Technical Finance Vocabulary

Confused about the increasingly complex vocabulary that you heard in the news?
Have you heard technical terms on the news and want to know what their importance are?
Become more educated about what is causing the current financial crisis.

http://www.riskglossary.com/link_letter/link_a.htm

State Colleges Better Bang For Buck

SmartMoney and PayScale looked at the question: Are private colleges' high tuition worth it compared to state schools? They based their rankings on what the graduates earn in their early and midcareer vs. the debt they have to take on. They developed a "payback ratio" and here are their findings:

• The top state school has a three to one payback ratio compared to the highest private school
• State schools are a better deal than most of the private schools, including ivies.
• If you factor in loan costs, the private schools are at the bottom of the payback list.
• Many of the top state schools are attracting greater numbers of top quality students.
  

http://www.smartmoney.com/personal-finance/college-planning/the-best-colleges-for-making-money/

http://www.smartmoney.com/Personal-Finance/College-Planning/colleges-that-pay-off/?page=all

In the end, it's your money. So, the onus is on you to educate yourself about money.

A NY Times article -- "The 17th Floor, Where Wealth Went to Vanish" -- talks about a Ponzi scheme run by Bernard L. Madoff, which let to losses of around $50 billion for investors.
http://www.nytimes.com/2008/12/15/business/15madoff.html?pagewanted=1&_r=1&hp

Large banks and other firms entrusted their clients' money with Mr. Madoff: "Scrutiny is also falling on the many banks and money managers who helped steer clients to Mr. Madoff and now say they are among his victims."

It will be interesting to see what the investigation of Mr. Madoff unfolds, but there are three important lessons at the outset:

• Too many people, including wealthy people, lack financial literacy. They readily entrust their wealth to others, including large financial institutions, to manage it for them. If you work hard to make the money, you should work hard to preserve it. The onus is on you to educate yourself -- to gain financial literacy -- and to do due diligence about the people and institutions that are supposed to help you preserve and grow your money.
• If you don't gain financial literacy, you expose yourself and your friends to schemers.
• Don't trust all professionals! Professionals are made equal. Just because a professional has a degree or works for a large institution doesn't mean they have your best interest at heart.

Are associates really competing for tasks with paralegals?

A National Law Journal article -- "As support staff layoffs continue at firms, attorneys learn to share resources" -- reports on the increasing number of layoffs of support staff in law firms. It also suggests that some associates might be keeping their billable hours up by doing paralegal work.
http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202426604353

Articles, such as this, show the kind of decisions that partners, associates, and their support staff are having to make in a down market.

It is important to note that firms are being affected differently by this economy: "'In good times, you'll see firms that have built up some extra fat in their administration. Some of these staffs have gotten really large, and they will cut nonessential positions,' Altonji said. 'Other firms will cut into the bone, and make cuts that aren't prudent. Essential services could be curtailed.'"

Job Search Advice for 1Ls in this Legal Market

This AmLawDaily article -- "Letter to 1Ls: We're Scared to Death!" -- demonstrates how the changes in the legal market are affecting students, even in their first year of law school ("1L").
http://amlawdaily.typepad.com/amlawdaily/2008/12/open-letter-to.html

The article gives good advice:

• Don't neglect your grades.
• Don't put all your eggs in one basket.
• Be specific in your cover letters.
• Demonstrate a connection to the location you are applying to.

I believe that the this advice is very important to follow. It is especially easy to neglect your grades in your first year with anxiety over jobs. Please remember, that focusing on getting great grades and getting the most out of your education should be your job right now.

In your first semester, focus on learning the new, and sometimes awkward, language of the law. Turn your attention to applying for jobs during the holiday break.

In a Down Economy, Paying for a Private College Gets Harder

The following paragraph from a WSJ article -- "Painful Choices as College Bills Wallop Families" -- summarizes the struggles that the recession is causing to students and their parents: "Many students are already making painful adjustments, including dropping out, borrowing more to stay in school, transferring to cheaper schools or taking on part-time jobs. A third of parents expect the economic downturn to affect their ability to pay for college this year, according to a survey of 7,000 parents of newly enrolled freshmen by Eduventures, a Boston-based research firm."
http://online.wsj.com/article/SB122895685290096607.html?mod=djem_jiewr_swwgn_121108

Legal Job Market Shrinks

A CnnMoney article reports: "Verdict is in: Legal job market tightens."
http://money.cnn.com/2008/12/03/news/economy/legal_industry/?postversion=2008120305

In short, just as in other areas of the economy, lawyers are losing their jobs, and recent graduates are finding it hard to get a job.

There are at least two important takeaways from this article:

1. In this market, getting a J.D., or even an LL.M, does not guaranty a safe, secure job. The tune that you have to go to school to find a safe, secure job is ringing hollow. One student's experience in the article shows this: "In addition to his living expenses, Magdy has about $150,000 in student loans and the first payments are due in the middle of this month." So, before you sink yourself into debt for a school loan, think carefully!
2. Students must study their profession. Within the law, some areas are doing well: "While hiring is slowing in certain areas, including real estate and M&A, there are other opportunities for lawyers that are flourishing in the current climate, Pierce Stronczer said, specifically, 'litigation, intellectual property, white-collar crime and bankruptcy, of course.'"

Homes You Could Buy With $150,000

In my native town, I could get a studio co-op in an apt building for under $150,000 and a starter house for around $400,000.

I often tell people that a family can get a nice house with a backyard in most areas of the country (outside of cities) for under $150,000. City dwellers don't believe me. Well, pictures can paint a thousand words!

Check out the 10 towns that AOL Real Estate chose to profile:

http://realestate.aol.com/home-prices/150000?pg=1

College Cost Calculators

At FinAid, you can find numerous essential college calculators for your every financial need.
Here is just a summary of what you will find:

College Cost Projections
Savings Growth
529 Plan Growth
Savings vs. Borrowing
Payment Calculator
Expected Family Contribution
Loan Calculator
Income Based Repayment
How Much To Borrow
Loan Comparison
Budgets

http://www.finaid.org/calculators/

Best Majors By Salary

PayScale has created a list of the most common college majors by salary potential.
You can look up the median starting salary and the median mid career salary by major.
The major disadvantage is that the list is not organized by highest salary major to lowest.

When deciding what career to pursue be sure to factor in what you will be earning.
These are only general median salaries (you may earn more or less based on your area and the economy). Your choice of major and salary potential should be an important factor in your choice of school and how much loans you take on.


http://www.payscale.com/best-colleges/degrees.asp

Grants and Scholarships for College

You can search for free money for college. "How To Factor Grants and Scholarships Into Your College Choice," by TheStreet.com, offers several grants and scholarship website databases.

Many of these websites offer the ability to specialize your search based on the type of award you are looking for.
The scholarship links are more accessible and relevant to the student than the grant links because the grant websites mix government contracts with student grants.

When we went to school there were no such databases with this specialization and broad amount of knowledge available.

Take advantage of these links.
http://www.mainstreet.com/article/life-stages/educational-funding/how-factor-grants-and-scholarships-your-college-choice

Lower Your Total College Bill

The article "State Schools Save Dollars, Make Sense," from TheStreet.com, makes several important points:

A college student may feel the "need" to go to an private school but after the experience of going to a public school and graduating with no loans, it is worth it.
You can save 30% of the cost of college by living at home.
Many elite schools are offering grants instead of loans based on your family income.
You can save money by working during the summers.
Fastweb.com and Scholarships.com offer free search for scholarships.
You can start out at a community college and then transfer to a state school.


http://www.mainstreet.com/article/life-stages/educational-funding/state-schools-save-dollars-make-sense?page=1

Top State Universities For Earning the Most Money

PayScale has created a list of the top state universities by salary potential.
You can look up the starting median salary for the schools and the mid career median salary.
This is an overall median salary, be sure to note that your major may put you above or below the median.
The only disadvantage for the site is that the schools are not arranged by highest to lowest salary. Also, be sure to factor in that graduates may have a higher starting salary in higher cost city areas (but also a higher cost of living).

http://www.payscale.com/best-colleges/top-state-universities.asp

Rethinking College Debt

In her article, "Its Time to Rethink College Debt," Laura Rowley writes about the emotional impact that taking out loans has on students. The student profiled was shocked to learn that she could find a job for only half the salary than she was told by her school counselor.

Rowley writes that students need to reassess the risk involved in taking out loans and not earning enough to repay them. She also says to stay away from private loans because you could owe double the amount as a gov't loan because of higher interest rates.

Other important facts:

• Make sure your yearly loan repayment is not more than 10-15% of your salary.
• A manual worker may end up with a higher standard of living than a professional because of not owing loans.
• State schools offer great value because of their low tuition rates.
• Don't borrow in total more than your expected starting salary.
• Start a 529 plan early to fund your childs education.

http://finance.yahoo.com/expert/article/moneyhappy/100520

Will your education pay off?

I am always reading stories about people who take out debt for college and for graduate school and anticipate riches in the future.

For an example about a person who went to law school and who expects the debt to pay off, see http://www.ireport.com/docs/DOC-133729

Although this story could be true for a small percent of students, it certainly is not true for many that I know. I know far too many people who have graduated with professional degrees but are struggling to find a job. They are now deferring their loans payments.

You need to ask yourself a key question, "Will my education pay off?" More on how to answer this in later posts.

IRS Ruling: Law School Loan Forgivness is Not Income

IRS Revenue Ruling 2008-34 provides that debt forgiven through law school loan forgiveness programs will not be income. For a historical perspective, see this informative link:
http://taxprof.typepad.com/taxprof_blog/2008/06/irs-blesses-law.html

A Critical View of Federal Loan Forgiveness Programs

A blog entry on http://www.usnews.com/ titled, "The Problem with Federal Loan Forgivness Programs," provides a sobering view of such federal loan forgivness programs.
http://www.usnews.com/blogs/on-education/2008/5/28/the-problem-with-federal-loan-forgiveness-programs.html

For a list of such programs, see our blog entry:
http://mhs-financial-advice.blogspot.com/2008/11/httpwww.html

Volunteer to Advance Your Career

I recently spoke with an attorney who reminded me of the value of volunteering. This attorney has volunteered in a number of ways. For example, he was volunteered at soup kitchens and he continues to take pro bono cases. He told me that volunteering opened doors for him that would otherwise have been closed. He even received and continues to receive recognition from judges, colleagues, and clients.

When you volunteer, you serve others and you give back to the community. But my conversation today reminded me that when you volunteer, you get back a lot more than you give.

Onecle Sample Contracts

Onecle is a great reference tool that has real world business contracts listed by category.
You can find actual contract SEC filings from such categories as: bankruptcy, separation agreements, consulting, credit, leases, benefit plans, compensation plans, franchise, proxy filing, promissory notes, stock agreements, severance, stock options, tax, etc.

This is a good reference learning tool because it is from real life contracts not sample documents.

http://www.onecle.com/

Best Places To Buy A House Based On Income

Business Week offers a ranking of best and worst places to live according to housing costs.
They rank the best and worst by measuring if the median house price is affordable for the median income in that area. Unfortunately, we live in the highest cost, the NYC metro area. The median income can not afford the lowest cost house in our area. They are stuck having to buy co-ops in apartment buildings. I don't know about you but I like a backyard, space, and having my own house without worrying that I have a mortgage I can't afford.

http://finance.yahoo.com/real-estate/article/105683/Affordable-Housing-Exists,-If-You-Know-Where-to-Look

Best Places To Live In

Money Magazine offers an excellent guide on some of the best places to live in the U.S.
Their rankings are based on jobs, schools and housing costs.
You can search by state and closest location to where you live now. You can also compare the cost of living in different towns. I often try to explain to people that their dollar will go a lot further outside of the big cities (especially in housing costs) and they will live a better quality of life. Hopefully, once you see the low cost, high quality neighborhoods available around the U.S., you might move to one of these great towns.

http://money.cnn.com/magazines/moneymag/bplive/2008/index.html

25 Ways to Save Money

A BusinessWeek article provides 25 ways to save money. We have heard much of this advice before, but it is good to have it in a short article.
http://finance.yahoo.com/banking-budgeting/article/105529/25-Ways-to-Save-More-Each-Month

Earn Money By Recycling

Did you know that you might be able to make money by recycling such things as your old cell phone, electronics, or car? The following article gives four websites that might provide a little something in return for your old nothing.
http://finance.yahoo.com/banking-budgeting/article/105497/4-ways-to-earn-cash-for-recycling

How much will college cost for your child?

If your child is 2, how much will you have to pay for college when your child starts attending at the age of 18? To estimate your future expenses, you can use this calculator:
http://finance.yahoo.com/calculator/college-education/col-02

This calculator factors in an "Annual college cost inflation" of 6%.

What I like about this calculator is that you can enter the information for more than one child at once. The calculator will show you the results one graph and on one table.

What I don't like about this calculator is that you have to guess what the annual cost of the college would be today. This prediction is not easy to do. For example, it does not take into account any financial aid your child might receive.

To get the most information with this calculator, as with any calculator, type in and compare a number of your estimates.

Find Tax Deductions

MSN has a great online tool, provided by TurboTax, to help you find your tax deductions:
http://turbotax.intuit.com/tax-software/ty07/msn/deduction-finder.jsp

How much did you really borrow?

It is well known that when you take out a loan, you have to pay back more money than you borrowed. You have to pay interest on top of the principal that you borrowed. But how much do you really have to pay back? An easy to use calculator from FinAid will quickly tell you the answer:
http://www.finaid.org/calculators/loanpayments.phtml

BankRate Glossary

Don't know a financial term that you heard in conversation or on the news? Look it up here. Info about credit, auto loans, atms, insurance, investing, iras, mortgages, small business, taxes.
http://www.bankrate.com/brm/defhome.asp

Public Jobs Loan Forgiveness

Learn how to get some of your student loans forgiven if you qualify and are willing to work for a certain period of time. You can choose one of many public service options. Don't worry about the money you might lose if you don't go into private industry. Think of all the money you will save in years of loan payments!
http://www.finaid.org/loans/publicservice.phtml http://www.finaid.org/loans/forgiveness.phtml

Take Tax Deductions

You can learn what important tax deductions to take if you itemize instead of taking the standard deduction. (Medical, taxes paid, interest paid, charity, casualty losses, job expenses, misc losses). Tax deductions reduce your taxable income. Learn about what is deductible and how much is deductible.
http://www.bankrate.com/brm/news/Financial_Literacy/Dec07_tax_deductions_a1.asp?caret=78b

Celebrity tax issues

Learn how some celebrities handle their tax issues and who they take advice from. Learn some of the tax pitfalls of being in the entertainment/ artistic industries. Learn how they handle the tax implications of having sporadic income but having to pay regular taxes.
http://www.bankrate.com/brm/news/Financial_Literacy/Dec07_tax_experts_a1.asp?caret=80

Learn MBA Topics For Free

You can learn topics such as: accouting, economics, finance, management, marketing, operations, etc. Here you will find quick summary entries to complex topics. The topic entries are written for the more general reader.
http://www.quickmba.com/

Legal Topics / Vocab

Here you can find out information about different legal topics.
You can learn about the current regulations and laws such as: accident, criminal, estate, family, labor, real estate, bankruptcy, financial, legal, etc. This website offers legal information on various topics all in one place and it also gives important definitions for legal vocabulary terms.
http://business-law.freeadvice.com/all_topics.php

To Retire Early, Save Early

An article by Laura Rowley, "Meet the 29-Year-Old Retiree," tells the story of Madison DuPaix, a woman who retired very early. Madison DuPaix follows the simple, but difficult to implement advice: To retire early, you must save. It is interesting to note that the Madison DuPaix defines retirement broadly: "It means doing what I love, and knowing when I wake up every day I can do whatever I want."
http://finance.yahoo.com/expert/article/moneyhappy/118245

If you are interested in learning how Madison Du Paix saved enough to retire at the age of 29, read her method in her blog, "My Dollar Plan."
http://www.mydollarplan.com/%22%3E%3Cspan%20style=%22FONT-WEIGHT:%20bold%22%3EMy%20Dollar%20Plan/

How much is the name of a school worth to you?

I spoke with a friend who attended Columbia University for a masters in psychology. He currently has a job earning less that $50,000 a year and has over $80,000 in debt from undergraduate and graduate loans. He told me, "I will have to pay over four hundred dollars per month for the next thirty or thirty-five years." I asked him, "Was going to Columbia worth it?" He answered, "No, but at least I can say I went to Columbia."

Is college worth it?

A recent CNN Money article asks, "Is college still worth the price?" The article shows that cost of college has risen "at a faster rate than costs have risen on any other major product or service."
http://money.cnn.com/2008/08/20/pf/college/college_price.moneymag/index.htm?postversion=2008082214

Going to College Costs More

A recent article CNN Money article, "College prices rise," summaries a report from the College Board indicating that the costs of college have increased. For the 2008-2009 academic years, the average cost of attending college ranges from $14,333 per year for in-state students at public four-year schools to $34,132 per year for a private four-year college. These numbers include the cost of fees and room and board. The article gives other statistics, including statistics for aid given to students.
http://money.cnn.com/2008/10/29/pf/college/college/index.htm

10 Most Expensive Colleges

CNN Money lists the ten most expensive colleges. The information provided includes last year's tuition, this year's tuition, and the increase in the tuition from last year. At over $40,000 a year, some of these colleges can cost over $160,000 over four years -- a lot of money!
http://money.cnn.com/galleries/2008/news/0810/gallery.expensive_colleges/index.html

Financial Advice for Scary Financial Times

A timely article for Halloween, "13 Financial Frights," provides some solutions to thirteen financial problems people could currently be facing in this economic downturn. We like this article because it lists some of the main concerns we are hearing, including, having your retirement savings decrease, seeing your stocks tank, and an inability to get a student loan.
http://finance.yahoo.com/banking-budgeting/article/106063/13-Financial-Frights

Moving Out of NYC

I know a person that is thinking about moving out of New York City. She is thinking about places, like Nebraska, where a house costs $125,000 rather than $500,000. She thinks that it is impossible for a young urban professional to become a millionaire while renting in NYC.

New York City is known to have a high cost of living. To do quick research about how far your salary will go in another city, check out the cost of living calculator provided by CNN Money: http://cgi.money.cnn.com/tools/costofliving/costofliving.html

Request from a young urban professional

Today, I asked a friend what financial advice she would like to learn about. She said

1. How to make a dollar go further
2. How to plan / save for the future (including for retirement)

Dave Ramsey's Seven Steps

Dave Ramsey's seven steps guide you on how to get out of debt, save for retirement, save for your child's college costs, pay down your mortgage, and become financially secure!
http://www.daveramsey.com/etc/cms/index.cfm?intContentID=2926

CNN Money Millionaire Calculator

CNN Money gives a a helpful calculator to get you thinking about how your present saving can impact your future. You can become a millionaire! How soon can you do it?
http://cgi.money.cnn.com/tools/millionaire/millionaire.html