Personal Finance 101 for Young Lawyers

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kalvano
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Re: Personal Finance 101 for Young Lawyers

Postby kalvano » Mon Jul 24, 2017 11:44 pm

Tiago Splitter wrote:
kalvano wrote:
Danger Zone wrote:Do you have access to a 401k? If not, open a deductible IRA account. You need to start copping dem sweet pre-tax benefits.


Once you hit a certain income level, you don't get full credit for the $5,500 IRA contribution. At that point, I'd rather stick it in a Roth and take the future benefits.

If you don't have an employer plan (and your spouse doesn't either) you can always get the full IRA deduction.


I can take the deduction, but deducting the whole $5,500 only saves like $1700 on my taxes. I'd rather go with a Roth and not have to pay taxes later on. That's more a personal call for me as I like that certainty that comes with tax-free withdrawals. I know for a fact I can take a $1700 hit right now, but I don't know what the future holds.

Anonymous User
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Re: Personal Finance 101 for Young Lawyers

Postby Anonymous User » Wed Aug 02, 2017 12:36 pm

Is there a consensus for PI attorneys on an IBR to use a traditional IRA over a Roth IRA to lower their AGI for monthly payments?

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Tiago Splitter
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Re: Personal Finance 101 for Young Lawyers

Postby Tiago Splitter » Thu Aug 03, 2017 7:02 pm

Anonymous User wrote:Is there a consensus for PI attorneys on an IBR to use a traditional IRA over a Roth IRA to lower their AGI for monthly payments?

I wouldn't say consensus. If you are paid reasonably well but under the IRA deduction limits then yes, but if you make like 40k I'd probably lean towards Roth. Do you have any LRAP assistance?

Porkypots
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Re: Personal Finance 101 for Young Lawyers

Postby Porkypots » Tue Aug 08, 2017 1:19 pm

so I have about 15K in savings sitting in my savings account. What is the best short term investment vehicle? I am going to need access to the money next summer when I quit my job :/

Nosso
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Re: Personal Finance 101 for Young Lawyers

Postby Nosso » Tue Aug 08, 2017 1:32 pm

Porkypots wrote:so I have about 15K in savings sitting in my savings account. What is the best short term investment vehicle? I am going to need access to the money next summer when I quit my job :/


A high-interest savings account like the Ally online savings or something similar. That's $150 at 1% interest. You don't have a long enough horizon to take on the inherent risks of other investments.

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Re: Personal Finance 101 for Young Lawyers

Postby Anonymous User » Thu Aug 10, 2017 10:53 am

Nosso wrote:
Porkypots wrote:so I have about 15K in savings sitting in my savings account. What is the best short term investment vehicle? I am going to need access to the money next summer when I quit my job :/


A high-interest savings account like the Ally online savings or something similar. That's $150 at 1% interest. You don't have a long enough horizon to take on the inherent risks of other investments.


I agree with the above since you will need to access the money next summer. But what do people think about a slightly longer time horizon of 3-5 years? I have about 40k saved in about 80% stocks (vanguard S&P index fund), 20% bonds (and another 60k in retirement accounts). I'm thinking of putting the 40k towards a down payment in 3-5 years. I am torn between moving it to a 1% savings account or leaving it in the market - maybe even moving to a more bond-focused portfolio. I know the old adage of time in the market beats timing the market but it seems (in my uninformed opinion) that there could be a downturn in the next 1-2 years, which makes me want to be more conservative with that 40k. Appreciate any thoughts or advice.

Nosso
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Re: Personal Finance 101 for Young Lawyers

Postby Nosso » Thu Aug 10, 2017 11:14 am

Anonymous User wrote:
Nosso wrote:
Porkypots wrote:so I have about 15K in savings sitting in my savings account. What is the best short term investment vehicle? I am going to need access to the money next summer when I quit my job :/


A high-interest savings account like the Ally online savings or something similar. That's $150 at 1% interest. You don't have a long enough horizon to take on the inherent risks of other investments.


I agree with the above since you will need to access the money next summer. But what do people think about a slightly longer time horizon of 3-5 years? I have about 40k saved in about 80% stocks (vanguard S&P index fund), 20% bonds (and another 60k in retirement accounts). I'm thinking of putting the 40k towards a down payment in 3-5 years. I am torn between moving it to a 1% savings account or leaving it in the market - maybe even moving to a more bond-focused portfolio. I know the old adage of time in the market beats timing the market but it seems (in my uninformed opinion) that there could be a downturn in the next 1-2 years, which makes me want to be more conservative with that 40k. Appreciate any thoughts or advice.


It really depends on you, but having a portfolio that's 80% stock for a 3-5 year horizon is very risky. Most would advise against it. CDs or a money market fund could be a good middle option.

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bk1
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Re: Personal Finance 101 for Young Lawyers

Postby bk1 » Fri Aug 11, 2017 12:46 pm


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Lacepiece23
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Re: Personal Finance 101 for Young Lawyers

Postby Lacepiece23 » Fri Aug 11, 2017 4:35 pm

Anonymous User wrote:
Nosso wrote:
Porkypots wrote:so I have about 15K in savings sitting in my savings account. What is the best short term investment vehicle? I am going to need access to the money next summer when I quit my job :/


A high-interest savings account like the Ally online savings or something similar. That's $150 at 1% interest. You don't have a long enough horizon to take on the inherent risks of other investments.


I agree with the above since you will need to access the money next summer. But what do people think about a slightly longer time horizon of 3-5 years? I have about 40k saved in about 80% stocks (vanguard S&P index fund), 20% bonds (and another 60k in retirement accounts). I'm thinking of putting the 40k towards a down payment in 3-5 years. I am torn between moving it to a 1% savings account or leaving it in the market - maybe even moving to a more bond-focused portfolio. I know the old adage of time in the market beats timing the market but it seems (in my uninformed opinion) that there could be a downturn in the next 1-2 years, which makes me want to be more conservative with that 40k. Appreciate any thoughts or advice.


IRA? Can't you put the 40k in then take out the contributions in 5 years. You may have already maxed your 401k and IRA though.

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North
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Re: Personal Finance 101 for Young Lawyers

Postby North » Sat Aug 12, 2017 6:38 pm

I just got my HSA account linked to the TD Ameritrade account it comes linked to. Anyone have any (higher risk) mutual fund recs? Seems like they have a ton.

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kalvano
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Re: Personal Finance 101 for Young Lawyers

Postby kalvano » Sat Aug 12, 2017 11:56 pm

Lacepiece23 wrote:
Anonymous User wrote:
Nosso wrote:
Porkypots wrote:so I have about 15K in savings sitting in my savings account. What is the best short term investment vehicle? I am going to need access to the money next summer when I quit my job :/


A high-interest savings account like the Ally online savings or something similar. That's $150 at 1% interest. You don't have a long enough horizon to take on the inherent risks of other investments.


I agree with the above since you will need to access the money next summer. But what do people think about a slightly longer time horizon of 3-5 years? I have about 40k saved in about 80% stocks (vanguard S&P index fund), 20% bonds (and another 60k in retirement accounts). I'm thinking of putting the 40k towards a down payment in 3-5 years. I am torn between moving it to a 1% savings account or leaving it in the market - maybe even moving to a more bond-focused portfolio. I know the old adage of time in the market beats timing the market but it seems (in my uninformed opinion) that there could be a downturn in the next 1-2 years, which makes me want to be more conservative with that 40k. Appreciate any thoughts or advice.


IRA? Can't you put the 40k in then take out the contributions in 5 years. You may have already maxed your 401k and IRA though.


IRA's have contribution limits.

clshopeful
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Re: Personal Finance 101 for Young Lawyers

Postby clshopeful » Mon Aug 14, 2017 6:55 pm

North wrote:I just got my HSA account linked to the TD Ameritrade account it comes linked to. Anyone have any (higher risk) mutual fund recs? Seems like they have a ton.


SMH (ETF semiconductor fund) risky, good returns.

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TatteredDignity
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Re: Personal Finance 101 for Young Lawyers

Postby TatteredDignity » Mon Aug 14, 2017 8:14 pm

I'm starting at a firm in October. My current job doesn't have a 401k. Will the firm let me contribute the max between now and year's end?

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polareagle
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Re: Personal Finance 101 for Young Lawyers

Postby polareagle » Mon Aug 14, 2017 9:32 pm

TatteredDignity wrote:I'm starting at a firm in October. My current job doesn't have a 401k. Will the firm let me contribute the max between now and year's end?


Many (most?) employers have a waiting period ranging from three months to a year (most commonly six months) before you can contribute anything.

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TatteredDignity
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Re: Personal Finance 101 for Young Lawyers

Postby TatteredDignity » Mon Aug 14, 2017 10:58 pm

polareagle wrote:
TatteredDignity wrote:I'm starting at a firm in October. My current job doesn't have a 401k. Will the firm let me contribute the max between now and year's end?


Many (most?) employers have a waiting period ranging from three months to a year (most commonly six months) before you can contribute anything.


Well, that simplifies things.

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bk1
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Re: Personal Finance 101 for Young Lawyers

Postby bk1 » Mon Aug 14, 2017 11:12 pm

TatteredDignity wrote:
polareagle wrote:
TatteredDignity wrote:I'm starting at a firm in October. My current job doesn't have a 401k. Will the firm let me contribute the max between now and year's end?


Many (most?) employers have a waiting period ranging from three months to a year (most commonly six months) before you can contribute anything.


Well, that simplifies things.

I think at least some firms count when you worked as summer (assuming you worked at the same firm before).

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thewaterlanding
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Re: Personal Finance 101 for Young Lawyers

Postby thewaterlanding » Mon Aug 14, 2017 11:29 pm

tag

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TatteredDignity
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Re: Personal Finance 101 for Young Lawyers

Postby TatteredDignity » Tue Aug 15, 2017 8:14 am

bk1 wrote:
TatteredDignity wrote:
polareagle wrote:
TatteredDignity wrote:I'm starting at a firm in October. My current job doesn't have a 401k. Will the firm let me contribute the max between now and year's end?


Many (most?) employers have a waiting period ranging from three months to a year (most commonly six months) before you can contribute anything.


Well, that simplifies things.

I think at least some firms count when you worked as summer (assuming you worked at the same firm before).


No such luck.

pricon
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Re: Personal Finance 101 for Young Lawyers

Postby pricon » Tue Aug 15, 2017 8:56 am

Future Ex-Engineer wrote:Great post. It is amazing to me how many people my age can't grasp the basic economic principles required to not end up on the street by age 60.

In the engineering world, I've got lots of old classmates who would have benefited greatly from knowing these things, so I imagine that would be equally true here.


Did you guys not cover this in a design class? In ChemE we did, in terms of business economics that equally applied to personal finance (ROI, inflation, etc.).

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Future Ex-Engineer
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Re: Personal Finance 101 for Young Lawyers

Postby Future Ex-Engineer » Tue Aug 15, 2017 10:03 am

pricon wrote:
Future Ex-Engineer wrote:Great post. It is amazing to me how many people my age can't grasp the basic economic principles required to not end up on the street by age 60.

In the engineering world, I've got lots of old classmates who would have benefited greatly from knowing these things, so I imagine that would be equally true here.


Did you guys not cover this in a design class? In ChemE we did, in terms of business economics that equally applied to personal finance (ROI, inflation, etc.).


Nope. Our curriculum (Electrical) didn't have any sort of business/economics. All of our offerings were very very technically focused.

Wipfelder
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Re: Personal Finance 101 for Young Lawyers

Postby Wipfelder » Tue Aug 15, 2017 3:36 pm

Future Ex-Engineer wrote:
pricon wrote:
Future Ex-Engineer wrote:Great post. It is amazing to me how many people my age can't grasp the basic economic principles required to not end up on the street by age 60.

In the engineering world, I've got lots of old classmates who would have benefited greatly from knowing these things, so I imagine that would be equally true here.


Did you guys not cover this in a design class? In ChemE we did, in terms of business economics that equally applied to personal finance (ROI, inflation, etc.).


Nope. Our curriculum (Electrical) didn't have any sort of business/economics. All of our offerings were very very technically focused.


We, as Americans, are uniquely terrible at personal financial management. The worst.

Anonymous User
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Re: Personal Finance 101 for Young Lawyers

Postby Anonymous User » Thu Aug 31, 2017 11:48 pm

"5. Max IRA: This is tricky because of income levels and tax brackets. If you are in Big Law then skip to #6. If you make less than $71,000 then contribute the max ($5,500) to a traditional IRA. Traditional IRA is better than 401k because there are usually less admnistrative fees and you have a wider variety of funds from which to select.

There is a big debate about contributing to a Roth (post-tax) or Traditional IRA (pre-tax). Google "Roth vs. Traditional IRA" and read about it and select from your personal preferences. All I'll say is that I prefer pre-tax investing because I anticipate paying little to almost no taxes in retirement."

Good info in this post, but this quoted section should probably be edited. It is not true that people in Big Law should skip to #6. They should google "Backdoor Roth IRA" and max that in addition to the 401k (if they can). Then, consider googling "Mega Backdoor Roth IRA" and call their 401k provider to see if the plan qualifies (i.e. if it allows after-tax contributions and in-service distributions). There is the potential for enormous tax advantaged savings in biglaw, as high as about $58K / year (across 401k, Roth IRA, and Mega Backdoor Roth IRA). The Mega Backdoor Roth versus loan pay down becomes a tricky question (with different answers for different circumstances), but there are people in biglaw, saving for retirement in taxable accounts, with the ability to Mega Backdoor, who don't do it because they don't know they can. This knowledge is worth many thousands of dollars.

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kalvano
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Re: Personal Finance 101 for Young Lawyers

Postby kalvano » Thu Aug 31, 2017 11:59 pm

I do a Backdoor Roth contribution every year. It's super easy and takes almost no extra time.

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kalvano
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Re: Personal Finance 101 for Young Lawyers

Postby kalvano » Sun Sep 10, 2017 11:23 pm

Does anyone here use TD Ameritrade? Thinking about switching to them.

Jchance
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Re: Personal Finance 101 for Young Lawyers

Postby Jchance » Sun Sep 10, 2017 11:45 pm

Anonymous User wrote:Good info in this post, but this quoted section should probably be edited. It is not true that people in Big Law should skip to #6. They should google "Backdoor Roth IRA" and max that in addition to the 401k (if they can). Then, consider googling "Mega Backdoor Roth IRA" and call their 401k provider to see if the plan qualifies (i.e. if it allows after-tax contributions and in-service distributions). There is the potential for enormous tax advantaged savings in biglaw, as high as about $58K / year (across 401k, Roth IRA, and Mega Backdoor Roth IRA). The Mega Backdoor Roth versus loan pay down becomes a tricky question (with different answers for different circumstances), but there are people in biglaw, saving for retirement in taxable accounts, with the ability to Mega Backdoor, who don't do it because they don't know they can. This knowledge is worth many thousands of dollars.


Can we get a list of firm that actually allows Mega Backdoor Roth IRA?




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