Tales from the Wallet: On Bad Financial Decisions

bad financial decisionsSo. I recently did something fairly dumb, and I thought I’d share. I normally follow the advice given to novices, and the bulk of what I’ve invested is in index funds or Vanguard lifecycle funds with very low fees. But occasionally, I like to walk on the wild side and put a little extra money in stocks. Now, over the years I’ve always regretted not investing in certain stocks on Day 1 — big stocks, whose products I was extremely familiar with and knew the value of, to me at least. For example: I remember when Google IPO’ed. I’ve heard tell of people who bought Apple on Day 1… and I remember vividly my mother asking my brother if she should buy him stock in Nintendo (he was 11 when it IPO’ed, and said no).

So, I thought, wouldn’t it be great to buy Facebook on the day it IPO’ed? I could even buy some for my son, and tell him that we bought it on the very first day. I know I’m on Facebook several times a day, and as a publisher I know how Facebook is completely changing the way people read and acknowledge news. So what if Facebook hasn’t totally figured out how it’ll make money, I thought. Big deal. (Hint: allow bigger ads bigger than 125×125.) On the flip side, as a consumer, I don’t trust Facebook farther than I can throw it, and I don’t like to post pictures of my kid on it — but that doesn’t mean I don’t recognize it as a significant force in the future of publishing, friendships, and life. (Pictured: Forehead slap, originally uploaded to Flickr by chizoo.)

Now is probably a good time to interject that I barely know how to buy stocks (I went through Schwab because that’s all I’ve ever bought stocks through) — let alone any of that fancy “financial talk” about things like P/E values or things like that. And I’ve bought very few stocks over my lifetime — in fact, I could probably list them all for you now. Google, Apple, um…. some other indulgent (very small) purchases in Linked In, AOL, the New York Times… and for a while I kept buying and selling Gap stock. (I would walk into a store, decide I liked everything in it, and then buy some Gap stock. Then after about a year I’d sell it, usually making about a 25% profit.) I haven’t even read Peter Lynch yet, even though I’m roughly following what I understand to be his advice, to invest in companies with which you’re very familiar.

Anyway: so the day of the Facebook IPO, I invested a small amount in Facebook… and I think it’s already “lost” 1/3 of its value. I say “lost” in quotes, though, because even though there has been major talk of what idiots people were to buy the first day of Facebook, and how screwy the numbers were if you actually knew how to look at them, I’m still not too concerned. Know why? I never expected to sell that stock this year… or next year… or even five years from now. And if I lose it all, well, even that will be ok. (In fact, I’ve read that even if you bought stock the eve of the Great Depression, you still would have made money if you held it long enough.) Considering that I also accidentally used a similar amount of money to buy a 30-year treasury bond when playing around on TreasuryDirect.gov (whoopsies), I don’t even know which is the bigger mistake — the money that’s locked into earning a crap rate of return for the next 30 years, or the money that’s bound up in a lousy investment but at least can be sold in the next five years as a capital loss if I need one.

But: Have I learned a major lesson about buying stock on the first day without knowing anything about how to read the charts? Um, yes. Forehead, meet palm.

Readers, have you made any dumb financial decisions?  Do paper losses stress you out?


  1. Facebook (now dubbed Faceplant) is predicted to tank even further. You should cut your losses.

    • It’s actually going back up right now, although it hasn’t recovered to the amount it traded for at the beginning. I think it’s at $32.

  2. I am a banana. :

    Government loans at a fixed rate of 8.5% for law school. :)

    • Anonymous NYer :

      I love your name an inordinate amount. I have no reason to especially like it, but for some reason, it is making me giggle. so…thanks for that.

      • I’ve already expressed my appreciate for I am a banana, for obvious reasons ;)

    • I am a plantain :


    • Word. First year of law school: +/- 2% loan. Second and third years of law school: 6.8% loans. Talk about a bad deal.

    • SF Bay Associate :


    • drowning in debt :

      Without a doubt, going to law school. $135k in debt so I can work a job for $75k a year, which I could have been making before I even would have finished law school if I had gone into any one of the other careers I’m qualified for. But I HAD to be a lawyer…

      Loans are 1/2 government fixed at 4.5%, 1/2 private ranging between 9% and 10.5%.

  3. Judithesl :

    I, too, bought Facebook on day one, but there were much bigger players who also invested in the IPO and lost money, some of whom are trying to sue to recoup their losses. The problem with buying individual stocks is that it’s nearly impossible for the small investor to act fast enough to profit on any news: by the time it’s hit the media, the big players with their massive
    computer power, have already acted.
    Btw, making a 25% return is not bad.

    • Massive computer power sure, but mainly access to preferential research and info. on company news.

    • When the Facebook stock went haywire, and then crashed, it was clear that lawsuits were inevitable. It’s yet another round of the Full Employment Act for lawyers like myself who work on suits like these (the previous rounds being Lehman etc and the mortgage crisis).

  4. Anon for this :

    I’ve bought nothing, out of lack of knowledge and laziness, which is it’s own kind of mistake.

    • Anonymous NYer :

      Ditto. I remember as a child my mom suggesting we get some apple stock for me (circa 15-20 years ago). We had an ancient macintosh computer at the time and I liked it. Boy, do I regret not following through on that one.

      • I sold my Apple stock when I was laid off in 2008. I found a new job within the year, but I miss that stock. I think I bought it at $70/share?

    • SF Bay Associate :

      This will date me, but my senior year of high school, we “played” the stock market with pretend money and tracked “our” stocks, which we could buy or sell, and then sell everything at the end of the semester to see who came out the most ahead. It was 1999. I “bought” Yahoo and AOL. My mother suggested I buy their real stock, and I blew her off because, well, I was a stupid teenager. After one semester, my “stock” went up something like 300%. I wasn’t even the biggest winner in that class. To this day, I regret it.

      • Stephanie Plum :

        If it makes you feel any better, you would’ve lost it all in the tech wreck.

  5. I feel your pain, Kat, but I don’t think you were dumb. You invested a small amount (while most of your investments are in reliable, sturdy vehicles). You plan on holding it. You thought it would be fun. All good! Very different from the mistake on U.S. Treasuries (although you never know, it might not be a mistake–before interest rates really tanked, I put money into a 3.5% CD for 18 months, thinking it was stupid, but now I know I should have done a 5 or 10 yr CD!).

    • Agree. There’s nothing wrong with a buy-and-hold strategy! You may also end up earning a nice little dividend (as far as I am concerned, this is the real reason to have stocks). As long as you didn’t put your life savings into Facebook stock, or assume that Facebook was going to pay for your son’s college education, you’re probably fine to hang in there for now. I don’t think Facebook is in immediate danger of going under.

    • Stephanie Plum :

      More people should be playing around on treasurydirect.gov. Not that bonds are a great deal right now but more because I doubt most people even know it’s there. Good for you Kat! Look at iBonds.

  6. Midwesterner :

    Don’t beat yourself up – sometimes you have to follow your own hunches, not the advice of anyone else. It’s your money! I have read that your strategy with respect to Gap is actually a sound one.

    Does anyone know if you can do financial advising/planning part time? I am not certified, and am a government lawyer (it would not be an issue with my employer to have outside employment, just wondering if there are opportunities out there).

    • I tried to reply to you but it put my reply at the bottom. You’ll want to look at the Investment Company Act of 1940 and the Investment Adviser’s Act. You’ll also want to look at SEC.gov. Not sure if that was the information you were looking for.

    • If you provide investment advice for compensation, you need to be licensed unless you fall within some narrow exemptions. Go to the North American Securities Administrators’ web site (nasaa dot org) to see the requirements in your state or province. Financial planning falls within the definition of investment advice.

      • Midwesterner :

        Thanks so much for the information. I should have said that I am not certified but would seek to become certified prior to actually engaging clients. I
        will check out those sites and see what options there might be.

    • If you want to do part-time financial planning, you’ll probably want to get hired by someone else instead of hanging your own shingle. For a small firm (less than $100million assets under management) you would need to register with the state, but it also means writing and filing a complete disclosure document, keeping appropriate books and records and understanding all of the regulatory compliance issues. If you want to stick to the advising, you should leave the compliance to someone else and focus on what you want to do.

  7. so anon for this :

    Grad school for a humanities PhD. Thankfully I left after getting my MA, and it was fully funded by the school – but to this day I still kick myself for the 3 years I could have spent building a career and putting myself on a better financial footing.

    • Really? I kick myself for the opposite reason — I’ve always wished I had an MA in the humanities or languages, and I can’t imagine going back now after working for over a decade. If yours was fully funded, it seems like a smart, not-very-risky move! You’ll have plenty of time in the workforce to get experience in the future.

      • Well, she didn’t exactly say “experience” is what she missed out on–she said career-building and a financial footing. I have a fully-funded PhD, which took me 5 years, and I get it.

        Lots and lots of space and words have been devoted to this dilemma, but basically I agree with both of you. Those who did it can certainly have regrets, partly because it’s easy to overlook the credential you have and play down its importance (me, on a bad day). Those who don’t have it might in some cases wish they had done it, because they see the advantages and may not recognize the sacrifice and opportunity costs involved. So again, I think you’re both “right.”

        • Time = money. I think it boils down to what career you want and end up having and whether you actually need or use the humanities graduate degree (or the skills you learned when you earned it) to get ahead. I think many of us in our generation enrolled in graduate degree programs without thinking ahead about whether they would actually help us advance in our chosen careers, and, in some cases, what our chosen careers are in the first place.

          • That’s exactly it. I went into it sure I wanted to be an academic though – and the realities of the academic world didn’t suit me. To this day I still struggle with what my chosen career should be, though the skills I’ve picked up in grad school have been useful in my current position (very communications- and writing-heavy).

            Don’t want to start another discussion about how people have found their chosen path – I know we’ve done this recently, but really any wise words on the topic are welcome!

          • To OP: I recommend a workbook called The Pathfinder. Set aside plenty of time for writing and reflection, though, and expect it to be intense and tiring! The stuff is for real. Put more into it, get more out of it.

        • No, I totally understand. The grass is always greener — I’m sure I’d feel the same way if I were you.

        • THIS! 7 yrs in a fully funded PhD, career u-turn and now, my chronological peers are well advanced in their careers while I’m still a junior newbie. Yes, the PhD helped me get the job I have now, but so would have 7 years of experience.

          • PharmaGirl :

            I spent 7 years for my fully funded PhD and have u-turned my career a few times in just 5 years. Because of the turns I chose (or those that chose me), I am much better conpensated than my grad school peers with greater work/life balance. Most of my peers are finishing their postdoctoral research, or starting a second post doc.

          • Exactly! I know I’m probably happier than if I had stayed in the PhD program, but it’s hard realizing that I’m still going to be a relative newbie moving forward.

            Monday: Thanks – have ordered the Pathfinder!

    • You know, on bad days, I feel that way about having gone to law school (more or less for the same reasons Monday identified). You make the best decision you can with the information that’s available to you at the time.

      • Anonymous NYer :

        I feel that way about my law degree about 3 days out of each week.

        • drowning in debt :

          Glad it isn’t just me. I run about 3 days a week. 5 if I’m drafting/responding to discovery. It is crazy-making to be getting a pretty decent salary just to be left with about 38% of it after taxes and student loan payments.

          • AnonIguess. :

            How about looking for an entry level position and being sunk at your spouses 30% plus tax rate, plus student loans. Every time I look at the salary and do the math, I get depressed because is it worth it? I might as well stay home. Sucks. At least hubby is taxed at 30% plus, guess something is right so I feel stupid complaining but its hard to get motivated.

      • I’ve also acquired a pretty different way of using networking/mentor-type advice. To be more specific, I’m more skeptical toward it than I used to be. Sometimes totally well-meaning people who really do their best still have no idea what’s good for you, what’s realistic, or the seriousness of trade-offs involved if you take the path they suggest.

  8. I love this post, with all my heart. I am exactly this way when it comes to retirement and investing. I don’t even know how to read the documents the retirement people send me and I deal with numbers all the time. Financial literacy, I needs it.

  9. Kat, you are not stuck in your 30yr treasuries. Bonds can be sold.

    • Yes, I was confused by this too. Only i-bonds (the kind your grandparents gave you when you were young) cannot be sold without penalty (I think). You can sell your 30yr Treasuries, you just have to take the mark-to-market.

      • There is probably even a mark to market gain if this was done around the same time as the FB IPO.

      • Anonymous :

        Series E bonds cannot be sold until redemption, but Series I bonds (inflation-indexed) can be sold after 1 year. However, you give up 3 months of interest payments if you redeem them before 5 years.

      • Stephanie Plum :

        You’re thinking of series E. IBonds can be sold any time, but forfeit interest if sold prior to 5 years.

  10. lucy stone :

    I found out my boss (the only other attorney in our office) is leaving in a month. Tips on negotiating for salary if I am offered her position? We’re government so I have to stay within range, but I’d like to get as high within that range as possible.

    • Why not ask for as high in the range as possible, especially if it’s still lower than what your boss made?

      I’m a fed and although I managed to get hired at about 4 steps higher than the original offer, I wish I’d pushed for more. The worst that can happen is they say, no, our final offer is $XX,XXX. I always was afraid if I did this people “wouldn’t like me” or something stupid like that, but now that I’m old, I know that almost everyone (well, male everyones) push for as high a salary as they can get. It’s expected.

      • lucy stone :

        Thanks! I’d like to ask for one step down from where she was in the pay scale. To be honest I’d be happy with the lowest step since it’d still be a 20k bump, but I don’t want to cheat myself.

    • In House Govt Univ :

      Why don’t they have to do a national search to replace her?

      • lucy stone :

        We’re a local government, we don’t do national searches for anything.

  11. Love this post! Very honest and humbling because we ALL make mistakes sometimes. I’m just starting out but I’ve been afraid to invest for fear that I don’t know what I’m doing. I need to bite the bullet and talk to someone who can help me figure out what investments are best for me based on how risk averse I am.

    • This is what Financial Advisors are for! Call up your local Edward Jones branch. They don’t charge for a consult.

      • Stephanie Plum :

        Ugh. No. With Vanguard, Kat has the right idea. Look at bogleheads.org.

  12. TJ:

    After a full year of looking for a job post-law school (with some part time work here and there and some volunteering), I was offered a great job this week! It doesn’t pay a lot, but it’s *exactly* what I want to do, with good people, with an office that has a DOOR! and WINDOWS!, and it’s within walking distance of my house.

    Eighty people applied for this job, and I just feel SO DANG LUCKY to have been chosen.

    People out there who’ve been looking for work: take heart! Also, you might want to think about starting a professional blog about an aspect of your field you think is interesting. I wouldn’t have gotten my job without it.

  13. TJ.
    Just found out my legal assistant, who currently works for 3 attorneys, was just assigned to a 4th. She can’t handle the three of us, and basically tells the two of us who are more junior that she does not have time to do our stuff/ will get to it later/ can’t do our filing, etc. I don’t ask for much, but sometimes I need HELP.
    Advice for handling this situation, short of telling my boss it was a very bad idea? (which I probably could do)…TIA

    • Oh god, I’ve been that legal assistant before. If you can or all your fellow attorneys can, see if you can’t talk to a boss. At the very least have your assistant map out how she prioritizes the work she receives from you all and you guys should do the same, prioritize the work you give her. That way 1) she doesn’t just help 2 attorneys, 2) your group can let her what she must do for each of you, 3) you can use her map + yours to show the boss how much work is slipping between the cracks because she’s overwhelmed.

      If this isn’t about her work ethic, make sure to mention that. If it’s anything like my last firm, she’s probably just an hourly employee making very little money with a lot of stress and little chance for advancement. That’s going to lead to burnout very fast- not just for the paralegal but for the attorneys like you who have to work twice as hard as your fellow attorneys because you don’t have adequate support staff in the office.

    • emcsquared :

      I have an assistant who is very good, but I was having the same problems – when I really needed help, the project was always too big and would stress her out. I finally pulled her aside one day when I knew that I would have some big projects coming up, and asked whether she wanted me to take the work directly to a “floating assistant” or our word processing department. We talked it through and came out with a plan of action that works for both of us (she is authorized to take any project of mine to a floating secretary, because I trust them and I trust her to review the work afterward), and we have been fine ever since. And now she prioritizes my work (even though she shouldn’t) because she likes me!

      So – talk with your assistant about it. And bring in the other people she supports too if that makes sense, but you certainly need to talk with her and come up with a plan for your work.

  14. Can we please use IPO as a noun? It’s not a verb.

  15. banker girl :

    Unlurking to post: To be honest, you don’t sound like you think you made a mistake at all. To wit:

    -I don’t know anything about investing… but I made 25% on my Gap investments
    -I’ve never read Peter Lynch … but I’m conversant with and following his investing strategies
    -I may have made a big mistake buying Facebook… but I’m not too concerned about it because I’m a long term investor

    There are TONS of great resources for personal finance and investing. Women, please don’t dumb yourselves down; credit yourselves with the ability to figure out “fancy financial talk.” Doing some long-term diversified investing in index funds, with a few individual stock picks is not rocket science.

    I know I sound grumpy, but this post combined both bragging-disguised-as-humility and “how can my poor brain figure out this complicated financial stuff,” which both drive me crazy.

    • I believe the term you’re looking for is “humblebragging”. But anyway, I completely agree with you. There’s just no excuse not to be financially literate. We run the world anyway, money is nbd. It’s just that sometimes it really takes a not-so-smart move to jumpstart the education.

    • Yes.

    • Please share! :

      Hi! I would love your list of great personal finance resources. Do share! : )

      • banker girl :

        For true newbies, I like Get a Financial Life by Beth Kobliner. A Random Walk Down Wall Street by Burton Malkiel for indexing. Jane Bryant Quinn’s book covers many finance topics. I don’t agree with Suze Ormond’s investing philosophy (bonds), but many on this site like Young Fabulous and Broke.

        I think Fortune magazine is a great read. Some personal finance information, but also a lot about how the markets work/current events. You can usually get a subscription for cheap. New York Times Saturday business section has very good personal finance and investing articles. And Vanguard, Fidelity, etc have good tools on their sites.

    • I’m not banker girl, but I recommend the NGDGTCO follow-up, Nice Girls Don’t Get Rich by Dr. Lois Frankel. It’s the best book about women taking charge of their finances.

      Also recommend Suze Orman’s “Young, Fabulous, and Broke.”

    • Hey maybe this is a bit harsh ? I’d be a bit sheepish too if confessing to buying FB at 38.

      But completely agree on ladies taking charge of their own $$.

  16. PSA – The Body Shop has 50% off all makeup – this includes brushes and makeup removers.
    I was actually in a store and they told me that the half price deal only runs until 2pm, but online it says all day.

  17. Dumb financial decisions :

    Why hello, 10K in credit card debt. Yes, I’m glad I have the experience of unpaid internships, but I wish I made more money now and could pay you off.

  18. Maddie Ross :

    Purchasing my house in spring 2008. After the market dropped like 1/2% because I thought, “oh, it’s fallen, I’m getting a deal.” 4 years in, I’ve lost 15%, which is my entire 10% downpayment + everything I’ve put in and then some. And that does not even count money spent on repairs, etc. I get that it’s a “home,” not an investment. But it irks my soul nonetheless.

    • This, but in early summer ’07, with a 25% value loss. I feel ya.

    • Bought summer ’09 and my place has lost 1/3 of its value.

    • I’m with you, Maddie. Bought my condo in 2008. Housing crush hasn’t really affected my area to the extent it’s affected others, but condo hasn’t grown in value in 4 years.

  19. I recently purchased a great navy, wool pantsuit from Long Tall Sally (I know some clothing there is questionable), that I was hoping to be able to wear for law school OCI interviews in the fall. I have a few questions:

    First, do I NEED to have it tailored? The pants are the perfect length for the shoes I have, but should I see if the tailor would recommend anything for the hip area or for the jacket?

    Second, is navy an ok color for OCI interviews?

    Third, is a pantsuit really acceptable, or should I try to find another option in black. I have a lower quality (NY&Co.) skirt suit, but it doesn’t fit nearly as well or make me feel as great as this navy suit. Also, wearing this black skirt suit to interviews for my jobs this summer made me feel overdressed and stuffy for a lot of my interviews. This could just be that I’m not used to wearing suits, but this nicer, newer suit makes me feel so much better.

    I also have a grey, small pinstripe suit from Ann Taylor with a longer, more men’s cut jacket and a polyester Long Tall Sally black pinstripe suit that fits well.

    Any recommendations would be great!

    • Why would you “need” to have it tailored? Is there a problem with the jacket or hip area of the pants? If there is, then you should get it tailored so it fits you better. If the fit is ok, then you’re good. Since it sounds like you’re unsure, ask someone who would honestly tell if you your suit needs work.

    • Wear the suit that makes you feel most confident and comfortable. It sounds like all the suits you listed would be appropriate so just wear what you like best. The interview is only a tiny bit about what you’re wearing and the rest is about your confidence, character, ability to talk about your skills, etc. All my law school interview suits were Macy’s Everyday Values that didn’t fit quite right, but I still made it through just fine.

      Basically: focus on your strengths, wear something that makes you confident, and it’ll all be awesome. Good luck!

    • I personally hate wearing skirt suits to interviews. To me personally, I feel like they say — look at me, I’m a woman! While the pantsuits just say — yes, I’m wearing the interview uniform… I want as little focus as possible on my clothes when I interview.

    • Only need to have things tailored if you don’t like them the way they are. Otherwise, awesome!

      I also wear my navy suits way more often than black, and I’m a litigator. I bought a nice black suit in law school and haven’t worn it since. I’d vote navy.

      And pants are fine.

  20. emcsquared :

    Buying my house in 2009 because it was such a “great deal” to get that dumb tax credit (which was almost entirely wiped out by the taxes on the treasury bonds I had to cash for the down payment). Can’t afford the mortgage payments on one salary, house has gone down in value, DH decides monthly that he wants to move because he feels “claustrophobic,” I hate house maintenance, and DH is still dragging his feet on the two house projects I asked him to work on last summer (this is not a gender thing; I single-handedly oversaw an entire kitchen renovation, flood clean-up, and remodeling of two rooms – his list is and was calling a handy man and electrician to handle a slew of small house gremlins that make lights flicker and doors fall off hinges).

    On the flipside – I’m glad I stood my ground and insisted on a townhouse, because yardwork would have equaled divorce.

    • SF Bay Associate :

      Thanks for saying this. I constantly feel like we are “throwing money away” by renting. It really, really upsets me that despite having two very well paying jobs, we still cannot afford to put 20% in any of the areas that would remotely work for our commutes and build equity instead of paying rent to build someone else’s equity. I am also very anxious at the thought that we are going to miss the lowest interest rates in our lifetime and the lowest property rates we’re likely to see. Maybe I should rethink.

      • SoCalAtty :

        Depending on what the FHA loan maximums are in your area, could you consider an FHA loan? I know PMI stinks and is really high, but the advantage is that you can put just 3-5 percent down. We did this in 2008, and hunted high and low for a good price in the area we wanted, and found a bank owned property which has held its value. PMI does go away in 5 years, so if you plan on staying in the property a long time it isn’t so bad.

      • emcsquared :

        There are different schools of thought on this, but my theory is that if you will be paying more in monthly interest (and PMI, property taxes, etc) on your mortgage than you would have paid in rent, then you should rent. If the reverse is true (monthly interest + expenses is less than rent), then purchasing makes sense. Basically, look at the component of the monthly payments that is not “principal” and compare that to the cost of renting.

        Of course, when I bought, DH and I were living in two apartments in two different cities, so we compared our monthly mortgage amount to the sum of the two rents and viola, buying was a great bargain. *sigh*

        • SoCalAtty :

          emcsquared: I mostly agree. It is also good to “pay” your potential mortage amount, if it is more than your rent, for a few months before really doing this. If you pay it into a savings account, you might have a decent down payment in not too long!

          For us, buying was about $1200/month more than renting. The advantage was the yard, not having to rent storage units for my husband’s business anymore, and the city business tax savings between the city we lived in and the city we bought in. The IRS tax deduction isn’t all that helpful once your income is over a certain amount. Also, for us, the ability to have a yard and a garden was worth the extra money. To rent what we bought would probably have been pretty close to the mortgage we pay now. I still believe that real estate purchased for a sane price is always a good investment in the long term (10+ years).

  21. SpaceMountain :

    Is anyone else in an investment club? Mine is with family members, and we pick individual stocks and invest small amounts of money, mostly just for fun but we have had some good luck here & there. I had hoped originally it would encourage the next generation to take an interest in financial matters, but that hasn’t happened (yet).

    • Investment is a professional concern for me but I am also in awe of my dad’s Thursday lunch club, who are a bunch of friends, mostly retired business owners or senior management, who’ve been having lunch together for years and who collectively take an avid amateur interest in stock-picking. They have a great network and highly effective recall of past bubbles, fads and collapses. I don’t think they ‘club’ their investments though – they swap ideas but invest individually or through various family offices.

      It doesn’t really surprise me that your younger generation has limited interest – the S&P500 is down/ flat over the last 5 years and the headlines have been dominated by one crisis after another, evil bankers etc. Very different to the prior 10 years, when many of my own contemporaries first start participating in markets.

  22. Financial decision-related threadjack:

    I need to move back to NYC to clerk this fall, and my credit score is really bad :(mostly because I have a tremendous amount of student loans).

    Does anyone know a broker/landlord that would be helpful in this situation? I only have about 3 months rent to put down, and I need to live in an area with a good public elementary school, which limits my options.

    • *to clerk=after clerking. I’ll be in BigLaw.

    • student loans should help your credit score generally not hurt them. you really are in a bad way in NYC w/o a good credit score since basically every apt will check. I’d try to stick to listings you see on craigslist for apts in building rented directly by the owner, who may be a bit more flexible. Show up to the viewing with all of your paper work and looking professional – you may want to have a letter of recommendation from your current landlord and when you pay for the credit check explain the situation and present the letter. Good luck!

    • “my credit score is really bad :(mostly because I have a tremendous amount of student loans”

      Actually, I’m not so certain about this. I too have a tremendous amount of student loans (if I had that amount in cash, I could buy a fairly nice house in my city) and have an excellent credit score. If your credit score is really that bad, you may want to look at what other factors could be affecting it (paying bills late, defaulting, large credit card debt).

      • When I checked my score today, the listed “credit line” was my original loan balance, but the outstanding amount was higher due to interest. (I have been on an excessive debt forbearance and not paying them while clerking). Because of that, it said my debt-to-limit ratio was like 116%.

        Is that not how it shows for everyone? /Totally clueless

        Thanks for the advice so far too!

        • Maddie Ross :

          Yeah, it’s not the debt itself that is killing your credit score, it’s the forbearance. Even though forbearance is different than defaulting, because your debt is compounding while you’re not paying, it’s bringing you down.

          So long as debt is current, even if it is “excessive,” it will generally not hurt your credit score. It is debt to limit ratio and payment history that matter. If you are in forbearance, you have zero payment history. Can you get off forbearance before you move and establish a track record of payment? It is my understanding that credit scores can be improved (or can fall) rather quickly.

    • I rented in NYC with a bad credit score when I just started out after law school. They required first and last month down and security (rather than just first month rent and security) because of my bad credit score. I worked with a broker and the broker was upset when he found out I didn’t have a great credit score despite my salary. In the end, I was able to find an apartment and it all worked out though.

      FYI – do your homework before you rent. One landlord wanted two months security, which as of several years ago was illegal in NYC. At least back then, a landlord could only charge up to one month rent for security.

    • Are you sure it is because of your loans? I have over 200k (kill me) but my credit score is pretty good. I just graduated tho so now im terrified it will be bad! I thought loans werent bad for your score??

      • I’m guessing based on the above that they aren’t bad if you start repayment immediately. If you defer/forbear, I don’t see how you’d avoid the interest making it look like you’ve exceeded your credit line.

        Of course, if you had a good/long credit history before law school, it might not be as big a deal.

    • It is a pretty tight rental market in NYC right now. Is it possible to get a guarantor?

    • I don’t think your student loans shouldn’t make that big of a dent on your credit score itself, unless you don’t pay them (forbearance doesn’t count – you’re “paying as agreed”). However, I would also think that if you have a letter from your firm that states your salary, that would help.

      Not NYC, but I moved to DC with no job and just money in the bank. I had enough to pay for a year, had my bank write a letter saying as such, and had student loans. I was accepted before the close of business the day I applied. So since you have cash and a good job on hand, then you might be in a better way than you think…

  23. Check out the ’40 Act and Investment Adviser’s Act. And SEC.gov. (And possibly FINRA although I’m not sure what you’re thinking of would come under their jurisdiction).

    • This was a reply to Midwesterner above but it wound up down here where it makes no sense. Please ignore!

  24. Gail the Goldfish :

    Dumbest financial decision ever? Passing up partial scholarships at lower ranked law schools to go to a top-5 school.

    Second dumbest financial decision ever: going to law school, period. The government is getting 8.5% on my loans, no matter where I had gone or how much I had borrowed.

    • Amen. Although I didn’t go to a top-5 school, just a top-40 school when I could have gotten a full ride at a lower but not horribly ranked school. UGH.

    • This is very interesting to hear. I went to a lower ranked school (T40) on a full scholarship and did very well for myself professionally. BigLaw, federal clerkships, no debt. But, I have friends at my same school who did not do as well and think that they would have had a much better time job-wise had they gone to a higher ranked school.

      • Gail the Goldfish :

        I think a lot of it was the year I graduated. If I’d graduated a year or two before or a year or two after, I think I would have been much better off. Unfortunately, I graduated in 2010.

        And apparently grad plus loans a couple of years before I started were something like 4%?! That would be so much better.

    • I’m not so sure about this…there’s definitely a little of the grass is always greener. I did the opposite– took a full ride at a lower-ranked school and turned down loans at a top-tier. I still have a massive debt load from undergrad (plus a little in living-expenses loans from law school), and I don’t have a top law degree, which has made it much harder for me to get where I wanted to get (out of state, to a major market) or do what I want to do (federal clerkship then, academics now). I didn’t know that I would want these things when I chose a school, but I also didn’t fully appreciate how much a lower-ranked school would hurt me (I didn’t know anyone who had been to law school, so I didn’t have the full picture).

      It’s great that I have less debt now, but I also can’t pay it off nearly as quickly, because I’m making a fraction of what I could be making, because I still have a long way to go to make up for my weaker degree.

  25. Definitely going to law school.

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