Berks County Bar Association The Berks Barrister Winter 2019 - 26

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Wellness Wisdom

Managing Student Debt &
Maintaining Your Sanity
By Paul Marrella, J.D., CFP®, CLTC®, RICP®

P

aying for college can be daunting. Paying for an additional
three-year law school education could prove even more
overwhelming. Hopefully, you can gain some insight into
how young lawyers can manage student debt, while also saving
and still having a social life.

The Problem

Law schools compute a "Cost of Attendance" which includes
tuition, fees, books and living expenses, which are more realistic
figures when looking at loans. For the 2018-2019 school year, the
Cost of Attendance for some Pennsylvania law schools are:

In-State Cost of Attendance
Pitt Law

$53,634

PSU Dickinson Law

$71,820

Temple Law

$49,416

Multiply those figures by three years, add inflation
adjustments, and it's hard to believe anyone can finance their
legal education without taking on student loan debt.

Understanding Loans

Recently, I had the pleasure of interviewing a group of
assistant district attorneys about the topic of student loans and
their repayment. What surprised me was how unnerving the
topic was for them. Most didn't anticipate the difficulty they'd
experience repaying their loans.
What's interesting about the group is that their debt was
rather similar. Many of them owe at least $150,000 and the
interest rate was somewhere around 6 to7 percent.

Below is a table showing loan payments of varying amounts
and pay off periods at 5 percent:

Monthly Payment for Loan at 5%
Loan Amount

5 Years

10 Years

15 Years

$150,000

$2,830.63

$1,590.92

$1,186.13

$250,000

$4,717.72

$2,651.54

$1,976.88

What do I do if I am in this predicament?
Consider the big three hurdles most face when accumulating
wealth. Three major situations need to be planned and saved for.
Unfortunately, for some, student loans are a fourth hurdle to face.
First, you need to pay for your housing. Most lawyers want
to own their home rather than rent. For some, renting is a more
reasonable option than they think.
Second, many of you will need to plan for your children's
education. Most lawyers value education and understand the
costs of it.

Third, finally, the "big enchilada," is planning for retirement.
Most are not considering this at the age of 25, yet it should be
addressed right away.

Any suggestions?

The three most important words in managing finances are
discipline, discipline, discipline. You cannot have enough of it. For
most, this means having a budget, which is usually the last thing
someone wants to deal with after a long day of work.
Keep in mind that the word "budget" does not mean "no
fun." There's an old saying, "Every dollar has a job description."
To make the student loan problem go away and enjoy your life
means you need to be diligent, almost relentless, in watching
where every dollar goes. Simple things like packing your own
lunch can make a huge difference.

Pick a "vice." For me, it is golf, and that's where I spend my
free time. It's amazing how refreshed I am on Monday after
playing golf on the weekend. Find what works for you and
schedule a budget for it. Law is a stressful career and doing things
for yourself is vitally important.

How do I budget?

Budgeting doesn't have to be complicated. Most of you
probably receive biweekly paychecks. That means 26 per year and
two months where you get a third paycheck. Since most bills are
monthly, this provides an opportunity to earmark those "extra
paychecks" for savings.
To start, jot down your recurring monthly bills that need to
be paid first. These include rent/mortgage payments, utilities and
student loans. Next, earmark a minimum of 10% for retirement
savings (various options do exist for most attorneys). The
remainder we can call your disposable income.

Take this disposable income figure and determine the lifestyle

26 | Berks Barrister


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Berks County Bar Association The Berks Barrister Winter 2019

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