Laying Down the Law
Andrew is about to graduate from college and plans to go to law school. He has an $80,000 mortgage and makes $2,400 a month. He's debt-free except the mortgage, so what should he be doing with his income?
QUESTION: Andrew in Las Vegas is about to graduate from college and plans to go to law school. He has an $80,000 mortgage and makes $2,400 a month. He’s debt-free except the mortgage, so what should he be doing with his income?
ANSWER: I would save up for law school. I would not contribute to the 401(k). A 401(k) is an investment. You are a better investment than the 401(k) is if you have to choose, and right now you are going to choose law school. I’m going to put all my chips on that hand of poker.
The poker is that you graduate and pass the bar. But I would not pay extra on the house and I would not start a 401(k). I would pile up as much cash as you can pile up to ensure that you graduate from law school.
When you get out of law school, you have plenty of time to do your investing and get your mortgage paid off. You’re doing well because you are thinking about it. You will meet many people on the college campus who haven’t bothered to think, which is kind of strange since they are there to get an education.
But they haven’t thought like you’ve thought. You’ve used what is called good walking-around sense. You have analyzed this and stayed out of debt. You could even sell the house. That would be a possibility if you need to. The big goal is to bust this law school thing out. Happen to it!