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Presenting our second “money snapshot,” this time with a 29-year-old chemist in New Jersey! She notes: “We paid off our cars and my student loan debt, and now we are saving for a house.”
By way of background: we got a few requests from readers to launch our own “money diary” series, so we 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 if you’d like to see the form and/or submit responses! You can also 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: J
Location: Collingswood, NJ
Age: 29
Occupation: Chemist
Income: $85,000
Household income: $176,000
Partner's age: 30
Household net worth: not sure
Net worth when started working: Nothing except $55,000 in student loan debt (age 22)
Current debt: $0
Living situation: Currently renting; rent is $1,525/month
Debt
How much money are you spending each month to pay down debt?
$3,000 credit card bill — covers almost all expenses except rent
How did you pay for school?
Grants and loans
Have you paid off any major debt?
Honestly, I wouldn't have been able to pay off student loans so quickly ($54k in 7 years) if I didn't have a partner covering all our daily expenses.
What is your living situation?
We are renting — we rented for five years before we aggressively started saving for a house. In 18 months we had enough for a mortgage that we felt comfortable with, but we're still hesitant to buy because property taxes in our area are so high and we aren't 100% sure we want to (can?) commit to this area.
Savings, Investments & Retirement
How much do you save for retirement?
15% or more of my salary in 401k, and I have a rollover IRA that I haven't touched. Both are more risk-balanced since I'm under 30.
How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
From 2011–2018, I put $10 a month into my HSA to focus on student loans. In 2019, I'll contribute almost the maximum.
How much do you save outside of retirement accounts?
My partner pays for day-to-day expenses, and most of my salary (minus Target trips and a few monthly expenses like Audible) goes to a savings account.
Do you have/use a financial adviser or planner? Do you have a favorite index fund where you stick everything? Are you doing a bond ladder or other asset allocation strategy (like value funds or target retirement funds)?
No, but I think we should use a financial adviser soon. After Christmas [2018], I want to buy index fund.
Do you have an end goal for saving (e.g., early retirement or job change) or are you just saving for a rainy day?
House, Travel, and Apocalyptic life events. Early retirement would be great, but I haven't thought about how to do that.
What's the #1 thing you're doing to save money, limit spending, or live frugally?
Automatic transfers help. Also, this sounds terrible, but having almost all our expenses on one credit card keeps me accountable. I'm far less likely to impulse spend if I know my partner is checking the credit card every week. My personal credit cards don't have travel rewards, so I only want to use the joint CC and use the points to travel abroad. So my impulse spending is limited, and when I do spend, it's at least going to be rewarded with crepes in Paris or something.
When did you start saving seriously? How has your savings strategy changed over the years?
I started saving seriously at the age of 26, and even more aggressively at 28.
How much do you have in cash that's available today?
$2,000
How much do you have in cash that's available in a week, such as with an online savings account?
$70,000
Spending
How much do you spend on the following categories on a monthly basis?
Groceries: $300
Restaurants, bars, takeout, and delivery: $150
Clothing and accessories: $150
Transportation: $160
Rent/living expenses: $1,525 (rent)
What's your spending range for these things? What's your average?
Vacations – Range: $0–$5,000
Vacation – Average: $2,500
Individual items of clothing – Range: $5–$75
Individual items of clothing – Average: $40
Apartment or house – Range: $900–$1,600/month
Apartment or house – Current main residence: $1,525/month
Car or other vehicle – Range: $0–$400/month
Car or other vehicle – Last purchase / current main vehicle: $400/month
Fill in the blank on this question: I could save _____ if I stopped ______, but I don't because _______.
I could save $150/month if I moved closer to work, but I don't because the state I work in is undesirable in so many ways.
When was your wedding and how much did it cost?
Everything including honeymoon cost about $30,000. My parents covered about half. We spent a lot of money on the venue, food, and photographer. We bought our own alcohol (tax-free Delaware), hired the least experienced but still awesome DJ, and I got all the table flowers from Produce Junction and Trader Joe's.
If you own, how much did your car cost?
$22,000
Money Strategy
Do you have a general money strategy?
Save as much as possible, and between my partner and I, try to live on one income and save the rest.
What advice would you give your younger self about personal finance?
Get a roommate after college. Don't buy a new car.
Photo credit: icons via Stencil.
Psst: We've talked about automatizing saving and automatic investing, as well as how to decide whether to pay down debt or save…
Anonymous
I find the “don’t buy a new car” money advice so interesting. My partner and I have only bought new cars. Three now since getting married in the mid-2000s. Each at 0%. One was traded after about 2 years for an SUV, as we couldn’t fit a car seat in the back (which was a necessity post-kid), but we drive the other 2 still. Both paid off. Unlike the OP, I would actually say that this is one of the smartest money decisions we’ve made.
Anon
I think this depends on how long one plans to drive a car. We also purchase new vehicles, and although I do not consider myself to be a “car person” I try to select cars that I will be satisfied with for a long time. I’m in the market for a new car now and plan to let my teenager drive my 2007 Lexus 350 SUV. It is doubtful that I would have driven a Rav 4 or Honda CRV for as long, which were the contenders when we bought this car.
Anon
I think the advice stems from a new car being one of the very few assets that loses value so quickly. If you’re going to keep the car for a long time it matter less, but buying a used car means that you aren’t going to lose a ton of money if circumstances change and you have to sell the car (or your car is totaled and you don’t have new car replacement insurance).
E
Agreed. I bought a new car at like a 1.5% interest rate. Monthly payments were about $330 and I paid it off early. I initially regretted getting a new car because it’d get dinged up in the streets of Chicago, but that wasn’t an issue. Most importantly, I’ve paid for standard maintenance and oil changes and haven’t had any issues over 4.5 years and 60k miles. It seems like my friends who bought used can’t say the same.
Additionally, regarding the credit cards comment: There’s nothing wrong with using your credit cards on everything. If you can manage it, it’s smarter to put everything on a card to get rewards/cash back rather than nothing when you pay cash or direct debit from your bank account.
anon
We’ve always bought used cars that were very new – generally less than 2 years old. It’s been great – we get a break on the price, but if you buy from a dealership you can usually get financing just like you would for a new car (though recently we’ve just paid cash). We drive our cars for around 10 years, meaning that they’re around 12 years old when we ‘retire’ them. I don’t really understand why you’d pay a price premium for a completely new car, when you can let someone else take the depreciation hit.
Equestrian attorney
+ 1. I bought a two-year old car with a dealer and I’m very pleased.
HSAL
Same. I generally buy new intending to drive it until it’s dead. I’ve found that all the “late model used” cars available are usually of a higher trim than I’m buying, so it ends being a negligible amount more each month (0 or .9% APR) for the brand new car with a full warranty that doesn’t already have 30K miles on it.
Anonymous
This. We buy our cars new, pay in cash, and keep them until they start needing a lot of expensive repairs, usually 250K miles or so. I don’t want to pay nearly as much for a two-year-old car with 30K miles on it and an expensive entertainment system that’s bound to break, when I can pay virtually the same amount to get a brand-new car that will give me 30K additional repair-free miles.
Worry about yourself
I think the issue is that the brand new car loses its value the second you drive it off the lot, whereas a used car that’s really only 2-3 years old and still in pretty good shape is just as good but not nearly as expensive. You’ll also have a lot more data on a 2 year car than a car that just hit the market. I bought my last car with cash, about 10k, but in hindsight I wish I’d financed a still used but slightly newer car, that was in better shape and had better features.
I do, however, see the benefit in being able to customize your car, rather than choosing from what’s available in your area.
anon
I think people are born into 1 camp or the other (same w/ ideas on leasing). I’d rather buy a new less expensive car and know it won’t have problems for at a minimum of 5 yrs, and know the history of it, and keep it until it breaks down into the ground (my 2010 corolla I bought for 0 down, 1% interest for $16.5k is still going strong and I’ve put barely any $ into it). When we bought it, similar used cars were only nominally less.
Alyssa
What are questions you make sure to ask before accepting a job offer?
I currently have a verbal offer from a startup. They’re pressuring me to make a decision but haven’t given me an actual salary number yet or written offer. I asked questions about concerns I have and got adequate answers. I’m at the point where I want to know as much as possible, but don’t want to come off as doubting or questioning the role. I just need to know stuff, it doesn’t mean I don’t like it!
CHL
Um that’s totally weird that they are pressuring you to make a decision and they didn’t give you a salary number yet! Don’t let them bully you into a big decision! Beyond stuff about the job/culture/reporting relationship etc. I would make sure you know base salary, how the bonus works — amount and what the organizational vs. personal performance measures are related to, and any equity. Also, benefits available, including retirement plan, health insurance, time off including any parental benefits if that’s important to you. There are probably people on this board more experienced with start ups but I think would want to know something about their finances and growth plan/plan to go public etc.
Alyssa
I did get some good information on the financial health of the company itself. Normally I would think that was a bit pushy but it’s a startup, they have to expect it.
anon
Good that you got adequate answers to your questions and I am going to assume the pressuring is a positive thing because they want you….you are in the drivers seat so you say “OK, now that I know more about the position, I am interested and open to reviewing an offer” Let them make the first offer, including benefits, incentive plan, etc. and then you can evaluate and come back to counter – this is how you negotiate. Ask questions first to clarify your understanding of the offer, then come back with your counteroffer. Wait at least a few days in between receiving the offer and responding….this also works in your favor. If you feel they are unnecessarily pushing or pressuring, tell them that you are very busy and need some time to evaluate.
anon
You need a written offer for sure- with salary and bonus and any stock options/other items laid out. Also if you qualify for a bonus- I’d def also ask how many people get their full bonuses each year. I have had 2 situations in recent yrs where our companies did weird things with bonuses– asking these questions may not have stopped that, but would have let me have better expectations. Also, this is the time to ask about any telecommuting, time off, etc that you may want.
MJ
I’m a tech lawyer. Beyond just accepting a startup’s offer, you should understand certain specifics around the stock options offered:
Are the ISOs or NSOs?
What percentage of the company’s fully-diluted equity do they represent?
What is the company’s standard vesting schedule? Is that what they gave you? If not, why not?
What is the current fair market value of the stock?
Does the company plan to do a large fundraising round soon which might seriously dilute your equity?
Does the company have convertible debt outstanding?
Are there any “clawback” provisions whereby the company could take back your _vested_ shares if you leave?
Is there any acceleration of vesting of your shares in the event of a change of control (e.g. if your company gets bought?)
What is the company’s cash runway at its current burn rate?
If the company is very early stage, I would ask for restricted stock if you are somewhat senior–it’s much more tax advantageous than stock options.
I will post a link below where you can find out a lot about stock options, how they work. At a startup, theoretically you are taking a below-market salary in exchange for this equity, so you should really understand the ins-and-outs.
Best of luck.
Jz
I’m a tech deal lawyer too and I would not let my clients (companies) disclose half of the info you’re asking for unless it’s to a senior employee or a valuable advisor. Options should not be offered on a % basis. That’s a constantly changing and a rank and file employee should not be privy to financing plans until a round closes. FMV can also change before the board actually grants the option.
Jz
I guess my point is that info is nice to have but I wouldn’t expect to have those answers.
MJ
Not my blog, but that of a former colleague:
http://stockoptioncounsel.com/
anon
Thanks for sharing.
I think your advice of aiming to live off of one income and saving the other is a great mindset.
Best wishes for your future.
Cat
The OP is not alone in this, but saying she pays $3,000 a month for her credit card bill is not “paying down debt” UNLESS you carry a balance on your card month-to-month. Otherwise, you’re just using credit responsibly!
Anon
Yeah that jumped out at me too. Sounds like she puts most of her expenses on her credit card and pays it off each month, which is what I do too. I would never describe that as “paying down debt.” I just use the card instead of cash so I can get rewards.
EB0220
Yes, I noticed that too and agree. I don’t count it as debt unless you carry a balance into the next month.
Anon
It drives me nuts when someone’s financial advice/savvy is basically “be married.” Yeah, I’ll just live off of my invisible partner’s income.
Anonymous
+1000000000. The singles tax is actually a real disadvantage and doesn’t need to be rubbed in our faces this way
Anon
She makes $85k, I don’t think she’d be destitute if she got divorced tomorrow…Her partner makes basically the same salary ($91k) so I’m not really sure how you think OP is only in this financial situation because of her partner.
Is it Friday yet?
Because she literally says “Honestly, I wouldn’t have been able to pay off student loans so quickly ($54k in 7 years) if I didn’t have a partner covering all our daily expenses.” Even if her partner wasn’t paying for that, the ability to share expenses for housing, utilities, food, etc. goes a long way.
anonshmanon
Well I can’t blame her for that. I mean, you could have a fabulously frugal and well-payed single person sharing their money snapshot, and then someone complains that they can’t replicate the situation because of having to financially support spouses/kids/relatives.
Anonymous
that’s pretty unfair, though. I suggest you read that part again. She acknowledged she could only pay off her debt due to her situation when she was asked about paying off debts. She was asked! She acknowledged someone single might not have been able to do the same! Seriously, what do you want? Only singles can participate in this?
Any of the saving strategies/tips for your younger self – really anything that could be perceived as advice or inspiration for others didn’t rely on a larger household income.
Anon
Yup. I think it’s unfair to expect someone to be responsive to every situation. I actually thought it was refreshing that the OP acknowledged the role that her partner played in helping her financial situation.
FWIW there are plenty of situations where being married is not helpful. If you marry someone who makes significantly less money than you, you effectively start subsidizing their expenses and have less money for your own financial goals and priorities.
Personal finances is personal. Not one size fits all. I personally appreciated this post and the OPs candor about how her partner played a role in her financial situation.
CR
Note to Kat: Perhaps exploring how couples make financial decisions bears a longer post. I do not come from a culture where spouses making essentially the same would have one pay the bills and the other save. How are decisions like this made? What’s the norm? Are there best practices? Pitfalls to avoid?
Anon
I think there was a post on this awhile back on the Tales from the Wallet series on this site. Can’t seem to link, but maybe try the archives!
Anon
I’ve definitely used similar phrasing (eg. “we save my salary and live off my husband’s salary”), because we save an amount roughly equivalent to my salary every year. All accounts except retirement are joint accounts (and we both max retirement) so there is no real distinction between “his money” and “my money” and it’s not like one of us has no savings while the other has tons of savings. So I think a lot of it is probably just semantics.
Ellen
I would love to be able to be in this position, b/c I would let my husband do all of the financial work, so I could concentrate on being a good lawyer and then have children to deal with full time. What is wrong with a division of labor? Nothing I say, b/c that is what works for me. I do NOT tell others how to live their lives, so let’s NOT be judgemental. YAY!!!
Anonymous
These money snapshots are not very helpful. Net worth = “not sure”? Average amount spent on one item of clothing, rather than total monthly or annual clothing budget? Average amount spent per vacation, with no sense of how often vacations occur? I would find it more useful to see total and take-home income, plus budget by category.
Anonymous
I’m not sure I agree. I see them as a translation of a financial situation to “real life”. This one taught me, for example, that my wardrobe must be way smaller than other people’s. Our situation is pretty similar, but the average amount I spend on an item of clothing is twice as high. The only way that works is if I have far fewer clothes.
Anon
I liked the first one a lot, but agreed this one was too vague to be useful.
AK
Thanks for sharing, J. Shoutout for Collingswood! We just stayed there this summer (family lives a few stops away on the PATCO). Loved the walkable downtown area, easy access to Philly, and the gelato from Haddonfield.
Anon
Thanks for posting!
I have the impression (from Refinery 29’s Money Diaries) that these kind of individuals’ money situation posts attract complaints no matter how they are structured. I wonder if it’s because money is a touchy/taboo subject for most people, and the discomfort makes people react with less charitable remarks, rather than appreciative ones? It would be a shame if that were the case because I really enjoy these posts, this community is amazing, and I appreciate the trouble the OPs took to tally things up and share!
That being said, I would personally be interested in knowing more about what drives the posters/commenters’ spending (or other financial decisions) if they are inclined to share! I’m curious whether any category of spending is more important than others, how people decided on priorities, whether they feel that they are splurging or thrifting on any given category and why, and how it affects their overall picture (financial and otherwise)… but I understand maybe it’s a bit complicated. The snapshot of numbers are interesting to see, and when I read them I feel like there might be more significance to the numbers to the posters than the figures alone will tell (e.g., $200 for groceries and meals out was a ton of money when I was in college; I would blow through more than that on a single meal on a given special occasion now because it is a priority for me).