Andy Hough

Why I Paid Student Loan with My Credit Card

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It appears that I need to give more information on why I paid down my student loan using a balance transfer from my credit card.  I’m confident that it was the wise choice.  My student loan charges 8.5% interest and the credit card charges 3.99% interest.  The credit card is cheaper money.  Even with the $75 balance transfer fee I’ll come out ahead using the credit card.

There is a limit of $2500 in student loan interest that can be deducted in a year.  This transfer was for $4900 and a little over $1600 of that went to interest.  I plan to pay this loan down more over the year and it is possible that I’ll hit the limit.  Even if I don’t since my taxable income for the year will likely be low I don’t think I would be able to use all of the $2500 deduction.   I don’t think this deduction would allow me to get back more than the taxes I pay.

There aren’t really any programs I know of that will pay off law school loans. There are some LRAP programs but the ones I have seen would fall well short of paying all my loans.  I have about $50,000 in loans now and will probably have about $65,000 when I graduate.  I’m not worried about not having any loans available to be forgiven.  I’m trying to pay down my Grad Plus loan since it has an 8.5% interest rate but I plan to stretch my Stafford loan payments out as long as possible.

Daylight Saving Time Info

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This is off topic but some of the misinformation I hear about Daylight Saving Time (DST) irritates me so I’m going to try to correct some of the more common misinformation.

I’ve seen it stated that DST was started to help farmers. If you know any farmers then you know that is illogical since they generally get up with the sun regardless of what the time is. DST was started in the U.S. as a way to save energy. Whether it actually does that and whether it is the reason we have DST now is open for debate. You can find studies supporting both sides.

The hours of sunlight in a day change because of the tilt of the earth’s axis. Some people think that DST actually changes the hours of sunlight in a day. It only changes what time of day we have sunlight. In order to actually increase the hours of sunlight in a day would require powers much beyond what Congress has.

I personally like having the extra hours of sunlight later in the day since I’m not an early riser. I’m not really sure if DST is an overall benefit though.

Used CC Balance Transfer to Pay Down Student Loan

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I went ahead and used the balance transfer from my credit card to pay down my Grad Plus student loan.  The amount of the transfer was $4900 plus a $75 balance transfer fee.  Since my interest rate will be over four points lower on the credit card I should easily make up the balance transfer fee.  If my math is correct after seven months I’ll come out ahead. The credit card rate is for life and I have other higher interest debt so I’ll be paying only the minimum or slightly above the minimum payment on the card balance. Once I graduate and my income is more certain I’m going to look into paying down more of my student debt in this manner.

One of my goals this year was not to incur any debt other than student loan debt.  Since this is just student loan debt transferred to my credit card I feel it is within my goal.

Using LexisNexis and Westlaw

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*Note-My new posting schedule is for Saturday’s posts to be about law school or law and Sunday to be about goals.  Monday through Friday will be about frugality but there will probably often be some overlap in the weekday and weekend subject areas.

If you’re in law school you probably know all about LexisNexis and Westlaw.  This post is not going to be a tutorial on how to use them.  Instead it is a suggestion to make sure you are getting the rewards out of them.

LexisNexis and Westlaw both have rewards programs that award points for doing various research activities.  They both want to make sure that you become a paying client when you graduate and enticing you to use their research systems now helps ensure that you will keep using them.

There are many different ways to earn points.  The easiest is to do the Fact or Fiction? at LexisNexis and the Daily Trivia at Westlaw.  These are not many points but they don’t take long and since you can do them frequently they add up.  To get the big points though you need to do tutorials or participate in the classes that the reps occasionally have.  These usually provide many more points.  I recently completed a forty-five minute class for 800 points.  That was well worth it since I can redeem those points for a $10 gift certificate and still have points left over.  Of course I also improved my research skills.

I prefer the LexisNexis reward program to the Westlaw one since they have a variety of $5 and $10 gift certificates you can redeem your points for.  This makes it quicker to get value for your points.  Westlaw doesn’t really have smaller items to redeem your points for.  The best choice in their program seems to be using the points for books.  Right now I’m just letting my Westlaw points accumulate and I’ll redeem them for something big when I finish school.  It doesn’t really matter which rewards program you like best since you should participate in both.  Keep your eye out for various opportunities to earn extra points throughout the semester.  These programs are a really good deal since you earn points for stuff you would or should be doing anyway and you gain valuable knowledge at the same time.

More Expensive Does Not Mean Higher Quality

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You do not necessarily get what you pay for.   An earlier post “Cheap Wine is Fine” showed how wine enthusiasts rated wine higher when it had a higher price tag but in a blind taste test they ended up preferring the $5 wine over the $90 wine.  Now there is a similar example in which audiophiles couldn’t tell the difference between music passed through coat hangers from that which passed through pricey Monster cables. The full story is at the Consumerist.   This shows again that quality is often perceived rather than actual.

There probably is a general correlation between higher priced goods and higher quality but you shouldn’t assume that to be true.  Many times even if an item is higher quality it isn’t enough to make it worth the higher price.  Before spending more on an item in order to get higher quality determine if it truly is higher quality and if you actually need the higher quality.