An Easy Change To Improve Your Relationship with Money

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How Money Beliefs Affect Your Spending

It’s common knowledge that one must control one’s thoughts because thoughts lead to actions. The same is true with money – how you think about money directly leads to how one spends money. So it goes that improving6 your relationship with money is an important first step to changing your spending habits.

Many people, particularly women, believe they are terrible with money and then they act according to that belief. I’m terrible with money, one thinks, and thus that person doesn’t feel the impetus to learn how to be better with money. Or they tell themselves they are terrible with money so it doesn’t hurt their psyche when they know they’re spending as they shouldn’t.

If you’re terrible with money, then acting as if you’re terrible with money seems like a logical next step. But if you perceive yourself to be good with money, it’s harder to act against that identity. If you act against your belief in yourself, you have cognitive dissonance.  So you then have to change your actions to match up with your identity or you rationalize your actions to yourself so you can retain your identity. Either way, it’s a bit more difficult than just thinking bad person=bad actions.

How to Change Your Money Beliefs

If you could change your view of yourself – it would be easier for you to act in accordance with that new belief. And then as you continue to act in accordance with that new belief, you develop more actions to support your belief.

I know some of you might say, you can’t just tell yourself something and have it be true. But if you think about it, your identity may not be factually based at all.

I think about this fact every time my mother says she hates to travel. The last time she said this, we were in Portugal. She can say she hates to travel and come up with this or that reason to support her belief, but she missed the biggest piece of evidence against her belief – the fact that she was traveling of her own free will.

Similarly, you may be able to conjure up a few anecdotes to back up your claim about whatever you think about yourself, but there is other evidence that you are consciously or subconsciously ignoring. You think you’re a terrible lawyer because your boss chewed you out. But you did well in law school. Your colleagues like you. Your clients have praised your work. If you were the jury, you would be hard-pressed to side with the “bad at your job” side when there is so much evidence against it. So often though, we are quick to side with the negative perspective even when there’s a weaker case for it.

You’re not an impartial jurist, particularly when it comes to judging yourself.  People remember the bad more than the good. And it will take more than a simple presentation of facts before you change your mind about what kind of lawyer or person you are. What you need to do is keep pelting yourself with the evidence until your emotional side gets worn down. This easy change idea is a way of pelting yourself with evidence to change your belief.

An Easy Change To Improve Your Relationship with Money

So here’s the idea: I read about a Jar of Awesome. In it, you keep a jar, and whenever something wonderful happens, you write it down and put it in the jar. Then whenever you’re feeling down and out, you can reach into the jar and read about a wonderful anecdote that you otherwise may have forgotten about.

This idea is similar. But instead of writing down wonderful stories, you write down stories or facts that support the idea of your new identity. Let’s say you want to change your self-impression that you are “bad” with money. Here are some anecdotes that, if true, you could write into your jar as “proof” that you are actually quite ok with money.

  • That new pair of shoes that you didn’t need and didn’t buy.
  • When you started your 401k.
  • When you renegotiated your salary.

And when you start to think of yourself as “good with money”, you will act in accordance with that belief. Instead of a vicious cycle, it becomes a virtuous cycle. You belief you are good, and you act as a good person would. You believe you are responsible with money and here’s the proof. Go out and create even more evidence to support your belief, and soon enough, it’ll be difficult for you to act against that belief. Because you truly ARE good with money. Here’s the jar with the facts to prove it.

So what do you think about this easy change to improve your relationship with money?

7 Tips to Reduce Law School Debt

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Step one to pay off  law school debt, is to reduce law school debt. That is, take out fewer loans. Though it doesn’t seem like you can do much to improve your debt while you’re in school and not working, but there you’re wrong. There are lots of strategies to decrease the loans you take out, and thus decrease your debt burden when you graduate. Here are the seven strategies I used to reduce my debt by tens of thousands of dollars while attending school.

Forgoing max loans.

The max loans I could take for three years of loan school was over $180k. This sum doesn’t include loan origination fees or the interest that would have accrued during law school.  This also doesn’t include private loans I could have taken on top of what was offered with the financial aid package for living expenses or to take the bar.

My friend took out the max loans because he figured that it was better to have them than to need them later. The problem with taking out the max loans is that schools overestimate the amount of loans they can give you because they don’t want you to run out of money. Then if you take the max loans you end up increasing your lifestyle to meet the amount of money that you have. And that’s how you get into more debt than you need to.

If you reduce the amount of loans you take, you reduce your lifestyle. Thus, you end up with less debt. If you can figure out a realistic but frugal budget, it’s not that hard to save money while you’re in law school. You can add in a little extra for wiggle room but don’t take the max loans just because they’re the max. Your future self will thank you for fewer loans that you will need to pay back. Instead of taking out the max loans, I ended up with about $92k (and $20k of credit card debt on 0% cards).

Attending a cheaper school.

Not everyone has this choice, but it should be a consideration if you’re undecided between schools with differing tuitions. With in-state tuition, I saved about $5,000/year on tuition and at least $10,000/year in living costs compared with attending a law school in a big city. It’s not just that the cost of living was lower but it was much harder to spend a lot of money in a small college town than in, say, New York City. That’s $45,000 saved without doing anything at all. Plus, in law school, you spend a lot of your time studying – you don’t need the added distractions of a big city.

Shopping around for insurance.

The health insurance they sell students is a racket. Students by and large tend to be young and healthy, so their insurance shouldn’t be that expensive. Still, most students didn’t think to shop around; they just paid for whatever health insurance the school offered. And why not? The students were paying hundreds of thousands – what’s a few extra thousand?

But I was concerned with the extra few thousand. I read the fine print, which said that I didn’t need to buy the school’s health insurance. Then I bought private health insurance. (This was pre-Obamacare so your mileage may vary). This move saved me $2,000/year ($6,000 total) and gave me better healthcare coverage than what my school was offering.

Treating loan money like real money.

Many law students make the mistake of treating loan money like Monopoly money. That strategy isn’t a winning one if your goal is to reduce law school loan debt. I treated my loan money like real money and lived like a student. Therefore, I did not increase my lifestyle and saved money where I could.

Of course, I bought used books. Used books are slightly inconvenient to buy and use, but it’s one of the easiest and well-known ways to save hundreds per semester. I brought my lunch and made bulk dinners on Sunday. I carpooled. If I went shopping, it was at Goodwill. I didn’t go on fancy vacations on borrowed money.

This doesn’t mean that I didn’t have occasional splurges at nice restaurants.  I preferred, however, to have a nice, memorable dinner with my boyfriend over numerous forgettable meals at the school cafeteria. Over the course of three years, these little tricks saved me thousands of dollars.

I made money in school.

It’s hard to work while you’re in law school your first year, but students tend to have more time 2L and 3L years. I worked at the library from my 2L to 3L years. During the summer, I took an additional and better-paying side job. I made quite a low salary but the work was minimal at all the jobs. All the jobs also allowed me time to study (the benefits of living in a college town). Thee few hundred bucks a month paid for my rent. Additionally, I met some interesting people.

Having the additional money meant that I could avoid taking out new loans, which could save hundreds on origination fees and interest. Additionally, any income earned makes you eligible for the earned income tax credit when you file your taxes. If I had been a bit savvier, and had more money, I could have put some money into a Roth IRA and taken advantage of the market climb. You live and you learn though. I was happy to have the thousands extra from these side jobs and get the Earned Income Tax Credit.

I maxed out several 0% cards.

It’s anathema in the personal finance community to use credit cards. As a warning, if you cannot be trusted with credit cards, do not follow this tip. You could get into a lot of trouble.

But, I’m quite good with credit cards.Because I had excellent credit, I was able to get 0% interest on cards for 12-18 month periods with credit limits totaling $20,000. The cards had staggered end dates that were months after my starting date. That way they wouldn’t come due while I was still in law school.

It was nice to be able to float my expenses for a while. This tip didn’t actually save a ton of money but it helped keep my peace of mind and liquidity. I put my last two years of spending on credit. I made sure that I was ready to pay them off once I had a job. But I knew that I would get a job eventually and I didn’t run up the balances.

Paid tuition with money instead of loans.

I took four years off between college and law school, where I saved up money for law school on an entry level salary. The money I saved I put toward tuition and living expenses. As stated above, I didn’t take out the max loans but only what I needed to get by. Additionally, because I was able to pay for my living expenses in cash, I primarily took out federal loans. Thus, if push came to shove and I got a job that needed to rely on loan forgiveness, most of my loans could be forgiven under the plan. I wouldn’t have pesky private loans that I would still have to pay.

Reduce Law School Debt

Basically, I lived like a student, and I didn’t regret it. Though I graduated with over $90,000 in law school debt, and $20,000 and credit card debt (on 0% credit cards), I know it could have been much worse.

Part of the reason that I was so careful with my money is that I entered law school in 2009. Even though I went to a top school, our law school class was told not to have high expectations for graduation. And I took to heart the possibility of having difficulty finding a job.

I think even keeping my law school loans below the six figure level put me ahead mentally (and of course, financially). I don’t regret any of it. The strategies I used in law school to save money made it exponentially easier for me to pay off my loans quickly and then, quickly start building my net worth. Then, after I was in a safe financial place, I was able to quit my job and take some time off. Each step was a building block to where I am today. Step 1: reduce law school debt; step 2: take on the world.

Do you have any strategies for saving money in law or graduate school?

Saving for Law School?: The Dodgy Way I Saved $65k in 3 Years

I managed to save $65k over two years for law school, but I did so in a dodgy way. I utilized tax savings and retirement accounts to up my savings. Did I miss out on huge growth?

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Paying for higher education is a huge obstacle these days – and graduate school is the worst. Graduate education typically does not have the scholarships or need-based aid given in undergrad. This leads to graduate students typically borrow three times what undergraduates do.  I knew I was on my own saving for law school. Thus, I worked after college and saved $65,000 to pay for law school. However, my method of saving was a bit dodgy/controversial. Read on to see if you think this was the right approach.

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How to Help a Depressed Lawyer (Especially When that Lawyer Is You) (Part 2 of 2)

Lawyers and depression go together far too often. Learn how to help lawyers who are suffering from mental health problems.

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In my previous post, I talked about why lawyers are so depressed and now we get to the meat: how to help a depressed lawyer. TL:DR  – the legal world is an environment that leads to depression. It doesn’t provide meaning, creativity, the chance to build meaningful relationships, the opportunity to be in nature, security, hope, intrinsic values, etc. The good news is that there’s likely nothing wrong with you if you’re a lawyer and you’re depressed. The environment would be enough to make a lot of mentally resilient people depressed. Still, we shouldn’t feel content knowing the causes of depression – we should learn ways to combat it. The following are some ideas to help a lawyer with depression, even if that lawyer is you.

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Why Are Lawyers So Depressed? (Part 1 of 2)

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A month ago, I logged into Facebook and saw a suicide note. Through the comments, I found out, my friend had passed. The situation reminded me of the last suicide I had heard of – a young lawyer- and the mental health problems that disproportionately affect attorneys. While some commentators have tried to explain why attorneys suffer from depression, I wasn’t convinced so I looked into it myself. So why are lawyers so depressed? Here are my thoughts.

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What Do You Do with Your Time?: A 40-Hour Workweek for Personal Goals

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Ever since quitting my job, everyone has been asking me what I do with my time. And I feel embarrassed to admit that I work completely on my own goals. Yes, I use what would be my 40-hour workweek for my personal goals.

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How I Paid off $112,000 in Law School Student Loan Debt in 18 Months

I was fortunate enough to graduate from college debt free. Then I had to go and attend law school where I racked up $112,000 in student loan and credit card debt. So you can add this to the unremitting list of “student loan debt payoff” stories. I will admit that my story is more boring than most:

My secret is that there is no secret: I got paid a salary that made it possible to pay off the debt while living a reasonable lifestyle. There are no magical tricks herein. My story is completely mathematically realistic.

The high income was the most important key to paying off my debt. Still, there were a few basic guidelines I followed that helped me pay off the debt.* Continue reading “How I Paid off $112,000 in Law School Student Loan Debt in 18 Months”

Why I Quit My Six Figure Attorney Job

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At 11am on a nondescript Monday in February, I noticed that nothing unpleasant had happened yet.  That was unusual. And noting that peculiarity seemed like reason enough to quit my six-figure attorney job.

I told people it was a spontaneous decision. I hadn’t picked a particular day, but I knew that day I couldn’t do it anymore. Rereading my journal, however, I came across this journal entry:

I just can’t continue on at my job. It’s never-ending. I’m constantly stressed and crying and there’s no relief in sight.

I wrote this in March of 2017, almost two years before I gave notice. They say it takes decades to become an overnight success, and it took me years to realize the toll that my job was taking on me.  I remember for so long actually liking my job.

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The Financial Life of Ally McBeal

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When you think of the most famous attorneys – it’s a lot of men. Even famous fictional lawyers tend to be men – Perry Mason, Atticus Finch, Bob Loblaw. But there are also a lot of great female attorneys – real and fictional. And it’s easy to forget that. So this is just a fun series to remind us of some of them, with an added personal finance twist And we’ll start with my favorite of all time.

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15 Financial Challenges For Female Attorneys

Personal finance is different for each person, and that’s especially true for women lawyers. Factors like giant student loan debt, no work life balance, lack of financial confidence, the glass ceiling – are just a few things that make navigating finances as a woman attorney different from others.

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Female lawyers face their own unique personal finance challenges. They call it personal finance because the principles are not universal. If you’re a lawyer, you will likely accrue a lot of debt and no earnings while attending law school. It might still be a good decision because you are pursuing the career you want and are potentially setting yourself up for higher earnings. If you take a pay cut so that you can care for your family, that also might be the right financial decision for you, even though you are not saving.

Personal finance looks different for each individual depending on their circumstances and the stages in their lives. You might ask why this site focuses on women lawyers and it’s because female lawyers have different financial circumstances than male lawyers or women in other professions, due to a variety of systemic problems and societal norms. These differences are not necessarily night and day from other people’s experiences, but it’s different enough to warrant different advice. Below I explain some of these differences.

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