In January, I made the decision to lend my parent Bum (who is no Bum!) $15k to pay off some credit card debt.  I believe that since I asked and accepted financial assistance from Bum for my 1L and 2L year for some living expenses I contributed to the debt.  But, the biggest culprit was my older sibling the Other Child who refuses to get a real world job and is going after his entrepreneurial dreams while Bum picks up the check.  I tried conditioning the loan on Bum cutting out the Other Child financially but Bum was having none of that so the $15k was a no-strings-attached unsecured interest free personal loan.

The only drawback to the loan was that I was not willing to wait around for my $15k to be repaid.  I wanted an aggressive repayment plan since Bum wasn’t willing to cut the Other Child out.  I lend the money this January.  I specified that I wanted my first payment of $5k on March 31, next $5k on June 31, and the next $5k on October 31 and oh maybe a nice little “gratuity” in December for being so so considerate. 

At the end of my post I asked my readers whether now that I have paid off the $15k in credit card debt, whether Bum will save the money to repay me or whether the increased cash flow means more money will end up going to the Other Child.   Guess what happened?  Bum is doing both.  Yes, both! 

Bum Spends More on the Other Child  

Bum is spending approximately $1,000-$1,200 per month on the Other Child for residential rent, office space rent, student loan payments, car insurance, food, gas, cell phone etc…  It started with $500-$700 and now it is almost double.  So, readers who predicted the Other Child will really benefit from this move were correct.  The Other Child is benefitting like crazy.  Its entire lifestyle is subsidized by Bum. 

Bum is Saving More

But, Bum is also saving money.  In fact, Bum already has my payment of $5k saved up that is due on March 31.  I think the high interest credit card debt was a huge burden on Bum and making it all go away in one swoop was a good thing and it is enabling Bum to save more (and spend more on the Other Child).  So, right now things are looking good but nothing is final until the $5k hits my bank account on the 31^st. 

So, in this transaction everyone wins except for Bum. 

• The Other Child gets more financial support and can continue working on its entrepreneurial venture. 
• The credit card companies got their payment. 
• I will (likely) get all my money back and I am expecting a little extra in the form of a gift. 
• Bum gets to continue supporting a grown adult, live an even more frugal lifestyle, work harder and longer, forego fully contributing to the 401(k) etc…  Poor Bum.   

And on top of all this, I went to visit Bum this past weekend and dropped a huge bomb about my career.  More to come on that.

 I had an outside scholarship that paid for $4k of my tuition for Spring 2009 and I used another $4k for my Fall 2009 tuition.  I found the terms of the scholarship and it states:

 The $4,000.00 scholarship is renewable for the third year of law school (except in the event of unusual circumstances, determined in the discretion of the firm, that may involve the Scholar’s academic performance or conduct subsequent to the award….)

 It seems I was wrong in my interpretation in thinking $4k was just for the third year as a whole.  The scholarship must have renewed again for the Spring semester since I still meet the requirements.  I paid my tuition somewhat early before the scholarship was applied to my tuition and I believe this triggered the refund.  

This brings down my total all time out-of-pocket law school tuition expenses from $29,377.50 to $25,377.50 and my Spring 2010 tuition from $8,777.50 to $4,777.50.   

 An unexpected $4,000 is the best way to start off the week!

According to the American Bar Association, the average tuition and fees for a private law school rose from $16,798 in 1995 to $26,952 in 2004, including a 5 percent jump from the $25,574 tuition average in 2003. To help pay for that education, students attending private law school borrowed an average of $76,563 in 2004-2005, according to the ABA.

I always stayed away from debt because I wanted to know that after Law School where and what I decided to do would be my own choice.  That choice should only be dictated by my personal preference (and the job market) and not how much I must make to meet my monthly debt payments. 

Having such a huge debt means that students will not only forego an ideal job for one that pays the most, but research shows that student loans will cause 44% to delay buying a house while 28% will delay having children per Mint’s data.   

I don’t believe in the concept of good debt versus bad debt because I think all debt is debt.  Debt for education is not necessarily good because it is for education.  It will only be financially benficial if it will increase your earning power in a significant manner for the amount your paid for the education plus the amount of money you lost by staying out of the job market while pursuing the education.  I think the term ”good debt” causes people to skip the careful analysis that they should be doing whenever they take on any kind of debt. 

Do you agree with the concept of good debt and bad debt?

 There is a very honest article  titled Unemployed law student will work for $160k plus benefits from a third-year Harvard Law student who was “no-offered” by his/her summer firm similar to me.   The author did forget to mention a crucial piece of information.  Harvard Law is taking close to half a million from their endowment and creating jobs for their graduates in the form of public interest fellowships.   Now, that’s an unexpected benefit of going to a top law school.  The law school will actually create jobs for its unemployed students.  

The poll did give me a good laugh.

Over budget by $63.63

February expenses were much better when compared with last month.   My gas use was very low because I was stuck inside for a whole week due to the snow storm. 

My food expenses have gone up because (1) I am eating out a whole lot more with friends and (2) I am feeling down about my legal career prospects and haven’t really had the energy nor the desire to cook.

 The attorney told me that going the non-legal route is not only makes obtaining a legal position down the road difficult but it is also a highly risky path to take.  She said she had seen too many lawyers get stuck in non-legal positions and advised me to proceed with caution.  Also, my legal skills would get shoddy from disuse.  According to her, a law school graduate becomes a lawyer by doing legal work and getting feedback from other lawyers.  It took her three years to feel competent in her skills as a junior lawyer.  Integral to that transformation from law student to lawyer was doing legal work and having feedback from lawyers. 

 I also discussed with her another problem with pursuing a non-legal job.  Your colleagues can feel intimidated by you.  I am already experiencing this at my internship site. 

 A lot of things she said was hard to swallow and the only consolation at the end of the meal was that she picked up the check.

Federal $6,834

DC: $921

Home State: $24

Cost: -$21.10

Total = $7,757.90

“What do you mean?  I want a job.” 

“No, you don’t.  If you really wanted a job then you would have also applied for state clerkships and you would have…”

Jane: “But, I don’t want to do state clerkships.”

“See, you don’t want a job.”

Jane: “No, I don’t want ANY job.”

“I would much rather you be in a position to turn down a job than have nothing.  You are working on plan A, then on plan B, now plan C.  By working on things consecutively, you are setting yourself up for failure.  You gotta have Plan’s A through Z and work on as many of them as possible.  You have to stagger your approach.  You have to do a full force job search none of this oh, I think I will like this.  I need you to spend at least 2 hours a day looking for a job.” 

Jane: “Two hours a day?!”

 ”There’s 168 hours in a week.  What?  You don’t have two hours to spent searching for jobs?” 

Jane: “I can try to find two hours.”

“And, you can’t be egotistical.  This is not the job market for that.  I graduated from a top law school and worked at some of the best firms.  I applied for 150 jobs last month.  Guess how many calls I got?  I got 4 interviews.  In any other market, my resume would have been snatched up but not in this market.” 

And…

I met this attorney on Friday.  Before then, I didn’t think this consecutive job searching was a bad thing although I knew it wasn’t the best way to go about it.  In some ways she is right about the fact that I don’t want a job.  I don’t want any job just to say that I have a job.  I would much rather leave the legal field behind and jump into something else rather than trying to make my way through a dead end profession where even a former Skadden associate like this attorney can’t find a job based on her superb qualifications.   But, I am thankful for this encounter because it did force me to sit down and make a list of A through Z options to pursue after graduation.  And, it did make me start spending 2 hours each day starting yesterday.

Plan A was to get a job at the firm that I worked as a summer associate at.  The attorney in charge of the summer program told me that I was getting an offer, so I didn’t look at alternatives.  Towards mid to late August, I found out that I was no-offered.

Plan B was to apply for a federal clerkship position.  I was behind in the application process because I abandoned it as soon as I was told about the offer, but somehow I got my applicated together and applied.  I got one invitation to interview from a judge.  He said that he had 600 applications for his one position and of that 600 he was interviewing 20.    I wasn’t the one person out of twenty who ultimately ended up with the position. 

Plan C  I decided to go with my current internship site because I believed I was more likely to obtain an entry level position with this organization than the internship offer from the more prestigious governmental agency.  I applied for two positions with this organization.  I reached out to a recruiter and she informed me competition was stiff these days with each position getting 300 to 600 applications.   If a position with this prospective employer doesn’t work work out then I need to consider alternatives. 

Readers: What, if any, mistakes am I making with my job search?  

If this situation gets worse then Bum, my parent, will need to fly out to the “Old Country” to visit my grandmother.  And of course, that means I will be the one shelling out the dough to get Bum there since Bumt doesn’t want to dip into the money that is being saved for the first installment on my loan.  Translation =  there isn’t much saved to begin with. 

I’ve about $10k in hand that is easily accessible.  If this situation gets worse then I will, without a doubt, shell out for a trip abroad and wait to impart a financial lesson about the importance of emergency funds to my parent (!) later.  I checked the flights and right now they are coming in at $1,140. 

This is such a delicate personal situation that I don’t think this is the time to cut Bum off to show that I am no longer the safety net.  This situation has definitely shown me that if I don’t set up some ground rules then I can easily become an ATM.

Update: 2/19/2010

My grandmother is doing much better and we do not believe that she had a stroke.  Thank you for your support.