Money Snapshot: A BigLaw Associate Shares Her Thoughts on Big Student Loans, Living Frugally, and Renting in NYC

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For today's Money Snapshot, we're talking salary, net worth, and aggressively paying off student loans with a reader in NYC who works as a BigLaw associate. She notes, “I sort of started from scratch (financially and personally) in my late 20s, leaving a marriage, switching careers, and incurring a lot of debt in the process. Things have gone well but it definitely changed all aspects of my finances and financial goals.” Still, she explains, “I've been the beneficiary of a lot of privilege and am grateful for that, and am grateful for the chance to be a high earner right now so that I can prepare for the future.”

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: N 
Location: NYC
Age: 34  
Occupation: BigLaw associate (was an Army officer between college and law school)
Income: $255,000/year (usually plus bonus, but not this year [written Dec. 2018]) before taxes
Partner's age: 47
Partner's income: They are a writer and their income varies wildly — in the low six figures in the year a book is published but closer to $40,000 other years. We live together in a long-term, committed partnership but keep our finances separate and cover joint expenses in proportion to our incomes. (I currently pay for the vast majority of joint expenses.) We both have student loans from grad/law school that we each pay separately.
Net worth: My net worth (alone) is approximately $140,000. I do not know my partner's net worth, but I believe it is close to zero or slightly negative (has retirement account and savings, but also student loans).
Net worth when started working: I started my current job at age 29 (the end of 2014) and my net worth was around -$160,000 (because of law school debt, a divorce, and living like a salaried person while in law school). Prior to law school I had approximately $60,000 of net worth, in savings and retirement accounts (no debt), and had worked since age 16 (part time in high school and college, full-time between college and law school).
Living situation: Rent a one-bedroom in Manhattan (walk to work, doorman building) for $2,925/month plus utilities (approx. another $120/month for wi-fi and electricity)

{related: how to pay off big student loans}

Debt

What does your debt picture look like?
The amount is $51,150, and it's all law school debt. Around $33,000 of it is a private loan with 3.45% interest and the rest is on interest-free credit cards. I use one credit card for everyday expenses and pay it off in full every month. I'm using my temporarily-giant salary to pay off my loans as aggressively as I can ($80,000 of principal this year, and I'm on track to get rid of it all by the end of 2019!).

How much money are you spending each month to pay down debt?
Approx. $4,000/month plus any bonuses

How did you pay for school?
I paid for my undergrad using a combination of student loans and a tuition reimbursement program from the National Guard; I also worked part-time throughout college. (I was in the National Guard during college and on active duty between college and law school.) I graduated undergrad with around $20,000 of debt and paid it off in around two years. For law school, I took out a combination of subsidized and PLUS loans, and the GI Bill also covered some tuition and living expenses (should have covered more, but I wasn't living as frugally as I should have been). I also took out a private loan to cover living expenses while I studied for the bar exam and in the months between finishing law school and starting my job.

I've gone from having over $205,000 of student debt to having just over $50,000 of debt in four and a half years.

What is your home debt? 
I bought a house in 2008 with my now ex-husband on a 30-year mortgage, using the GI Bill, which seemed to make sense at the time. We qualified for a larger loan but borrowed approximately $268,000, the value of the house at the time (the house, which I think has just recently recovered its 2008 value, is the ex-husband's problem now). I don't know that I'll buy property again; certainly not while I live in NYC.

{related: paying down debt vs saving}

Savings, Investments & Retirement

How much do you save for retirement?
I max my 401(k) — no employer match, sadly, though I hear that's par for the course in BigLaw — and my IRA each year. My income is too high to use a Roth IRA; I have not experimented with rollovers yet. Eight percent of my paycheck and 66% of my bonuses (in years that I get them) go straight into the 401(k) until it's maxed.

How much money do you allocate to other tax-savvy investments/accounts?
None

How much do you save outside of retirement accounts?
$1,750 from each paycheck is diverted into a savings account, which I use as an emergency fund or for large expenses, or to invest.

What is your investment situation like?
I mostly use low-fee index funds (Vanguard and Fidelity) but have bought a few ETFs as well. I don't have much of an asset allocation strategy right now.

Do you have an end goal for saving or are you just saving for a rainy day?
In the shorter term, I am trying to build up a cushion so I can take a lower-paying job with a better lifestyle in the next 2–3 years.

What's the #1 thing you're doing to save money, limit spending, or live frugally?
Find a job that doesn't leave time for anything else! Kidding aside, I “pay myself (or, I guess, my law school) first” and then there's very little left over to buy other things, and I try to have a general mindset of abundance (what I already have is good enough) in order to live frugally. I don't shop for fun (and most of my clothes are secondhand or I've had them forever, though I look perfectly presentable so you wouldn't know it), do my own nails, cook at home (and eat office catering leftovers when we have them), use the public library, go to free cultural events, take the subway or walk everywhere, and try very, very hard not to get suckered into purchasing the latest must-have/do thing/experience.

When did you start saving seriously? How has your savings strategy changed over the years?
I realized I was still living way outside my means around 2015 (I had the largest salary ever, but was still living paycheck to paycheck) and started recording every purchase I made (I still do this), made a budget, and vowed to put as much money as I could toward my student debts. I've been a little more aggressive with savings sometimes and a little more aggressive with loan payments other times.

Do you have an estate plan? A trust?
I don't feel I have enough assets to do this. My partner and my parents will get my life insurance proceeds when I die, and my parents will get my savings, and that works for me.

How much do you have in cash that's available today?
$15 in my wallet, $302 in a checking account

How much do you have in cash that's available in a week?
$14,500 in savings accounts

How much is in your “emergency fund,” and where do you keep it?
I have $10,000 in my “emergency fund” in a savings account, included in the above.

How much do you have in retirement savings?
Approximately $147,000

How much $ do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
Approximately $31,000 (this and retirement were several thousand dollars higher before this month's stock market correction)

In honor of the original name of this series (Tales from the Wallet)… here's a wallet we recommend!

Spending 

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

Groceries: $450
Restaurants, bars, takeout, and delivery: $80
Clothing and accessories: $0 
Transportation: $40
Rent/living expenses: $3,000
Entertainment: $50
Other major expenses: Over $106,000 so far this year has gone to federal, state and city taxes, social security, and Medicare deductions. Happy to assist with our country's social safety net but that's a whole lot of money I earn but never see.
Health care — premiums and other costs: $420/month for self and partner; firm pays the rest; I estimate we pay around $500 per year out of pocket.

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

Vacations – Range: Up to $7,000 as the most ever, for a week on a private villa on an island.
Vacations – Average: Usually closer to $3,000. Vacation once or twice a year.

Charity – Range of donations: $250–$2,500
Charity – Average donation: $1,000/year 

Individual items of clothing – Range: $0 up to $700 for a suit
Individual items of clothing – Average: $60 (I rarely buy clothes anymore)

Apartment or house – Current main residence: $2,925

Car or other vehicle – Last purchase / current main vehicle: $6,200 (only ever bought one car and it was used)

Fill in the blank on this question: I could save _____ if I stopped ______, but I don't because _______.
I could save $1,500/month if I stopped paying my partner's half of the rent, but I don't because I love them, they support me in countless non-financial ways, and eventually we will live somewhere cheaper. 

When was your wedding, how much did it cost (total), and how much did YOU pay? 
I got married in 2006 and it was less than $100. I think we split the cost. (The subsequent divorce cost me around $10,000 in legal fees.) We got married at city hall, at the county seat where our military base was located! We wanted a marriage and couldn't care less about a wedding.

How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
I've been paying my own way since I was 17 (when I started college). I expect I'll have some financial responsibility for my parents when they are older.

{related: how to survive divorce financially}

Money Strategy

Do you have a general money strategy? 
Pay off all my student debt by the time I'm 35, then save as much as possible before I leave BigLaw.

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?
We always have more of one or the other, but just because you CAN save time by spending money doesn't mean you HAVE to. I live in a ridiculously expensive apartment so I can walk to the office, which is worth it to me, and will pay for direct flights when traveling, sometimes. I do quite a bit of of pro bono legal work but also donate money to charity.

What are your favorite resources for personal finance (podcasts, blogs, books, series, conferences)?
The Frugalwoods are the same age as I am and I've been inspired by their journey and strategy for years and years, and of course I read Refinery29's money diaries, though that's for entertainment rather than advice. I will peruse financial independence blogs (Mr. Money Mustache helped a lot early on) but am mostly on a glide path/am not looking for financial advice right now.

What advice would you give your younger self about personal finance?
Save more. You aren't necessarily missing out by not traveling to All The Places and eating at All The Cool Restaurants — you tend to buy things and look for the “best” things because you feel insecure. Study instead of trying to buy your way into appearing competent and successful.

Icons via Stencil.