Put Your Money Where It Matters (to you)

Money is always a game of juggling your priorities.  I became extra aware of it this weekend when I was talking with my father about my aging and ailing Toyota Prius.  The trunk doesn’t open on my Prius.  The latch broke a couple of months ago and my father asked me why I hadn’t had it fixed yet.  And I blathered something about not having time and money.  But then I realized that fixing the trunk just wasn’t my priority right now.  I find the time and money to go see my favorite bluegrass bands.  I always find the time and money to enjoy dinner out at my favorite brewpub on Friday nights.  I have the time and money to take a class every semester to work toward an academic goal.  It’s just not that important to me to be able to open the trunk on my Prius.  I will get it fixed eventually.  But it’s pretty easy for me to work around for now, so I just haven’t made it a priority.

I guess the tricky part with money is defining your priorities and making sure they’re not out of balance.  Making bluegrass festivals more important than repairing the broken trunk latch on a car that is otherwise fine isn’t a problem.  Making dinner out at the brewpub more important than paying the rent is a HUGE problem.  It’s a matter of making sure your NEEDS are met before you start throwing money at your WANTS.  And then you can decide how you are going to prioritize those wants.

I want to get my trunk repaired.  I just don’t want it more than I want concert tickets.  At least not this week.

Lost: One Credit Card

I lost my credit card two weeks ago.  I had it in my pocket while I was at a music festival.  And then next day I couldn’t find it.  I checked my purse.  I checked all the pockets.  I dug through my camper (that we were staying in at the festival).  I just can’t locate it.  And at the end of the day, this is really no big deal.

As soon as I realized the card was missing in action, I logged into my account on line to check for recent activity.  I found there were no charges that I hadn’t made.  Then I put the account on “pause,” which allows regularly recurring charges to continue but any other charges will be blocked.  This has given me some time to continue looking for the missing card, in case it is just misplaced and not really gone.  The idea of cancelling the card and changing the number everyplace that I have recurring charges is less than appealing, so I want to give my camper one more good overhaul in case it’s hiding in the mattress somewhere.

In the meantime, I’ve been really glad that I have another card that I’ve been able to use instead.  Without a backup card I would have been in a bad place (adulting really seems to require plastic payment these days!).  I’m thinking it’s probably a good idea just in general to have more than one credit card.  Not just because of situations like mine, but because not all places take all cards.  Some merchants will accept MasterCard, but not Visa.  Some will take MasterCard and Visa, but not American Express.  And so on and so on.  I like to be prepared for just about any situation, and having multiple payment options helps with that.

My plan for tonight is to pull everything out of the camper and really search for the card one more time.  If I don’t find it, I’ll cancel it and get it reissued this week.  But luckily, if it really is gone, it’s no big deal.

The Time to Buy is Now

I hate dealing with health insurance issues.  Everything seems so confusing.  Beyond the premiums, you have to deal with deductibles, co-pays, co-insurance, and networks.  It feels like the whole system is stacked against the little guy.  But there is one thing that is much worse than dealing with health insurance—not having health insurance.  Modern medicine is amazing.  And amazingly expensive.  So if you go without insurance you are taking a giant risk.  One bicycle accident or unhappy appendix can put you many thousands of dollars in the hole.

Because many students don’t have health insurance from another source, Penn State offers a student health insurance plan that provides great coverage.  The enrollment period stays open until September 3, so you still have a week to get signed up if you need insurance.  It’s not cheap.  Few things that are actually good are also cheap.  But we do have the flexibility to increase federal student loan eligibility to cover the cost of this important purchase.  You just need to stop by the Law School’s Financial Aid Office (in suite 105) or send me an email (sab36@psu.edu) and I’ll help you through the process.

The right time to buy health insurance is right now.  The wrong time to buy health insurance is when it’s too late and you need it.

Out of Sight is Out of Mind

Out of sight is out of mind.  Sometimes this is a bad thing (like when you misplace the Mother’s Day card you bought and forget to mail it until Memorial Day).  Sometimes this is a good thing (like when you don’t have any junk food in the house and you are forced to eat carrots instead).

Knowing that out of sight is out of mind can be a useful tool.  For example, at the beginning of each semester many students receive a large refund of student loan money to use for living expenses for the whole semester.  Getting that money out of your normal cash flow will make it easier to make it last the whole semester.  One option some students use is to immediately pay rent ahead through the end of the year.  Another option (and the one I prefer) is to build a monthly budget (taking into account the amount of money you have) and only allow yourself to use that much each month.  Put most of it into a savings account.  Preferably a savings account for which you don’t have an ATM card and transferring funds takes a couple of days—making it harder to cheat and withdraw funds early.

You should set up a designated “pay day” when your month’s funds transfer to your more accessible checking account so you have money for rent, food, laundry, and other living expenses.  The key to this working is simple:  DO NOT PAY YOURSELF EARLY!  If you do, you may find yourself subsisting on Ramen and hot dogs during finals.  Because money is a finite thing.  Unexpected windfalls rarely happen.  If you run out of funds and don’t have more coming for several weeks, you’ll be uncomfortable for a while.

Out of sight is out of mind.  So put your case books in plain view and stash your money away where it’s harder to get to.

 

One Bite at a Time

The halls are eerily quiet.  Nearly everyone is wearing exercise clothing.  Coffee is being taken in intravenously.  The law school reeks of exam time.

Take a deep breath.  Have the extra piece of chocolate.  Stop by the shelter and pet some dogs and cats.  It’s ok to eat pizza for breakfast and potato chips for dinner.  This too shall pass.

As the old saying goes, “How do you eat an elephant?  One bite at a time.”  And while I don’t condone the consumption of pachyderms, I love the sentiment.  If it seems impossible, break it down into smaller, more manageable pieces.

Hang in there.  You’ve got this.  One bite at a time.

Sometimes You Need to Reboot

Sometimes you just need to reboot.  We’ve all had it happen with our phones and computers.  The system just gets so overwhelmed that the only way to fix it is to turn it off and turn it back on again, giving it a fresh, clean start.

I was away from the office last Friday because I needed to reboot myself.  Spring is a pretty overwhelming time of year in the Financial Aid Office, and my work and personal worlds both had me feeling a bit out of control.  So I took a long weekend to go to a small music festival (one of my favorite things to do) and disconnect from normal life.  Today I’m back in the office with the same mounds of undone work surrounding me…but I feel better than I did last week.  Because I’ve had a reboot.

Sometimes your finances will feel overwhelming and you won’t be sure how you’ll ever be able to dig out.  At those times you may need to reboot your financial plans.  Maybe you have a credit card balance that you could save money on by transferring to a different card.  Maybe your student loan payment is uncomfortably high, but you can make life more manageable with a different payment plan.  Maybe your housing cost is too high and you have to make the difficult choice to move to a less expensive situation.  If your money has you feeling like you are sinking rather than swimming, you may need to look at things from a different angle and reboot your plan.  You will experience this many times throughout your life.  But nothing is hopeless.  You just need to reboot.

Secure Your Own Mask First

When you fly on an airplane there is always a safety speech before takeoff.  And the thing that has been ringing in my head since my last flight is, “Please secure your own mask before assisting others.”

That one sentence pretty much sums up this semester for me.  Spring semester always seems a bit harried, and this semester is no exception.  I’m not getting things done in as timely a fashion as I would like.  I’m a little overextended and feel like I’m focused a lot more on caring for others than making sure I’m ok myself.  But a conversation with a student last week made me revisit a tip on this theme that I wrote a couple of years ago.  I need to stop and secure my own mask before I can assist others.  You simply can’t effectively help others if you are in risk of not keeping yourself going.

The “secure your own mask” bit also hits close to home in a different way when it comes to charitable giving.  I’m sure I’m not the only person who hears the phone ring, sees the number of their alma mater, and lets it go to voice mail.  I know they are looking for a donation.  Sometimes it seems like every charity I’ve ever donated to is reaching out for a contribution at the same time.  And I want to assist others.  But my husband and I have some medical issues that are challenging financially.  So rather than stretching myself to assist others as much as I would like, I smile, politely said no (or agree to only a tiny amount) and proceed with securing my own financial mask.  It won’t be this way every year.  And it’s ok to say no to charities if you’re not feeling particularly financially secure yourself.  It comes back around when things are steadier financially.

I am hopeful that summer will unfold differently for me.  But it’s only because I’m taking steps to secure my own mask first.  Then I can proceed with assisting others.

 

The Scarcest Commodity

The scarcer a resource is, the more valuable it becomes.  It works this way with oil and diamonds and the minerals that help to make up your smartphone.  And it works this way with your time.  The further we get into the spring semester the scarcer time seems to be.  Exams (and commencement!) are only a few weeks away.  Your schedule is likely full of papers and events and planning and bar exam applications and outlines and study groups and…..well, you get the idea.  I’ve been finding the same thing in my world as both my personal and professional responsibilities seem to be more than I am able to squeeze into my waking hours.  But we trudge on, we compromise, and eventually we get through it.

The compromising is the tough part.  Every decision to spend your time on one thing means not spending it on something else.  Your priorities become clear.  When faced with the decision of spending my Saturday night seeing some favorite musicians perform or meal prepping with my Instant Pot, I chose the concert.  But that left me without lunches for the week.  Yet another decision.  Do I buy lunch out, or buy something pre-packaged?  I’m busy, but I’m not rich, so I hit the frozen food aisle at my local grocery store and bought an assortment of reduced-calorie frozen meals to eat for lunch this week.  And while I was at it, I grabbed a frozen veggie lasagna for Sunday dinner.  Not the most delicious food ever.  But also not bad, and not outside my budget.  And I didn’t have to give up the Saturday night concert.  I chose to spend my time on fun rather than food, but also didn’t give up too much of my money in the process.  Quality of food is less important to me than quality of life (which for me generally means live music).

Every decision has a trade-off.  But it’s important not to let money be the thing you sacrifice.  You can do or have anything you want.  But you likely can’t do or have everything you want.  What’s most important to you? What are you willing to give up in order to have it?  Can you do that without blowing your budget?

Good Enough Is Good Enough

Sometimes “good enough” really is good enough.  This is a lesson that law students often struggle with.  Having always strived for (and often attained) perfection, it’s difficult for law students to retrain the brain to accept that “good enough” is very often quite acceptable.

I’ve talked before about how I am taking classes toward a Certified Financial Planner certificate.  This weekend I had a very full agenda.  And I had a quiz I needed to take.  Through the magic of online education, I have three attempts to complete and submit my quizzes.  On the first attempt I struggled and earned a 7 out of 10.  I thought about retaking it, but I was pressed for time.  I decided to wait and see what Sunday brought to decide if I would retake.  When I got to Sunday evening, I decided to take my 7 points and move on with life.  Reality is that the three points I lost will likely not affect my grade.  I’ll probably get a B in the class no matter how hard I try.  And that is good enough.

The bar exam is often the first testing hurdle you will face where the goal is not to get the best grade in the batch.  The goal is to pass.  Whether you have the highest passing score or the lowest passing score does not matter.  At the end of it all, if you have any passing score you become a lawyer.  If you waste your energy focusing on perfection, you are actually less likely to pass.  This is a case where good enough really is good enough.

It’s unlikely that you’ll ever be perfect with your finances.  You will someday pay a bill a few days late (or miss a month altogether when you have misplaced the mail).  You may experience a month when you are unable to pay your credit card in full.  You might buy a stock that tanks.  You may discover that your bank has been charging you fees you could have avoided.  There is always room for mistakes and room for improvement.  But the reality is that this is another area where good enough is good enough.  You may have temporary setbacks.  But if you continue striving to do all the right things, it will likely be good enough.

Perfection is difficult to attain and attempting to do so can wreck your mental health.  It’s ok to ease up on yourself.  Because in so many cases good enough is good enough.

Income Tax for Law Students

Everyone seems to have income tax on the brain right now.  The news is full of stories about people who are getting less of a refund this year than they did last year.  Is the reason the changes to the tax code?  Or did they just have less tax withheld from their paychecks?  Or is it both?  The world may never know.

I’m still working on my taxes right now, and things are definitely different from last year.  But the basics of filing your federal income tax as a law student are actually pretty much the same.  Here is what you need to know:

  • The Lifetime Learning Credit still exists, allowing you to reduce your tax liability if you had expenses for tuition and fees in 2018.  You will need to complete IRS form 8863 and Schedule 3 to claim this credit.
  • Student loan interest can still be claimed as an adjustment to income, reducing your tax liability.  You will need to complete Schedule 1 to claim this credit.
  • Student loan disbursements that you received DO NOT count as income.
  • Scholarships that do not exceed tuition and fees DO NOT count as taxable income.
  • If your income for 2018 is less than $66,000 you can e-file for free.
  • The 1040 form looks a lot different (shorter) than it did in the past.  And the 1040 A and 1040 EZ no longer exist.  But how you attack the process of filing really hasn’t changed much.

Filing your income tax can be intimidating.  But it’s definitely something that a law student should be able to handle on their own, without having to pay a professional.  The online/software programs available to help make it really easy.  And if you are getting a refund—that makes it all worthwhile.  And if you are NOT getting a refund, all the better.  That means that you have not been giving the federal government free use of your money all year!