Why 145K Is Often Not Enough Max Your 401k

In response to my recent post about Financial Choices As An Associate Determining Your Future, one associate left the following comment:

Thanks, I appreciate this post. As a new associate, it's good to be scared straight every now and then. This is high octane nightmare fuel. I cannot imagine earning biglaw money for five years and not managing to pay off my student loans and maximize 401(k) contributions.

First, congratulations to the associate on being employed in this tough job market!  You are no doubt a very smart and on-the-ball person - it further shows in that you are seeking financial advice early in the game.  Second, the sentiment that the associate mentions - that they can't imagine not paying off the student loans and maxing their 401k - is a pretty common sentiment.  However, as associates find out, it is all too easy to fail to accomplish this.  We will discuss some of the reasons why associates fail to accomplish this and what they can do to help themelves after the break.

Lawyers And "The Millionaire Next Door"

The bestselling book The Millionaire Next Door was a real eye-opener for me.  The book is based on a series of surveys set up by the authors who both work in academia and serve as advisors and consultants to businesses that are trying to market products to the rich.  The book provides a lot of great information about the millionaires in America, including generally how they got there, who they are, and how they live. 

The book also mentions lawyers and provides some analysis of how lawyers can become millionaires and why more laywers aren't millionaires.  We will discuss the advice provided by the book as well as some points that the book may have missed after the jump.

Comparing Hiring Odds Now And In The 1990s Recession

The ABA Journal has an article entitled "When the Detour Becomes the Destination
How 5 grads survived a recession—and how you can too".  The article gives several examples of lawyers that launched their careers during the last legal recession during the early 1990s.  The article is an attempt to be inspirational and give hope to those law students that are struggling to find jobs during the current recession.  That's a sentiment that I applaud.  However, I don't think a straight comparison of the early 1990s recession with the current recession paints an accurate picture of the employment situation - and that does a disservice to current law students and those considering entering law school.  We take a more detailed look at the assumptions and likely outcomes below.

Financial Choices As An Associate Determine Your Future

I'll never forget a conversation that I had as a young associate with another associate a few years more senior than me - who I will call Senior Associate or "SA" for short.  I had been working at the firm (a large law firm with top compensation in the city) for a few months and had come to realize that even though my salary seemed high, after taxes, social security, health insurace, student loan payments, and car payment, there did not seem to be much left over.  At the time, I did not yet have a lot of insight into personal finance, so I came up with the idea of trying to figure out what more senior associates were doing so that I could potentially copy that.

Portrait Of A Recent Law School Grad - Part 3

This is the third and final part of our series about Lawyer X - a 2009 graduate of a Tier 1 law school who is smart, hardworking law school graduate that is trying to make his way in the worst recruiting market in decades.  The first part of the series appears here. The second part of the series appears here.

Three Useful Books For New Attorneys Or Law Students

I sometimes get asked by law students or young associates whether I could give them a reference that might help them make an easier transition to law firm life.  There are three books that I recommend - I'll identify them below and discuss their pros and cons.

Costs To Consider When Buying A Condo

This posting is NOT going to be about 1) the decision whether or not to buy or 2) about finding the area that is most desirable.  Instead, I am going to assume that the potential buyer has already arrived at generally what they want and is now trying to decide among several potential purchases by comparing the costs associated with the ownership of the properties.  One would think that it would be simple to compare these costs, but I see people (even smart young attorneys) screw this up all the time.  I attribute this to their inexperience and the fact that the real estate deal is complicated and their eyes are on the wrong ball.  I'll explain further below.

Increasing US Debt And Its Impact On Investing

In previous articles, we focused a lot on the financial considerations of those who were attending or thinking about attending law school.  Frankly, that's gotten old.  It's time now to shift focus for a time to other financial considerations that may face an attorney later in their career.  In this acticle, we are going to take a look at how the increasing US debt may impact investment returns in the future.  Some specific recommendations that may lead to a higher return are presented after the jump.