I mentioned previously that I was almost done with my credit card debt and that I refinanced my car onto a 0% balance transfer credit card.
I have good news to share! I made the last payment on my credit cards today! As of now, I have no car loan, and no credit card debt. My dad refuses to let me pay back what I borrowed from my parents, so as far as I'm concerned, if he doesn't want the money, that debt is gone, too.
All I have left is a massive student loan balance. I'm going to hold off on attacking that just yet because I want to buy a house. I qualify for down payment assistance through a local business organization, so all I have to come up with is enough to cover closing costs. I should have that in a few months, and then I'll go looking for the right house for me.
After that, I'll start going after my student loans and then the mortgage. I'm hoping to have the student loans gone in about 3 years, and then the mortgage a few years after that.
Overall, I've already paid off somewhere in the mid to high 5 figures of debt. I'm ready to get off this roller coaster.
I'm not cutting up the credit cards. I'm sticking them in the drawer for emergency use only, and I'll keep one card in my wallet to use for purchases and I'll pay it off in full every month. (This is basically how I've been operating for the last couple of years anyway. I pay off my main card every month, and I've been attacking the other ones to get rid of the stuff that piled up while I was unemployed and underemployed.)
Freedom is so close I can taste it!
Thursday, December 20, 2018
Saturday, September 29, 2018
Broke Urban Lawyer Refinances Again
The credit card that I recently paid off just offered me a balance transfer offer of 0% for 12 months. I decided to take advantage of it to refinance my car loan. I had a good interest rate on my car loan, but it wasn't as good as 0%, obviously. Plus, I'm trying to buy a house in the next 6 months, and the minimum payment on the balance transfer is $100 per month less than the car payment, so that's an extra $100 I can put toward a mortgage.
Obviously, I'm going to pay more than the minimum payment, but mortgage eligibility is calculated based off of the minimum, so the more I can lower my minimums, the more house I can buy. And every payment I make lowers the minimum even further.
Additionally, now that I own my car in full, I can drop comprehensive and collision insurance, saving me $500 per year. And I got a happy surprise yesterday as well. When I bought the car back in January, I decided to buy gap insurance as well. Gap insurance pays off the difference between the loan balance and the value of the car in the event that the car gets totaled. I figured it was a good idea because I was underwater on the car loan from day one. Since I paid off the loan, the lender canceled the gap insurance, and I'll be getting a $493 refund because the gap insurance was originally for 4 years (the life of the loan), but I paid the loan off in 9 months, so I get the remaining premium back.
The savings on car insurance now that I only have liability coverage paid for the balance transfer fee. The gap insurance refund will go right to the credit card to pay down the balance.
One step closer to freedom!
Obviously, I'm going to pay more than the minimum payment, but mortgage eligibility is calculated based off of the minimum, so the more I can lower my minimums, the more house I can buy. And every payment I make lowers the minimum even further.
Additionally, now that I own my car in full, I can drop comprehensive and collision insurance, saving me $500 per year. And I got a happy surprise yesterday as well. When I bought the car back in January, I decided to buy gap insurance as well. Gap insurance pays off the difference between the loan balance and the value of the car in the event that the car gets totaled. I figured it was a good idea because I was underwater on the car loan from day one. Since I paid off the loan, the lender canceled the gap insurance, and I'll be getting a $493 refund because the gap insurance was originally for 4 years (the life of the loan), but I paid the loan off in 9 months, so I get the remaining premium back.
The savings on car insurance now that I only have liability coverage paid for the balance transfer fee. The gap insurance refund will go right to the credit card to pay down the balance.
One step closer to freedom!
Saturday, August 25, 2018
Broke Urban Lawyer Calculates Opportunity Cost
Law school is expensive. In addition to tuition, books, and fees, there's also the opportunity cost involved in doing law school instead of something else. That something else could be working or getting another degree. (Or backpacking around the world or raising organic goats or whatever.)
I'm not counting living expenses in the opportunity cost calculation because I would have had to eat and have a place to live whether or not I went to law school.
For a year and a half of law school, I was going to school full-time and either not working at all or working so part-time that it basically only covered my train pass and a little food. The rest of the time I was working full-time and going to school part-time. So I won't count as an opportunity cost the time when I was working full-time because I didn't lose any opportunity as a result of school. (Well, except for sleep and a social life, but I don't know how to put a dollar value on that.)
So, the true cost of my legal education can be measured as opportunity cost + tuition/books/fees + interest on my student loans. Once I know the true cost, I can calculate the break even point. The break even point is when the true cost of my education plus my cumulative salary equals the cumulative salary I would have earned had I not gone to law school.
I'm not really getting into numbers on the blog because I'm still squeamish about being specific about my financial situation, but I ran the numbers privately. It's hard to get an accurate assessment because I can't see into the future to know what my income is going to be going forward.
2017 is the first year I made more money as a lawyer than I would have made doing something I could have done with just my BS.* I'm going to predict that my income going forward will be a bit more than my 2017 income but not hugely more. If I start earning beyond my wildest dreams, then all the calculations will go out the window.
A back of the envelope calculation says that it will take between 5 and 6 years from the time I started out-earning my previous earning power to recover what I paid and what I gave up for law school. So, I should break even by 2022. Hopefully I'll also have my student loans paid off by then, but I'm not holding my breath on that. Even if I'm still making student loan payments, the extra income will offset the debt enough to still count as a break-even point.
I started law school in 2005. My law degree has a 17 year payback time frame. I don't think I'm that much of an outlier among people who graduated around the time I did. This is why one of my public services is talking people out of law school. It really did a number on my finances.
On the other hand, there have been some pretty good intangible benefits. I have a high social standing. Despite all the lawyer jokes, it still does impress people when I tell them I'm an attorney. And I also get a lot of flexibility in my schedule that I wouldn't necessarily be able to get in other fields. I work from home when I'm not in court, and I'm my own boss. I more or less set my own hours. My prior career in HR didn't give me this much freedom.
I'll re-run the calculation in a year or two to see if the numbers change. Until then, I'll just keep on forging ahead. There's not much else to do.
----
*That's Bachelor of Science, not Bulls----. Though I did major in Political Science and minor in Philosophy, so insert your own joke here.
I'm not counting living expenses in the opportunity cost calculation because I would have had to eat and have a place to live whether or not I went to law school.
For a year and a half of law school, I was going to school full-time and either not working at all or working so part-time that it basically only covered my train pass and a little food. The rest of the time I was working full-time and going to school part-time. So I won't count as an opportunity cost the time when I was working full-time because I didn't lose any opportunity as a result of school. (Well, except for sleep and a social life, but I don't know how to put a dollar value on that.)
So, the true cost of my legal education can be measured as opportunity cost + tuition/books/fees + interest on my student loans. Once I know the true cost, I can calculate the break even point. The break even point is when the true cost of my education plus my cumulative salary equals the cumulative salary I would have earned had I not gone to law school.
I'm not really getting into numbers on the blog because I'm still squeamish about being specific about my financial situation, but I ran the numbers privately. It's hard to get an accurate assessment because I can't see into the future to know what my income is going to be going forward.
2017 is the first year I made more money as a lawyer than I would have made doing something I could have done with just my BS.* I'm going to predict that my income going forward will be a bit more than my 2017 income but not hugely more. If I start earning beyond my wildest dreams, then all the calculations will go out the window.
A back of the envelope calculation says that it will take between 5 and 6 years from the time I started out-earning my previous earning power to recover what I paid and what I gave up for law school. So, I should break even by 2022. Hopefully I'll also have my student loans paid off by then, but I'm not holding my breath on that. Even if I'm still making student loan payments, the extra income will offset the debt enough to still count as a break-even point.
I started law school in 2005. My law degree has a 17 year payback time frame. I don't think I'm that much of an outlier among people who graduated around the time I did. This is why one of my public services is talking people out of law school. It really did a number on my finances.
On the other hand, there have been some pretty good intangible benefits. I have a high social standing. Despite all the lawyer jokes, it still does impress people when I tell them I'm an attorney. And I also get a lot of flexibility in my schedule that I wouldn't necessarily be able to get in other fields. I work from home when I'm not in court, and I'm my own boss. I more or less set my own hours. My prior career in HR didn't give me this much freedom.
I'll re-run the calculation in a year or two to see if the numbers change. Until then, I'll just keep on forging ahead. There's not much else to do.
----
*That's Bachelor of Science, not Bulls----. Though I did major in Political Science and minor in Philosophy, so insert your own joke here.
Wednesday, August 22, 2018
Broke Urban Lawyer Returns from Oblivion with Good News
I've been terribly neglectful about blogging here. However, I come bearing good news. I've made incredible progress on my debt. And I mean incredible in the literal sense of the word - impossible to believe!
I've paid off all but one of my credit cards. All I have left in credit card land is a $2900 medical bill from surgery earlier in the year. It's interest-free until next summer, so I'm going to take my time paying that one off.
Oh, and I still have my car loan, a loan from my parents, and my student loans. My debt sentence still has many years left on it. It feels nice to have a little victory, though.
My credit cards represented 20% of my debt burden, so I'm 1/5 of the way toward freedom.
I hesitated about whether to post this on Facebook because I consider money to be a somewhat private topic, but I opted to do so, and the outpouring of support from my friends and family has been amazing. I have a bunch of people cheering me on.
I've paid off all but one of my credit cards. All I have left in credit card land is a $2900 medical bill from surgery earlier in the year. It's interest-free until next summer, so I'm going to take my time paying that one off.
Oh, and I still have my car loan, a loan from my parents, and my student loans. My debt sentence still has many years left on it. It feels nice to have a little victory, though.
My credit cards represented 20% of my debt burden, so I'm 1/5 of the way toward freedom.
I hesitated about whether to post this on Facebook because I consider money to be a somewhat private topic, but I opted to do so, and the outpouring of support from my friends and family has been amazing. I have a bunch of people cheering me on.
Monday, January 8, 2018
Broke Urban Lawyer Buys a Car
I've had a lot of terrible luck with cars. One time, I called it bad car-ma. It feels that unrelenting.
It all started out when I foolishly decided to get rid of my trusty old Camry after law school. The car had been good to me, and I had over 300,000 miles on it with minimal problems. It was old, and I figured I deserved a newer car.
I sold the Camry to my neighbor and bought a 2000 VW Jetta. That thing was a money pit. It was a lot of fun to drive when it worked, but it rarely worked, and it was very expensive to maintain. The car lasted a year and a half before I gave up and sold it to a junkyard. I replaced it with a 2005 Honda Civic, since they're known to be reliable. That one lasted six months before the engine and transmission died. I was working in San Francisco at the time, so I didn't replace the car. I just took the bus. My neighbor was still driving the Camry I sold her.
Then I moved to Phoenix.
It all started out when I foolishly decided to get rid of my trusty old Camry after law school. The car had been good to me, and I had over 300,000 miles on it with minimal problems. It was old, and I figured I deserved a newer car.
I sold the Camry to my neighbor and bought a 2000 VW Jetta. That thing was a money pit. It was a lot of fun to drive when it worked, but it rarely worked, and it was very expensive to maintain. The car lasted a year and a half before I gave up and sold it to a junkyard. I replaced it with a 2005 Honda Civic, since they're known to be reliable. That one lasted six months before the engine and transmission died. I was working in San Francisco at the time, so I didn't replace the car. I just took the bus. My neighbor was still driving the Camry I sold her.
Then I moved to Phoenix.
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