Personal Money Snapshot - Corporette.com

Money Snapshot: A Federal Program Manager Shares Thoughts on Paying off Student Loans and Renting vs. Buying

GuestPoster — Wed, 26 Jun 2024 17:07:54 +0000

For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader C, who lives in the Washington, D.C., metro area and works as a federal program manager. She noted, “I grew up pretty blue-collar and poor, which impacts my perspective.”

We got a few requests from readers to launch our own “money diary” series, so we’ve asked willing readers to fill out a form with lots of details about debt, spending, saving, and more! If you’d like to fill out the form and be considered for a future personal money snapshot, please click here to submit your response! You can see a PDF of the questions if you want to review them ahead of time. See others in the Personal Money Snapshot series here.

Please remember that this is is a real person who has feelings and isn’t gaining anything from this, unlike your usual friendly (soul-deadened, thick-skinned, cold-hearted, money-grubbing) blogger — so please be kind with any comments. Thank you! — Kat

Name: C
Location: Washington, D.C., metro area
Age: 47
Occupation: Federal program manager
Income: $157,000
Partner: 46, male, and I’m the primary breadwinner
Household income: $220,000
Net worth: $1.1 million, including my husband's
Net worth when started working: First job with a W-2 at 16, and pretty much $0 net worth
Living situation: Own home

Debt

How much debt do you have currently?
$350,000 mortgage and $16,000 car loan

How much money are you spending each month to pay down debt?
$1,800

What does your debt picture look like?
I paid off my student loans about eight years ago. My debt now is mostly mortgage, which I refinanced when rates were low. I’m considering making extra principal payments but am generally just paying according to the amortization schedule.

I had to buy a new car recently after a car accident, or I’d still be driving my paid-off 10-year-old car. That rounds out my debt picture. I hate debt so I try not to carry a credit card balance.

How did you pay for school?
For undergraduate, I attended a private liberal arts college and received financial aid, including scholarships, grants, work study, and federal student loans. My parents assisted with living expenses. I went back to graduate school after three years working at an Ivy League university and paid through working, some savings from my working years, grants, scholarships, and loans.

Do you own or rent? How much do you pay monthly?
Own; $2,400 payment including mortgage, taxes, and insurance

Home debt: Share your theories and strategies with us (including any that lead you to rent rather than own).
I rented for a long time, even when I could have afforded to buy something. It made more financial sense and gave me peace of mind. I don’t know if it was the right decision, but I liked having the flexibility of moving if necessary, having a chunk of change in short term savings for emergencies, and not having to worry about maintenance. At the time, I had a decent rent and wanted to live in the city. I would have spent way more on a mortgage for a place that wasn’t as nice or well located.

People say it’s “throwing money away” to rent, but the reality is you will always be spending money on housing expenses to someone else, even if it’s just taxes. You need to look at the full picture and not let others tell you what you should do.

When I finally bought my house, it felt right. I spent less than I qualified for and based my purchase price on what I wanted to spend in payments. I have been a home owner for five years and have a 30-year mortgage (refinanced once — so on year three of the refi) I would like to pay off sooner.

Have you paid off any major debt?
I consolidated my student debt at a pretty low rate and paid it off with a lump sum payment about eight years ago from short term savings I had. Because it was fairly low interest, it would have technically made more sense to invest that money, but getting that monkey off my back felt so good. Sometimes money decisions are all psychological.

Savings, Investments & Retirement

How much do you save each month or year in retirement vehicles like 401Ks, Roth IRAs, and others?
I max out my investment in tax advantaged plans (401k, etc.) and so does my husband. So currently ~$46,000/yr.

How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
Limited purpose FSA ~$2,000. I have a HSA but have not contributed to it recently.

How much do you save outside of retirement accounts?
This is an ongoing challenge. We have a savings account that we fund with whatever refunds, bonuses, etc., we might get. We have a regular contribution of $800 per month set up, but withdrawals do happen for home maintenance projects.

Talk to us about investments. Do you have a financial adviser/planner?
No planner… had one who was not that helpful, so I generally distribute across various funds, a target retirement fund, or an index fund. I’m a “set it and forget it” investor

Do you have an end goal for saving or are you just saving for a rainy day?
Just a rainy day/eventual retirement

When did you start saving seriously? How has your savings strategy changed over the years?
I think in my second job out of college when I moved into a shared roommate situation to save rent. In my jobs post grad school, I made a point of saving at least 20% in retirement funds.

What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
I have some room for improvement here! Cooking at home is the one thing that cuts out unnecessary spending for me.

Have you ever made a big money move or investment with savings in mind, such as rolling over an older IRA into a Roth IRA or superfunding a 529?
No. I did roll an old retirement fund into an IRA, more for the sake of staying organized.

Do you have an estate plan in place? A trust?
No, unfortunately. It’s on my list.

How much do you have in cash that’s available today?
$4,000

How much do you have in cash that’s available in a week?
$50,000

How much is in your “emergency fund,” and did you include it in the previous question?
That is the amount in the previous question, kept in a basic online high yield savings account.

How much do you have in retirement savings?
$700,000

How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
$0

If property values (home, car) are included in your net worth, how much are those worth?
Home value is about $700,000, car about $10,000 for my husband’s. Mine isn’t included in the net worth.

Spending

How much do you spend on the following categories on a monthly basis?

Groceries: $800
Restaurants, bars, takeout, and delivery: $400
Clothing and accessories: $100
Transportation: $350
Rent/living expenses: $3,000
Entertainment: $200
Other major expenses: $150, dog food and other dog expenses
Health care – premiums and other costs: $280/mo. in premiums for me and my husband; $2,000–$3,000/yr. in out-of-pocket.

What’s your spending range for these things? What’s your average?

Vacations – Range: $1,000–$5,000
Vacations – Average: $5,000

Charity – Range of donations: $2,000–$3,000
Charity – Average donation or giving amount: I typically give from $100–$500 per charity.

Individual items of clothing – Range: $30–$100

Apartment or house – Range: In my life, $350 (shared house in early 2000s) to $2,400 (now)
Apartment or house – Current main residence: $2,400 all in

Car or other vehicle – Range: $0 to $400/mo
Car or other vehicle – Current main vehicle: $40,000, put a large amount down, $400/mo

Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $200 if I stopped using a cleaner, but I don’t because my husband and I would argue about cleaning!

If you're married: When was your wedding, how much did it cost (total), and how much did YOU pay?
I got married in 2018, wedding was $15,000, and I paid for all of it.

Wedding: Tell us about it!
I had a small (30 people) wedding at a very nice beach resort. It was an amazing day.

If you own, how much did your car cost?
$40,000 when all was said and done. I’d much rather have my old paid-off car that was totaled last year when I was rear ended!

If you own, how much did your home (permanent residence) cost?
$480,000

Have any large medical expenses (including nursing homes) for yourself or others played a role in your financial picture?
No

Are there any other large expenses in your life, either now or previously?
We renovated a bathroom last year. It ended up costing $40,000, much more than I ever thought it would!

At any point in your life to date, has inheritance played a role in your money situation?
No, but my husband’s father inherited money and this enabled him to gift us a chunk toward our down payment.

How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
My family, none in my adult life, but my husband has received money from his father, both for our down payment and for bills. It’s weird to me, but I realize it’s just how their relationship is.

Does your family provide any non-financial support?
No

Money Strategy

Do you have a general money strategy?
Set it and forget it for investing. Otherwise, I try to have minimal debt and live below my means.

Time vs. money — do you spend money to save time (e.g., cleaning service)? Do you donate your time instead of money? What else does this phrase mean to you?
I do hire cleaners once a month, which my husband and I joke is cheaper than marriage counseling. He is messier than I am and less prone to clean.

More recently, I have taken the time vs. money thing to heart when it comes to returning items or complaining or worrying about getting the deals I was supposed to. I think more than time, it’s avoiding the stress. I earn enough that I’m comfortable, so worrying about a 50-cent coupon isn’t worth the stress.

What are your favorite resources for personal finance?
I don’t really follow anything, though I’ve listened to Suze Orman and Dave Ramsey in the past.

What advice would you give your younger self about personal finance?
Do whatever it takes to save for retirement and put down the credit card. I wish now that I didn’t blow so much money on going out and put that toward savings instead! Also, fight to earn what you deserve and don’t accept less.

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Money Snapshot: A Government Lawyer Shares Her Thoughts on Budgeting, Renting, and Retiring Early

GuestPoster — Wed, 22 May 2024 17:00:00 +0000

For today’s Money Snapshot, we’re talking salary, net worth, debt, and public student loan forgiveness and more with reader M in Pasadena, CA, where she lives with her husband and three kids and works as a government lawyer. She noted, “I received public student loan forgiveness and it wiped out $190,000 of student loan debt.”

Name: M
Location: Pasadena, CA
Age: 39
Occupation: Government lawyer
Income: $198,000
Family: Husband, 41 years old; 3 children, ages 7, 5, and 5. My husband is a stay-at-home dad and works part time. Our kids attend a great public school.
Household income: $215,000
Net worth: My husband's and my net worth is $450,000.
Net worth when started working: My first career was in theatre. I'm pretty sure my net worth was $-15,000 for the loan balance from college.
Living situation:

Debt

What does your debt picture look like?
Currently no debt. We aggressively paid off our credit cards and my husband's student loans from 2017– 2020. My law school loans were forgiven [through PSLF]. I had a small loan from college that my parents paid off.

How much money are you spending each month to pay down debt?
$0

How did you pay for school?
In college, my parents paid for it. I was cognizant of the amount previously saved and I went to a state school and worked a part-time job to cover rent and food. I borrowed $120,000 for law school which included two scholarships. It ballooned to $190,000 with interest, but it was recently forgiven under the public student loan forgiveness plan.

Do you own or rent? How much do you pay monthly?
We rent a house in a HCOL area with great schools for $4,500 a month.

Home debt: Share your theories and strategies with us (including any that lead you to rent rather than own).
We rent because it is cheaper to do so in our city. We pay more rent for a better school district. We do not plan on buying a house in our area, but we might buy property elsewhere. Currently, we send more to our investments instead of a mortgage.

Have you paid off any major debt?
We paid off $80,830 in three years on one income. During that time we had twins and paid cash for a vehicle and paid for preschool. It was tight, but we sacrificed and did it.

Have you ever done anything noteworthy to avoid or lessen debt, such as cashing out your 401(k) early?
I would never touch my retirement to pay off debt. We cut expenses and side-hustled more income.

Savings, Investments & Retirement

How much do you save each month or year in retirement vehicles like 401(k)s, Roth IRAs, and others?
$5,000/month or so. $1,815 goes to my pension. $1,916 to max out my 457(b). The difference goes to our IRAs and then our brokerage account once that is maxed.

How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
We invest $5,000 a year for my son's college. My daughters did some “acting” as babies and have a healthy start to their college fund. We set aside about $500 a year into our FSA.

How much do you save outside of retirement accounts?
We carry about $20,000 for an emergency fund. If we dip into it, we replenish quickly. We save $250 a month for our next vehicle. We also save for vacations and bigger costs throughout the year. It is not automatically. I transfer the money each month to a HYSA.

Talk to us about investments. Do you have/use a financial adviser/planner?
We do not use a financial adviser. I will have a pension and I treat that as the low-risk part of my portfolio. I then invest aggressively with the rest. We love Vanguard and put the rest into mostly VTI.

Do you have an end goal for saving or are you just saving for a rainy day?
We want to retire early. I would love to retire in 10–15 years. We expect to move to a LCOL area. I might keep working, but it will be part time and on my terms.

When did you start saving seriously? How has your savings strategy changed over the years?
I had a career in theatre before going to law school. I loved those days, but it was not financially great. We started seriously saving, investing, and paying off debt after I graduated law school at age 30.

What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
We budget. We assign every dollar a job once it is received and try to stick to that. We use YNAB for budgeting. We do not eat out much. I do not buy expensive clothes or handbags. We drive used cars paid for in cash. We use credit cards to travel-hack. We have pinpointed a few areas that matter to us which are housing, experiences, and kid activities and try not to spend too much on the rest.

Have you ever made a big money move or investment with savings in mind, such as rolling over an older IRA into a Roth IRA or superfunding a 529?
No. Just slow and steady wins the race.

Do you have an estate plan in place? A trust?
I need to get this done. I'm a lawyer without one! It's on my 2024 to-do list.

How much do you have in cash that’s available today?
$30,000

How much do you have in cash that’s available in a week?
$15,000

How much is in your “emergency fund,” and did you include it in the previous question?
$20,000, partly in my checking and in a HYSA

How much do you have in retirement savings?
$400,000 between my pension, 401(k), 457(b), and IRAs

How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
$7,000 in a brokerage. We prioritize the retirement accounts first.

If property values (home, car) are included in your net worth, how much are those worth?
Our vehicles are probably worth $20,000 total.

Spending

How much do you spend on the following categories on a monthly basis?

Groceries: $650
Restaurants, bars, takeout, and delivery: $150
Clothing and accessories: $100
Transportation: $500
Rent/living expenses: $4,500 (rent)
Kid-related expenses: $1,000. This includes activities, saving for future bigger stuff like summer school, clothes, shoes, the occasional babysitter, etc.
Entertainment: We spend $50 for streaming services and subscriptions. We go to the theatre every month or so.
Other major expenses: We have some travel planned this year. I am setting aside $800 a month for that. Nothing else is really major.
Health care – premiums and other costs: $250 a month for copays, prescriptions, etc. As a government employee, my premiums are covered by my employer.

What’s your spending range for these things? What’s your average?

Vacations – Range: $200–$8,000
Vacations – Average: $2,000

Charity – Range of donations: $50–$500
Charity – Average donation or giving amount: $1,200/year

Individual items of clothing – Range: $20–$300
Individual items of clothing – Average: $50. I buy good brands and quality on Poshmark or at local consignment shops. I do not skimp on shoes or bras.

Apartment or house – Current main residence: $4,500

Car or other vehicle – Current main vehicle: Our used Prius was $15,000. Our used minivan was $10,000. We paid cash.

Any other large personal expenses?
Not really. Rent, kids, and travel are the biggest categories this year.

Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $600 a year if I stopped buying organic, artisanal flour, but I don't because I love my homemade sourdough.

If you're married: When was your wedding, how much did it cost (total), and how much did YOU pay?
It cost about $15,000–$20,000. I don't really know; my parents paid. We bought our rings for $1,000.

Wedding: Tell us about it!
We were fresh out of college. It was at the country club. Very classic. My parents paid for most of it. His parents paid for the rehearsal dinner. We paid for our rings. We had about 200 guests. You could not do the same wedding today for the same price!

Have any large medical expenses (including nursing homes) for yourself or others played a role in your financial picture?
Fortunately, no. My dad is an estate planning attorney, so I know he has that figured out. My husband's parents do not talk about money, but I think they have it covered.

Are there any other large expenses in your life, now or previously?
We have a $5,000 electric cargo bike. We love it to cart the kids around. In our early 20s we cash-flowed a six-week backpacking trip in Europe. It was about $10,000, a lot of money for us back then. We want to spend a month in Ireland when the kids are older. That will probably cost a pretty penny. We plan to pay for college. We might buy a rental in an area where might later retire in the next few years. We'll see.

At any point in your life to date, has inheritance played a role in your money situation?
No inheritance. When our parents pass we will probably receive a bit, but I'd rather that they stay alive as long as possible.

How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
My parents paid for college, bought my first two cars, and are generous. For example, my mom will randomly pay for a kid activity, and they give us a check at Christmas and birthdays. My in-laws did not help my husband after he left for college. They will gift us a couple hundred at Christmas.

Does your family provide any non-financial support?
We don't live near family. Since having children, we had one vacation without kids and my in-laws flew out and watched the kids. My parents visit every few months and will watch the kids now and then. Sometimes my husband travels for work and my mom will fly out to help.

Money Strategy

Do you have a general money strategy?
Keep expenses low. Invest the rest.

Time vs. money — do you spend money to save time (e.g., cleaning service)? Do you donate your time instead of money? What else does this phrase mean to you?
I donate time to my law school and church. We don't give as much financially. Sometimes I will pay for convenience items, but I like to make things from scratch and look for a deal.

What are your favorite resources for personal finance?
YNAB. The Simple Path to Wealth by J L Collins. I have a great like-minded community on Instagram.

What advice would you give your younger self about personal finance?
Live within your means. Invest a little, even if it's only $20 a month. It all adds up.

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Money Snapshot: A Retired Lawyer Shares Thoughts on Retirement and Past “Bad Money Habits”

GuestPoster — Wed, 03 Apr 2024 17:00:00 +0000

For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with SA in Los Angeles, who is a retired government lawyer. She noted, “[My husband and I] are newly retired and have decided to spend a bucketload of money on travel while we can. This year's travel budget will probably exceed $100,000.” Later, she added, “We are just trying to walk the tightrope between living well while we still have our health, and having our money last as long as we need it to.”

Name: SA
Location: Los Angeles metro area
Age: 65
Occupation: Retired government lawyer
Partner: 76 years old, most-retired lawyer with his own practice. We are in the beginning stages of starting our own law-related business that we hope will bring in maybe $60,000 per year going forward, with both of us working part time.
Income: Total from all sources about $300,000
Household net worth: Total for both of us about $6.2 million, not including the value of my government pensions — split about 50-50 between the two of us
Net worth when started working: Started working as a teen. I had bad money habits and my net worth was negative due to student and consumer debt until I was in my early 40s.
Living situation: Live with husband; own home and two rental properties

Debt

How much debt do you have currently?
Mortgage on primary residence $514,000 (own, mortgage is $2,240); mortgage on rental property $522,000; mortgage on husband's rental property $477,000

How much money are you spending each money to pay down debt?
Total payments on mortgages (primary residence and rentals): $7,014. The payments on the rental properties are more than offset by the rental income.

Do you own or rent? How much do you pay monthly for your house or apartment?
We own. In addition to our $2,150/month mortgage, we average about $550/month for utilities.

If you have children, how much do/did you spend for childcare and/or education?
My child is 37. I paid for her undergrad (community college, state university) in cash, total maybe $150,000; she paid for grad school with the GI bill.

What does your debt picture look like?
We are fortunate to be debt-free other than mortgages. We do put almost all everyday expenses on credit cards, for the cash back, but pay off religiously every month and never carry any revolving debt.

How did you pay for school?
My parents paid for undergrad, other than a small student loan (low four figures). I paid for law school with a credit union loan for the first year (in the staggering sum of $10,000 back in 1984) and scholarships, a small student loan, and a teaching assistantship for the second and third years.

Home debt: Share your theories and strategies with us (including any that lead you to rent rather than own).
We refinanced a couple of years ago when rates were at the bottom. It's a 30-year mortgage and we have no need to pay it off or down. Our mortgage is much less than rent on a similar house or even a small apartment would be. My husband bought this house many years ago and although he has taken cash out for a remodeling project, we still have more than a million dollars of equity so we feel like we are sitting pretty.

Have you paid off any major debt?
Yes! My second husband and I paid off $242,000, including student debt, credit card debt, and about $100,000 of his back taxes, back in the early 2000s. It took us about 3.5 years and we used the “snowball method.” It was a terrible marriage in a lot of ways but we were absolutely on the same page with our finances.

Have you ever done anything noteworthy to avoid or lessen debt?
I took an early distribution from my 401(k) about 10 years ago when I was remodeling my house and costs went over the cash I had on hand after my divorce. It hurt to pay the taxes and penalty but I felt like I was putting the money back into an investment (the house), and the value of the house has increased and it's rented out now with positive cash flow so I don't waste a lot of time on regrets even though it wasn't my smartest financial move.

Savings, Investments & Retirement

How much do you save each month or year in retirement vehicles like 401Ks, Roth IRAs, and others?
Until I retired I put the max of $200/month in my health savings account and also maxed out my 401(k) and 503(b) accounts.”

How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
At this point we're in withdrawal mode, but up until I retired a few months ago I was saving almost $2,000 a month (including employer match) in my 401(k) and 403(b) accounts.

How much do you save outside of retirement accounts?
I save $750/month in the “Christmas” fund, $600/month in the “property tax” fund, $250/month in the “misc. charity” fund, and $200/month in the “my daughter” fund. These are all automatic transfers to designated savings accounts.

Talk to us about investments. Do you have or use a financial planner or advisor?
My husband has a financial advisor but I have all my money in target date funds.

Do you have an end goal for saving or are you just saving for a rainy day?
We are just trying to walk the tightrope between living well while we still have our health, and having our money last as long as we need it to.

When did you start saving seriously? How has your savings strategy changed over the years?
I was terrible with my money until I was about 40 and my then-husband and I found ourselves in major debt and had to do a big turnaround. That was when I started paying myself first and it's worked out well. Also getting the government job with pension was a huge financial boon.

What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
I track every penny in and out and have for years. That keeps me conscious of what's happening with the finances and avoids debt.

Do you have an estate plan in place? A trust?
Yes. Wills and trusts for both of us.

How much do you have in cash that’s available today?
A few hundred dollars

How much do you have in cash that’s available in a week?
We could theoretically get our hands on a couple million dollars within a week.

How much is in your “emergency fund,” and did you include it in the previous question?
I have $12,000 in an online savings account.

How much do you have in retirement savings?
My husband and I have about $2.5 million in tax-deferred accounts, plus real estate, plus my pension, plus his Social Security (which he is taking now), and my Social Security (which I will start taking in a couple of years).

How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
None

If property values (home, car) are included in your net worth, how much are those worth?
Home net $1.6 million, 2 rental properties net $1.2 million total

Spending

How much do you spend on the following categories on a monthly basis?

Groceries: $350
Restaurants, bars, takeout, and delivery: $700
Clothing and accessories: $1,200
Transportation: $1,000 (not counting husband's car payment, which is paid by his business)
Entertainment: Concerts $600, theatre $400, TV $120, books/magazines/newspaper $300
Other major expenses: Travel $10,000/mo. average. We are newly retired and healthy for now, so we are living it up while we can. Obviously we don't expect this level to last forever.
Health care – premiums and other costs: $500/mo. total for both of us

What’s your spending range for these things? What’s your average?

Vacations – Range: $500–$80,000
Vacations – Average: $40,000

Charity – Range of donations: $5 up to $25,000 currently. Just finished multi-year $100,000 donation.
Charity – Average donation or giving amount:

Individual items of clothing – Range: $25–$500 up to $5,000 for a designer bag
Individual items of clothing – Average: Average $100–$300 for me; husband spends more

Apartment or house – Range: $100,000 to $695,000 purchase price
Apartment or house – Current main residence: Currently worth $2 million; husband bought for $234,000 in 1984

Car or other vehicle – Range: $8,000–$70,000
Car or other vehicle – Current main vehicle: $70,000

Any other large personal expenses?
(1) We contribute probably $3,000/month to various nonprofits. (2) Personal trainer on and off, and gym membership. $350/month (3) Husband spends $800 or so per month on wine. (4) We have done a lot of work on the house, to the tune of more than $200,000, in the past several years.

Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $720 a month if I cleaned my own house but I just don't want to.

If you're married: When was your wedding, how much did it cost (total), and how much did YOU pay?
First: $8,000, parents paid / Second: $15,000, I paid all / Third: Total probably $70,000+; I paid $32,000

Wedding: Tell us about it!
We had a church wedding with 250+ guests followed by a luncheon reception and a dance party in the evening. We like to say our wedding is what you'd expect to get if you left two eighth-graders home alone for the weekend with the checkbook! It was over the top but very fun and we don't regret a bit of it!

If you have vacation homes, timeshares, or income properties, how much did those cost?
My rental property, which was my home before I married, cost $695,000 in 2014. Husband has a rental triplex that cost $410,000 in 2002.

Have any large medical expenses (including nursing homes) for yourself or others played a role in your financial picture?
My daughter may be having some significant medical expenses in the near- to mid-future, and we are prepared to help with that.

How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
My parents gave me a mid-five-figures cash gift when I bought my house after my divorce about 10 years ago. They helped me buy a car after my first divorce.

Does your family provide any non-financial support?
My mom babysat a lot on weekends when my daughter was small.

Money Strategy

Do you have a general money strategy?
I just keep an eye on things and try not to overspend. It's like planting a tree: The best time to get your financial act together is 20 years ago, but the second-best time is right now. I was a late bloomer but I ended up doing really well.

Time vs. money — do you spend money to save time (e.g., cleaning service)? Do you donate your time instead of money? What else does this phrase mean to you?
I am a fan of throwing money at problems.

What are your favorite resources for personal finance?
I was a big fan of Mary Hunt's Debt-Proof Living back in the '90s/early 2000s. She helped me get out of that big debt.

What advice would you give your younger self about personal finance?
Don't get into credit card debt!

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Money Snapshot: A Non-Equity Partner Shares Thoughts on Budgeting, Working an 80% Schedule, and More

GuestPoster — Wed, 20 Mar 2024 16:29:53 +0000

For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader L, who is 36 and works as a non-equity partner at an AmLaw 200 law firm. She lives in the suburbs of Minneapolis with her family of five.

She noted:

We knew from the beginning of our marriage that we would want someone home with the kids and that we would send them to private (religious) school, so that has informed many of our choices. I work an 80% schedule. My parents were poor when I was young but frugal and upwardly mobile and are now well-off in retirement and occasionally give us monetary gifts in the range of a few hundred to a thousand dollars. My husband's parents were professional class when he was growing up but bigger spenders, and we anticipate needing to help them financially in the next 10–15 years.

About This Series

Name: L
Location: Minneapolis suburbs
Age: 36
Occupation: Non-equity partner at an AmLaw 200 law firm (80% schedule)
Income: $280,000 — I am theoretically bonus-eligible but my firm does not pay large bonuses and my transactional practice area has big swings in hours, so I never count on it.
Family: Husband is also 36; he is a stay-at-home dad to our three children and has been for almost a decade.
Household income: $280,000
Household net worth: ~$300,000
Net worth when started working: I started working at age 15, when my net worth was 0. My parents paid my college tuition but I paid for my living expenses. I got married after college and worked part time for a few years before law school. I graduated from law school and started working at a BigLaw firm when I was 27.
Living situation: Own home

Debt

How much debt do you have currently?
$300,000 left on our mortgage and $60,000 left on my law school loans. No car payment or credit card debt.

What does your debt picture look like?
We have never had credit card debt. I had about $160,000 in law school debt when I graduated. I've refinanced a couple times when interest rates were favorable, and we've been making the scheduled payments; we have about four years left on it. We bought a house for $375,000 two years ago and have a standard 30-year mortgage on which we make the scheduled payments.

How much money are you spending each month to pay down debt?
We pay $2,150 on our mortgage and $1,250 on my student loans. Both are at very low interest rates so we are not paying them down aggressively.

How did you pay for school?
My husband and I both had National Merit scholarships for undergrad and our parents paid the remaining tuition. We both paid for our own living expenses with part-time jobs and debt, so we had some debt when we graduated, which we paid off before I started law school. I again had about a 33% scholarship for law school (I paid out-of-state tuition at a state school); my husband worked full time (while he went to school too) while I was in law school, which paid our living expenses, and I took out loans for the remaining tuition.

Do you own or rent? How much do you pay monthly?
We own. In addition to our $2,150/month mortgage, we average about $550/month for utilities.

Home debt: Share your theories and strategies with us (including any that lead you to rent rather than own).
We rented for many years while we lived in a higher-cost-of-living city; in retrospect we probably should have bought but we valued our mobility/ease of switching jobs, etc., at that time and didn't want to be encumbered with a mortgage.

We purchased a house two years ago before interest rates started to rise, and because our interest rate is so low we have no intention of paying it off early; it will still be paid off before we hit retirement age. We bought much less house than we could have technically afforded because my husband stays home, we have a nanny, and our kids go to private school, and we are not willing to compromise on any of those things, so we keep our housing expenses down.

Have you paid off any major debt?
No dramatic success stories, just the normal college and law school debt.

Have you ever done anything noteworthy to avoid or lessen debt?
I joke that we live a 1950s middle-class lifestyle — we have one income, one stay-at-home spouse, one old car in a one-car garage, a small 1950s house in a not-fancy, first-ring suburb, one small television and one radio, one road trip summer vacation, one push mower, and a handy husband who can fix most things himself. It's a good life!

Savings, Investments & Retirement

How much do you save each month or year in retirement vehicles like 401Ks, Roth IRAs, and others?
About $25,000/year. Our accountant is always pushing us to save more, and we should, but we don't.

How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
$7,750 to our HSA

How much do you save outside of retirement accounts?
We use YNAB so all our money has a job; we don't have amorphous “savings.” We have about $90,000 sitting in high-yield checking/savings accounts at any given time, and $40,000 in a brokerage account, but that money is allocated to known upcoming expenses, like estimated quarterly tax payments, private school tuition paid in a lump sum in August, a $50,000 home renovation project we have planned.

Talk to us about investments: Do you have/use a financial adviser or planner?
We do not currently have a financial adviser. My husband is a hobbyist and manages everything himself, and has outperformed the market for the last 12 years so I let him do it.

Do you have an end goal for saving or are you just saving for a rainy day?
We do not really “save.” We have some small retirement savings, although I don't know if I will ever be really ready to retire — I love working. We have a lot of more immediate needs like home renovation projects and private school tuition and summer camp.

Our plan is basically for my husband to get a job if we need more money for the kids when they are in college — we don't have extra money for college savings now. I hope to be an equity partner with a higher income at some point, or could go back to a full-time schedule if we really needed the money.

When did you start saving seriously? How has your savings strategy changed over the years?
Other than retirement savings and an emergency fund equal to three months' expenses, we don't have any extra income beyond what we need for each year's expenses. We have amounts earmarked for vacations, home repairs, a new car, etc., but I don't really consider that “savings” because we will definitely need a new car at some point, our house will definitely need maintenance and repair, we will definitely take a vacation — these things are not unknowable expenses so we just budget for them in advance.

What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
I think the big thing is living in an average house in an average-cost-of-living area — that keeps all our other expenses down.

Do you have an estate plan in place? A trust?
We have a simple estate plan but there isn't much in our “estate” — house, life insurance, and retirement accounts — so it's not complicated.

How much do you have in cash that’s available today?
$90,000

How much do you have in cash that’s available in a week?
An additional $40,000

How much is in your “emergency fund,” and did you include it in the previous question?
$25,000 in a high-yield savings account (included in the $90,000 available cash)

How much do you have in retirement savings?
$225,000 between me and my husband

How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
$15,000

If property values (home, car) are included in your net worth, how much are those worth?
House is worth about $375,000.

Spending

How much do you spend on the following categories on a monthly basis?

Groceries: $2,235
Restaurants, bars, takeout, and delivery: $356
Clothing and accessories: $583
Transportation: $300 (car insurance, vehicle maintenance, gas, transit, parking)
Rent/living expenses: $2,627
Kid-related expenses: $4,000
Entertainment: $361

Health care – premiums and other costs: Our premium for a high-deductible plan is $16,487 for a family of five. We contribute $7,750 to an HSA and typically need all of that for deductibles and co-pays. (We have two family members with complicated and treatment-intensive chronic medical conditions.) We also spend about $120/month on supplements and alternative treatments not covered by health insurance or reimbursable through the HSA.

Other major expenses:

$800 for home renovation/home maintenance (budgeted each month, often spent in a chunk on a single project/issue)
$700 for what I call “household and personal care” — linens, makeup, soap, trash bags, home décor, haircuts, toothpaste, etc. — things that are not groceries and not clothing but ordinary expenses of living
$500 for life and disability insurance
$350 for housecleaning
$350 for travel (budgeted, often spent in a chunk one to two times per year)
$250 for phone (including landline so our children can talk to their friends), internet, streaming services and website hosting fees (for our family website)
$200 for entertaining expenses above groceries — We host big parties a couple times a year and have 10–15 people for dinner weekly.
$150 household gym membership

What’s your spending range for these things? What’s your average?

Vacations – Range: Most of our travel is to visit family and costs less than $3,000 per trip. Our honeymoon on Maui would have been our most expensive trip except it was mostly paid for by family as a wedding present. We also took a bar trip but that also cost about $3,000.
Vacations – Average: $3,000

Charity – Average donation or giving amount: $600/month, $400 of which goes to our church

Individual items of clothing – Range: $0–$600

Apartment or house – Current main residence: $375,000

Car or other vehicle – current main vehicle: $14,000 for our minivan (bought from a family member below-market as a baby gift)

Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $650/month if I stopped buying the majority of our groceries directly from sustainable farmers, but I don't because the nutrition and ethical commitment of sustainable and traditional foodways are important values for our family.

If you're married: When was your wedding, how much did it cost (total), and how much did YOU pay?
We got married in 2010. I think our wedding cost about $11,000 for close to 200 guests; we paid about $500 (for my dress and tailoring on his suit), and my parents paid the rest. My husband's parents paid for the rehearsal dinner and some activities for out-of-town guests the day before the wedding; I'm not sure how much that cost altogether but likely less than $1,500 (but this was 13 years ago so who knows!).

Wedding: Tell us about it!
Not fancy, very religious. I am definitely of the opinion that when it comes to weddings, the more children there are running around and the less money you spend, the more likely your marriage is to be successful. (I know, I know, everyone has many counterexamples to this, it's fine, your marriage is fine, I'm happy for you.)

Have any large medical expenses (including nursing homes) for yourself or others played a role in your financial picture?
We just plan to hit our deductible every year and plan accordingly.

How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
We've received small gifts from parents at critical points — a few hundred up to a thousand here or there when we were first married and needed a major car repair, or when we needed just a bit more to have a full down payment for our house.

Does your family provide any non-financial support?
My mom and dad live a couple hours away but are very involved and supportive of our life! We leave the kids with them or they come watch the kids when one or both of us is traveling, and they occasionally pay for a summer family vacation in lieu of Christmas/birthday presents so that we can be together with all my siblings and their children.

Money Strategy

Do you have a general money strategy?
YNAB — give every dollar a job! We have kept track of every last cent together since we got married 13+ years ago and it helps us make sure we are spending in line with our values and are prepared for the normal expenses of living.

Time vs. money — do you spend money to save time (e.g., cleaning service)? Do you donate your time instead of money? What else does this phrase mean to you?
Yes, we have a very high value on our time while our children are young — they are only little for such a short time and, hopefully, we will be able to work for a very long time. (We are heavily insured with disability/life insurance if not.)

So we have prioritized being able to spend meaningful time with our kids while they live in our house, participating in their education and giving them an unhurried childhood at home. I could work full time and make way more money; my husband could work and we could increase our household income by 75% (based on his salary before he stayed home), but we would miss so much more of our kids' lives then and it is not worth it to us.

What are your favorite resources for personal finance?
My husband! He has read a master's-degree worth of economics and personal finance books.

What advice would you give your younger self about personal finance?
Probably should have done what we could to have bought a house earlier… but we didn't want to. So.

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Money Snapshot: A Government Lawyer Shares Her Thoughts on Home Buying, Paying Off Student Loans, and More

GuestPoster — Wed, 21 Feb 2024 18:00:00 +0000

For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader D in the Midwest, who works as a government lawyer. A mom of two, she noted, “Kids don't need ‘the best' of everything — your time is the most important thing you can give them.”

Name: D
Location: Midwest, MCOL
Age: 46
Occupation: Government lawyer
Income: Around $160,000 per year ($140,000 from main job; $20,000 from side gig)
Family: Spouse, 43, married 12 years; two kids
Household income: Varies, but around $400,000
Net worth: Combined net worth is around $900,000
Net worth when started working: Age 14 — net worth of nothing
Living situation: Married, own home
If you have children, how much do you spend for childcare and/or education? Two kids, $25,000/year daycare, afterschool for elem.

Debt

What does your debt picture look like?
No debt other than mortgage — around $180,000

How much money are you spending each month to pay down debt?
Mortgage around $1,900/mo.

How did you pay for school?
Split cost of college with divorced parents (we each paid one third; I took out a small loan for my third). I paid grad school and law school without parental help through work study, scholarships, and loans. Always worked as well, except 1L year when prohibited.

Home debt: Share your theories and strategies with us (including any that lead you to rent rather than own).
We chose a home that is much less than we could technically afford — it's a weird house in a great neighborhood. We bought at a good time and at a very low rate. We've made modifications over the years to accommodate more kids, two home offices, etc.

Have you paid off any major debt?
Paid off all grad/law school debt (around $100,000) within seven years of graduation by living frugally, making large payments, and (key) delaying mortgage/children until nearly paid off.

Have you ever done anything noteworthy to avoid or lessen debt, such as cashing out your 401K early?No

Savings, Investments & Retirement

How much do you save each month or year in retirement vehicles like 401Ks, Roth IRAs, and others?
Max out 401K through work, contribute $500/mo. towards investments.

How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
We contribute at least $5,000 per year to kids' 529s with refund from childcare account.

How much do you save outside of retirement accounts?
None, but we spend less than we make each month. Just sits in the account until we make large deposits once or twice a year into joint investment account.

Talk to us about investments. Do you have/use a financial adviser or planner?
We use a financial advisor and trust his allocation.

Do you have an end goal for saving or are you just saving for a rainy day?
Would love to retire early, but my youngest doesn't graduate high school until I'm 60, so…

When did you start saving seriously? How has your savings strategy changed over the years?
Always. Grew up poor.

What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
Limited expenses — public schools, eat most meals in, limited entertainment budget.

Do you have an estate plan in place? A trust?
Not yet, but would like to get one set up for kids.

How much do you have in cash that’s available today?
At least $100,000

How much do you have in cash that’s available in a week?
$300,000

How much do you have in retirement savings?
$400,000 between the two of us

How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
$300,000

If property values (home, car) are included in your net worth, how much are those worth?
House, around $575,000 (purchased for $345,000 nine years ago); cars, negligible

Spending

How much do you spend on the following categories on a monthly basis?

Groceries: $800
Restaurants, bars, takeout, and delivery: $200
Clothing and accessories: $50
Transportation: $150
Rent/living expenses: $1,900 mortgage
Entertainment: $50
Other major expenses: Travel 1–2 times per year, $5,000 annual
Health care – premiums and other costs: $250/month for family coverage (gov't employer)

What’s your spending range for these things? What’s your average?

Vacations – Range: $1,000–$6,000
Vacations – Average: $3,000

Charity – Range of donations: n/a
Charity – Average donation or giving amount: $3,000/year

Apartment or house – Current main residence: $1,900/mo.

Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $250 month if I used drugstore-brand skin care and stopped yoga gym/occasional Botox, but I don't because I've earned the right to spend a little on myself.

If you're married: When was your wedding, how much did it cost (total), and how much did YOU pay?
Paid for ourselves, $5,000

Wedding: Tell us about it!
Small event in a local park, nice lunch for 40 or so guests

If you own, how much did your car cost?
$30,000 Honda CRV, paid cash

Have any large medical expenses (including nursing homes) for yourself or others played a role in your financial picture?
IVF: $30,000 for one procedure that, thankfully, worked

At any point in your life to date, has inheritance played a role in your money situation?
Not yet, but anticipated

How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
No

Does your family provide any non-financial support?
Occasional childcare, more by request from them than need from us

Money Strategy

Do you have a general money strategy?
Be poor at least once in your life — no better way to learn how to manage expenses than if you have to by necessity.

Time vs. money — do you spend money to save time (e.g., cleaning service)? Do you donate your time instead of money? What else does this phrase mean to you?
Spend on cleaning service — weekends are for family time. Also, kids don't need “the best” of everything — your time is the most important thing you can give them.

What are your favorite resources for personal finance?
None

What advice would you give your younger self about personal finance?
Don't live beyond your means. If you can, live frugally and spend down on debt before taking on expenses of a house/kids. Buying nicer groceries is still cheaper than eating out. Goodwill plus tailoring will serve you well for work clothes for a long while.

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Money Snapshot: An In-House Counsel Shares Her Thoughts on Law School Loans, Pet Expenses, and Buying Art

GuestPoster — Mon, 08 Jan 2024 18:31:33 +0000

For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader Elisabeth, who lives in a LCOL area in the Mid-Atlantic and works as an in-house counsel. She noted, “I was born into what would now be considered upper middle class. In 1980 it was probably middle class. I was very privileged and fortunate that my parents paid for my undergrad education and I graduated with no debt.”

Name: Elisabeth
Location: Mid-Atlantic region, LCOL area
Age: 43
Occupation: Sports marketing to lawyer, now in-house counsel
Income: $204,000 base salary, 20% target bonus (Last year paid out at $63,000 and I expect it will be similar this year. The bonus is mostly based on company performance. There is a formula I never have really understood!)
Net worth: $385,000 (includes debt for mortgage and student loans, but not car value)
Net worth when started working: 22 years old, right after college, if we are talking FT work. I worked PT jobs since I was 15. Net worth at 22 was close to zero. No debt, but also no real savings.
Living situation: Single; own home

Debt

How much debt do you have currently?
$147,000 left on mortgage and $83,000 in student loans

How much money are you spending each month to pay down debt?
$1,000 for mortgage and $830 for student loans

What does your debt picture look like?
I incurred student loans from law school. I wasn’t very smart and even though I had a partial scholarship, I took out the full amount I could each year and then also a private bar loan. Not great but oh well. The house I own now is my second house (not concurrently). I used the gains from the sale of my first house towards my second but did not put a huge down payment down (3% maybe?) because the rates were good and the overall price was low. The house was $170,000 mostly financed.

How did you pay for school?
Undergrad was paid in full by my parents. Law school was a combination of federal loans and a partial scholarship ($17,000/yr.) earned for my 2L and 3L years based on 1L year grades. I also took out a $12,000 private bar loan.

Do you own or rent? How much do you pay monthly for your house or apartment?
Own, $1,000/mo. mortgage which includes escrow for taxes, etc.

Home debt: Share your theories and strategies with us (including any that lead you to rent rather than own).
Mortgage payment is $1,000/mo. on a 30-yr. fixed rate. I refinanced after the first year to 4.25%, which I am hanging on to as long as possible. I didn’t do any calculations for how much I could spend — just had a general ballpark in mind for monthly payments and guesstimated what that meant for price point. I was approved for way more than I was comfortable spending, of course. Principal is $296, escrow is $309, interest is $368, and I round up to $1,000. I think it will end up being $1,000 in [2024] because of an escrow adjustment. So for now I pay a little more but I will keep it at $1,000 most likely.

Have you paid off any major debt?
I had about $12,000 in credit card debt after law school, based on some bad spending decisions. I paid that off within two years of law school thanks to my midlaw salary that went far in my LCOL region. I also paid off my private bar loan within a couple of years of graduating. I financed one car and ended up paying that off in a lump sum of about $7,000 with a bonus one year.

Savings, Investments & Retirement

How much do you save each month or year in retirement vehicles like 401Ks, Roth IRAs, and others?
401k maxed out at $22,500, IRA maxed out at $6,500, and starting in 2024 I will also be deferring 5% of my comp (was nervous to do more than that as I am new to the whole deferred comp thing).

How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
HSA maxed out at $4,150; I have $2,000 in a CD right now.

How much do you save outside of retirement accounts?
$2,000 per month gets direct deposited straight into a HYSA.

Talk to us about investments. Do you have a financial adviser or planner?
No financial planner. I set my retirement accounts to a target date plan with max risk. I pretty much leave everything alone. I have a robo investment account but it doesn’t have much money in it right now.

Do you have an end goal for saving or are you just saving for a rainy day?
I am a one-pot saver so I use my savings for home repairs, vacations, emergencies, large horse vet bills, etc.

When did you start saving seriously? How has your savings strategy changed over the years?
Hmmm probably not until I was in my 30s. Now I try to max out the retirement vehicles, have a good chunk in my savings, and then enjoy my life.

What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
Directly diverting into a savings account

Do you have an estate plan in place? A trust?
I have a will to ensure my animals are taken care of. My life insurance and retirement beneficiaries include those who have offered to take an animal, my godson, and my new niece. Otherwise, because I am single with no kids, no planning.

How much do you have in cash that’s available today?
$5,000

How much do you have in cash that’s available in a week?
$45,000

How much is in your “emergency fund,” and did you include it in the previous question?
Same as above. All one pot.

How much do you have in retirement savings?
$330,000

How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
$2,000 (in a CD)

If property values (home, car) are included in your net worth, how much are those worth?
Property value is, and the house is currently valued around $250,000. The car is not, but KBB says I could get around $6,500 in a private sale for it.

Spending

How much do you spend on the following categories on a monthly basis?

Groceries: $550
Restaurants, bars, takeout, and delivery: $25
Clothing and accessories: $150
Transportation: $100
Rent/living expenses: $80 ($1,000 mortgage payment)
Entertainment: $50
Other major expenses: Horse board $750, farrier $155, lessons $340 (all per month); other pets (two dogs, two cats), $300/mo. between special food and meds (they are old). $170/mo. on Orangetheory. ~$200/yr. on running races.
Health care – premiums and other costs: Dental $16/mo., health insurance premiums $260/mo. (single, no dependents), vision $8/mo., concierge doc $1,250/yr., $650/yr. on appt. costs, $200/yr. on meds

What’s your spending range for these things? What’s your average?

Vacations – Range: $1,500–$5,000
Vacations – Average: $2,500

Charity – Range of donations: $50–$1,000
Charity – Average donation or giving amount: $100

Individual items of clothing – Range: $50–$300
Individual items of clothing – Average: $150

Apartment or house – Range: $150,000–$170,000
Apartment or house – Current main residence: $170,000

Car or other vehicle – Range: $15,000–$50,000 (buying new car this year)
Car or other vehicle – Current main vehicle: $16,000

Any other large personal expenses?
I buy original art, which usually sets me back about $5,000 per year, as well as jewelry, which sets me back about $2,000 a year.

Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save thousands per year if I didn’t buy art and unique/custom-made jewelry, but I don’t because they bring me joy and I want to support female and underrepresented community artists.

At any point in your life to date, has inheritance played a role in your money situation?
I inherited $10,000 when my maternal grandmother died, and it allowed me to buy a car outright.

How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
They paid for college, which is huge. I have occasionally borrowed a couple thousand from my parents interest-free but I always pay them back (when buying and selling a house at the same time). They have allowed me to live with them when I had a bad breakup and had to move immediately. Same with after some medical issues when I needed care and could not be independent.

Does your family provide any non-financial support?
Pet sitting for longer vacations

Money Strategy

Do you have a general money strategy?
Save, but also live!

Time vs. money — do you spend money to save time (e.g., cleaning service)? Do you donate your time instead of money? What else does this phrase mean to you?
Absolutely. I have a cleaning team who comes every two weeks and a neighborhood teen who mows my lawn. I do pro bono legal work because I think it is very important, but I also donate to charity.

What are your favorite resources for personal finance?
I don’t really have any, but I do enjoy Vivian Tu! (Your Rich BFF)

What advice would you give your younger self about personal finance?
Don’t get arrested lol (that’s how my credit card debt started), and also don’t take out the max law school loans when you don’t need to!

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