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Californians Learning How to Succeed in Personal Finances

Retirement Planning? That Will Be Then, and This Is Now


Una Chung recently finished reading "The Millionaire Next Door" and can't get the book out of her head.

"My next goal is to be a millionaire," the 24-year-old legal assistant said with a laugh.

But first, she has to figure out a way to pay for law school. That's assuming she's absolutely sure she wants to make the law her life. After all, those millionaires profiled in the bestseller are all entrepreneurs. The prospect of having to go tens of thousands of dollars into debt to pay for law school isn't one the debt-averse San Fernando Valley resident relishes. She's eager to get started on an investing program now.

"I'm concerned," she said. "If I attend law school, I'll probably be 29 before I start seeing any money again. That's several years of investing I'll have lost.

"I've read that it is never too early to begin a retirement plan, and I don't want to lose out on the value of compounding." Then again, Chung says she has a genuine enthusiasm for the law.

Give Chung extra credit for thinking ahead and starting to educate herself about investing at a relatively early age.

But in seeking advice on an investment program at this stage, said Ken Kurson, a New York-based specialist in the finances of people in their 20s and 30s, Chung is getting a bit ahead of herself.

Moreover, in giving so much weight to a single book, she could find later that she's set herself on a path that ultimately may not make her happy and thus may not make her wealthy either.

"There is no such thing as one-size-fits-all financial advice," Kurson told her.

Before Chung can even think about a long-term investment program, she needs to step back and consider what she wants to do with her life, then set priorities among her goals.

Once she's done that, she can start thinking about her future finances. That's not to say she needs to make an immediate decision. If Chung realizes that she's unsure, she can make flexibility a priority.

Beware of 'Golden Handcuffs'

Fortunately, there's no need to worry that Chung will be adding unnecessary expenses to a law-school debt that could total $90,000 by the time her name is added to the Parker Directory. Chung, who grosses $36,000 annually in her job at a Westside law firm, manages to save $200 to $400 every month and pays at least $50 extra on her undergraduate student loans by keeping a tight grip on her overhead.

How tight? Well, she recently went to the trouble to try to get an admittedly legitimate speeding ticket dismissed, thanks to a bit of legal maneuvering explained in a do-it-yourself book.

"It was one of the best experiences of my life," she recalled, clearly relishing the idea of having won a court case all on her own as much as the fact that she saved $140 on the ticket.

She also points out that she paid off her car a few months ago, ahead of schedule. It wasn't so much the interest she saved--it wasn't sizable--it was just the idea of retiring a debt. To do it, she used an extra job payment of several thousand dollars and raided the $2,000 she had in savings.

She has the same attitude toward her undergraduate loan balance, now around $9,000 and carrying less-than-usurious interest rates around 8%.

Yet as focused as Chung may be on her finances, her vision of a professional future remains hazy. In one breath she talks confidently of obtaining a prestigious, high-paid associate's position with an upper-crust law firm such as Los Angeles' Gibson, Dunn & Crutcher, where beginning lawyers routinely work 12-hour days. In the next, she proclaims a deep interest in improving the lives of her fellow men by practicing public-interest law.

Then talk of that far-off time gives way to more immediate thoughts. "I'd rather be a student than a worker. I don't like working 40 to 45 hours a week. I like late nights in the library. I'm not going to law school thinking there are big bucks after I graduate. I want to learn."

For a law student, this matter of likes and dislikes can ultimately carry a lot of weight--and finances are a big part of the reason.

The Access Group, a Delaware-based nonprofit provider of law-school loans, reports that the average debt for 1997 graduates was $68,500.

"These students are paying for their education with future income," said Jeff Hanson, an Access Group director. Because of the debt they've incurred, they have to stay in high-paying jobs they don't enjoy. "We call it the golden-handcuffs problem," he said.

Investigate Grant Programs

But that's only one way to reduce law-school obligations. The other is to do what you can to borrow less or to participate in a loan-forgiveness program.

So instead of investigating mutual funds, Kurson said, Chung could spend her time more productively by looking into scholarship, grant and loan-forgiveness programs to minimize what she'll owe once she graduates.

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