionable person. I never was, but I have definitely become more hobo-chic than I used to be with the weight gain. I also have never made clothes a priority, I think spending $50 on a single item for me is ridiculous but will pay over $2000 for a saddle. Of course, in my head a saddle lasts 20 years, and a new piece of clothing is lucky to make it 2 years. So I generally wear too many oversized tshirts and sweatpants, and I really need to get it together. The problem is I never really learned how to dress well from anyone. I’m pretty much starting from scratch.

I have a decent trench coat, a nice long overcoat, and two pairs of nice heels, though neither are work appropriate. I have two pairs of work pants and several button down work shirts that are starting to show some wear. I have several cocktail dresses that are appropriate for work mixers. I have no day dresses that are work appropriate, and most of my tops are going to need replacing, probably before next year. The challenge is going to be finding pieces that 1) hold up to wear and tear and my lack of laundry skills, 2) are flattering, and 3) are within my price range. I somehow doubt I will be able to find pieces that meet all of those criteria, but we’ll see.

2010 wardrobe goals:

Acquire a work appropriate cardigan
Acquire 2 new work appropriate tops
Acquire work appropriate flats
Acquire a flattering pencil skirt
Acquire some tasteful accessories

State of the Butt!

I have terrible eating habits. My mother is obese and diabetic, and I inherited many of her attitudes towards food. Despite that, I have never been significantly over weight until the last 2 years or so. My very active part time jobs and multiple childhood sports took care of the excess calorie burn needed until I entered law school. I think I’ve gained 20-25 pounds in those last two years. Now I’ve never been thin, I was just active enough to have more muscle than fat contributing to my slightly high BMI. I don’t have that excuse anymore. I am just below obese on the BMI scale, and I hate my body right now. I’ve never been particularly proud of it – I’d always preferred delicate bone structures to my own workhorse build. But it’s something I had more or less accepted, which I have now ruined by not being active enough. And my butt is right now my worst body part, ugh. So here goes:

2010 fitness goals:

Lose 25 pounds
Become a regular runner
Eat in 5 nights a week consistently

State of the Pocketbook!

A blog that talks about Personal Finance should probably have a starting point post, right? At least most of the ones I have read have a mea culpa post, illustrating exactly how they managed to dig themselves into this oh so deep hole, and explaining what has motivated them to educate themselves and change their behaviors. People have little measure of how far you’ve come unless you give them some benchmark to measure from. So, time to take a deep breath and spill it.

I come from an upper middle class background. I’ve never been truly poor, though my mother grew up poor. As a child I never had to worry about where my next meal came from or what would happen if I tore or outgrew my winter coat. My family followed the stereotype, my professional Dad off earning the dough to keep the karate lessons coming while my mom stayed home and took care of us three kids.

My parents put a premium on experience over stuff during most of my childhood, paying for horseback riding lessons, piano lessons, karate, dance, and pretty much anything I was interested in learning. As children my brothers and I were forced to stick with something  we wanted to try until we gained a level of skill and knowledge to know whether or not we wanted to stick to it. We couldn’t quit because it was hard at first, and that lesson was actually a very useful one. One of my brothers ended up being so good at baseball he could have been on the college team, the other pursued track, even though he kind of sucked at first, just because he loved it, and I could have made a competitive bid for the equestrian team at my school. Neither of us ended up joining the team, mostly because neither of us were interested in going pro and the time commitment throughout college for an college level team is significant enough to be a threat to your academic achievement. Grades would pay the bills one day, while being on the team wouldn’t.

We were much better off than many of my friends, and were allowed to pursue anything we wanted. We probably received more “stuff” than we really needed at our ages, but interestingly enough we all eventually stopped the long lists of wanted gifts to Santa in exchange for one single targeted purchase related to our hobby. This reevaluation of values was a natural part of growing older for us, and our parents never really did much with those lists except arbitrarily picking one or two objects off them for Christmas gifts anyway.

That said, my parents never really educated us kids about personal finance, and generally we weren’t denied much. If it wasn’t outrageous, and we proved that we were willing to work for it, we would get it. For example, I received a horse for my 17th birthday. Yea, I know you’re sitting there and going “And THAT’S not outrageous? Whatever rich girl”. But you have to realize I had been riding horses for ten years at that point, and as soon as I received my car had driven half a hour (one way) every day, without fail, to go scoop horse crap in exchange for riding lessons. My parents would only pay for one lesson a week, since they were expensive, so I worked for the equivalent of minimum wage – 5 hours of work for 1 lesson. My parents managed so simultaneously spoil me and make me work for it.

When I went to college I brought my horse and tried to work enough to offset those additional expenses. I did very well for a while, though I didn’t have any concept of saving, since if I ran out of money I could just call my father for a bailout. I would get yelled out, but he would do it. The yelling was enough of a barrier for me that despite my lack of savings I managed to avoid getting into too much trouble.

But things kind of fell apart from there. My long distance boyfriend from my home state lost his apartment and I offered for him to move in with me. I was still living off my parents but managed to earn enough to pay entirely for my horse and cover some of my own expenses. I had a credit card, but I carried at most a $200 balance from month to month. My boyfriend moved in, and immediately my spending went up. It took him some months to get a job, and in the meantime my credit card balance shot up, mostly charges from restaurants, since we had completely different eating habits and I didn’t want to cook two meals. When he did get a job it was for minimum wage, and he didn’t end up keeping it 6 months.

I have continued to support him since then, and made some spectacularly idiotic financial moves along the way. I took out on credit the downpayment for a motorcycle he ended up losing to the financing company and paid probably upwards of $4000 on a credit card taken out to buy a laptop he didn’t really need. Each one of these decisions was made within a couple of weeks of him finding a lucrative new job that he ended up losing within the year, with him being unable to make the promised payments before he even lost the job.

Don’t get me wrong, these were my decisions. I never said no, and I have become accustomed to eating out often, which is a terrible financial habit. Lifestyle inflation has occurred in my life despite never having a full time job (I went to law school straight after undergrad). And to make matters worse, I owe six figures in student loan debt, almost entirely from law school.

Interestingly enough, this is not the worst it has been. I once owed near $10,000 in high interest credit card debt, and today I am down to $3,000. I currently have two part time jobs and a passive income stream, and managed to strong arm my boyfriend into getting into college to gain some marketable skills. He is still unemployed, but full time student who is unemployed is better than full time couch potato.

This isn’t day one for me, and it didn’t take a financial armageddon for me to decide to change my ways. I just realized that on one credit card I was paying $300 a month for the minimum, and when I added all of my debt payments they were more than rent! My credit card payments are now under $100 a month, and I pay more than the minimum balance every month. But I still have a way to go.

2010 financial goals:

• Eliminate all revolving debt before my grace period runs out for my student loans
• Build an emergency fund of at least $1000
• Save $3000 for possible study abroad

Introductions

I’m a twentysomething student located in the Southeastern US, who’s trying to figure out how to transition from student life to working professional life. That transition is going to have effects on just about every aspect of my life, and so I’m going to cover topics like personal finance, weight loss, fashion (aka How Not To Dress Like A Hobo), and career development.

As for the juicy stuff, I read too much, ride horses, speak Japanese, watch far too much TV, and have been in a relationship with the same guy since high school. I love travel, have almost graduated from law school, don’t have a very good brain to mouth filter, and have too many cats. I start disastrous home improvement projects I can’t finish, am an inherently lazy person, and have a PhD in procrastination.

Nice to meet you.