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For today's Money Snapshot, we're talking salary, net worth, student loans, and more with a reader in San Francisco, who works as a compliance officer in fintech. She notes, “Leaving the practice of law was actually the best thing financially for both me and my husband. Who knew? […] Sometimes it feels like we are living paycheck to paycheck in a city like San Francisco, but we try to throw as much money towards student loan debt and retirement as possible. That being said, I earn about $100,000 more now than I ever did as a lawyer.”
She added, “The only type of law I ever enjoyed (and I tried several) involved aggressive business development to be successful, which was emotionally exhausting. I also wanted the freedom to move between states, and potentially abroad, without having to get relicensed. Being a lawyer is often wrapped up in your sense of identity, so there was definitely a mourning period and feeling of ‘loss of prestige.' Once you get past that, it was absolutely the best decision for us.”
About the Money Snapshot Series: 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: Margo
Location: San Francisco
Age: 29
Occupation: Compliance officer in fintech (former attorney)
Income: $135,000 total compensation, $10,000 of which is in stock options
Partner's age: 34
Partner's income: $80,000 (former attorney turned sommelier)|
Net worth when started working: I passed the bar exam two weeks after I turned 21 (graduated early) and started working in a non-salaried position. It was the height of the recession, and my net worth was negative $55,000 due to student loans.
Joint net worth: About $60,000
Living situation: Pay $2,120 rent (for a studio :/ ) and $300 for a parking spot. That's San Francisco for you.
Other large monthly expenses: We take retirement savings very seriously in an attempt to catch up from graduating in the middle of the recession. We max out my 401k (about $1,440 a month) with an additional $900 to our Roth IRAs.
Coronavirus update: Because Margo wrote her Personal Money Snapshot before the pandemic, we asked her for an update. Here’s what she wrote:
First off, I am extremely grateful to be healthy so far, and my heart breaks for those who have passed or lost a loved one. Financially, we are down an income at the moment as restaurants are barely operating, but luckily I still have my job. Our lease is now month to month, so we can vacate quickly if our income drops further and still have enough savings to get by in a lower cost living situation. We have drastically cut spending and are trying to prepare for the worst financially. Being in a small studio in a crowded neighborhood is challenging as we try to stay appropriately distanced, so I am doing the best I can self-care wise.
Debt
What does your debt picture look like?
I currently have $29,000 left on my student loans. My husband has about $32,000 left. Our (used) car was fully paid after three months, so our only debt is from school.
How much money are you spending each month to pay down debt?
$1,200 minimum for both our student loans, but we always try to pay a couple hundred extra a month. We have aggressively refinanced from between 7–8.6% to 1.95% and 2.72%. If I could go back in time, I would have never gone on an income-based repayment plan.
How did you pay for school?
My undergrad was paid for and discounted through things like dual enrollment, AP, and community college in the summer. I went to a budget, public law school on a combination of loans, clerking, and scholarship.
Home debt: Share your theories and strategies.
Owning a home in San Francisco is financially unattainable for us in the next decade. That being said, renting is almost easier when you think about the risk of wildfires, earthquakes, etc., in the region. We are also financially scarred from the recession and don't see home ownership as a safe investment.
Have you paid off any major debt?
Not yet.
Have you ever done anything noteworthy to avoid or lessen debt?
Aside from occasionally borrowing from our $1,000 immediate emergency fund, no.
We asked Margo about her early graduation (from high school and so on), and here's what she told us:
My parents were very focused on education and pushed me to get a lot of college credits through dual enrollment at local colleges, dual credit, and AP tests while I was still in high school. I don't think any of us realized how many credits I had until I finished high school at 16 with only 37 hours left towards a bachelor's. I knocked that out in one year and went to law school right after. I recognize that I was very privileged to be in a public school system that offered those opportunities and had parents who knew how to navigate the system.
Savings, Investments & Retirement
How much do you save for retirement?
$19,000 in my 401k, $2,000 in my Roth IRA ($5,000 in my husband's Roth IRA).
How much do you save outside of retirement accounts?
I try to transfer a couple of hundred to a high-yield savings a month, but that is deprioritized in months where credit cards are higher and need to be paid down before interest is charged.
Talk to us about investments.
Low cost Schwab IRAs and company 401k plan.
Do you have an end goal for saving or are you just saving for a rainy day?
My goal is to have a nest egg built before working a less demanding job remotely and living abroad.
What's the #1 thing you're doing to save money, limit spending, or live frugally?
Dedicating money to retirement accounts and student debt repayment before it ever hits my checking account.
When did you start saving seriously? How has your savings strategy changed over the years?
I didn't start saving seriously until leaving the law, when our salaries increased.
Do you have an estate plan? A trust?
No, which is terrible for a former estate planning attorney. However, we have no true titled assets, so I feel OK leaving accounts with survivorship information for now.
How much do you have in cash that's available today?
$20,000
How much do you have in cash that's available in a week, such as in an online savings account?
$7,000
How much is in your “emergency fund,” and where do you keep it?
Two emergency funds: $1,000 available immediately in traditional savings, $7,000 in an online savings accessible within three days.
How much do you have in retirement savings?
$71,000 for me, $21,000 for my husband.
How much money do you have in long-term investments and savings that are not behind a retirement wall?
Stock options that have an unknown final value but I spent $10,000 per year in salary for.
If property values (home, car) are included in your net worth, how much are those worth?
Ha. Our car is maybe worth $8,000.
Spending
How much do you spend on the following categories on a monthly basis?
Groceries: $600
Restaurants, bars, takeout, and delivery: $1,200
Clothing and accessories: $60
Transportation: $400
Rent/living expenses: $2,120
Entertainment: $70
Health care — premiums and other costs: $68 for all medical, vision, dental insurance premiums. Very little out of pocket.
What's your spending range for these things? What's your average?
Vacations – Range: $2,000–$7,000
Vacations – Average: $3,000
Charity – Range of donations: $200/month
Charity – Average donation: $30
Individual items of clothing – Range: $10–$200
Individual items of clothing – Average: $40
Car or Other Vehicle – Last purchase/current main vehicle: $11,290
Fill in the blank on this question: I could save _____ if I stopped ______, but I don't because _______.
I could save $800/month if I stopped eating and drinking out, but I don't because that's why we live in this incredible food city.
When was your wedding, and how much did it cost?
2013 — $20,000 of which we paid for on our own. My dress was $292 dollars at a sample sale! The alterations cost more than the dress. We spent the most money on our photographer.
How has your family provided financial support in your adult life, if any?
My parents paid for my college, which is not a privilege that all can benefit from. However, I became financially independent at 18, between my 1L and 2L year.
We asked Margo whether she and her husband plan on staying in the Bay Area indefinitely, and she had this to say:
I think we'd like to stay in SF for the foreseeable future, as this is one of the few places where our chosen industries overlap in terms of jobs. However, Covid-19 may force new career pivots, so it's difficult to know what will happen. Also, living in a place where I could comfortably afford more than a studio is suddenly a lot more appealing for obvious reasons.
Money Strategy
Do you have a general money strategy?
Minimalism and savings.
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?
To me, money is expendable and time is precious. I would rather earn less and have more time outside of work.
What are your favorite resources for personal finance?
NerdWallet and Mint.
What advice would you give your younger self about personal finance?
Do not max out student loans.
Icons via Stencil.
Anon
I’m so confused – you finished *law school* at 20?! When did you finish college?
Kate
She explains it later in the post — she finished HS at 16 and already had enough credits to get a college degree in one year, then she went to law school.
Diana Barry
Interesting – I also finished HS at 16 but would never have wanted to skimp on the college experience, I had such a great time in college!
Anonymous
I’m wondering if that will become a thing now — between AP credits / early college offerings in high school / co-matriculating at community college to get transferrable (and less expensive) credits. How that college ain’t what it used to be, it’s hard to justify the expense (or 4 vs 3 years of the expenses).
ana
I’m a little older than Margo, and people thought I was strange when I did it. It definitely helped with expenses. I agree with other comments that I probably didn’t get the full college experience. However, if I hadn’t fast tracked credits, I would have needed to work 2 jobs and also stay longer in school. I’m not sure what I would have preferred. It’s an interesting tradeoff – higher expenses vs more experiences.
anon
I was thinking the same thing! Margo’s story is super impressive but man, I wouldn’t trade my undergrad years for anything.
Anon
Same– I came into college with something like 60 AP credits and added on additional minors and a master’s degree to stay for 4 years. (I had a full tuition scholarship that covered the master’s degree as well). I look young anyway and felt like going to law school young wasn’t going to be a good move. I also grew up a lot in college.
Sloan Sabbith
I finished high school on a normal schedule but already had 2 years of college credit due to a program in my home state that allowed me to take classes at the local university and earn dual credit for it. I finished college at age 20 and started law school that fall. I liked undergrad, but I felt like law school was more of the traditional having fun as a student phase of my life. I didn’t have very many close friends in college because I came in as a junior and didn’t live in the dorms due to health issues, so I had a hard time making friends with freshmen, and just generally a hard time making friends. I came into my own during law school.
Anon lawyer
Would love to hear more about transferring from law to compliance.
Anonymous
And I would love to hear more about transferring from law to sommelier!
Housecounsel
Having a husband who is a sommelier = priceless.
Anonymous
Lawyers only make $35k/yr?
Anonymous
This! When I first read that she makes $100k more now that she ever did in law, I was expecting at least a $250k+ comp package, or more for SF. I think we’ve been skewed by some of the BigLaw salaries discussed here.
Equestrian Attorney
Lawyers can make anywhere between 10k and several million a year. I think people underestimate the range of careers in law – not everyone works in big law, in fact that’s a pretty small percentage of lawyers. Lawyers can work in government, non profits, in-house, and in smaller firms where your salary often a cut of what you bring in, which can be very little at the start of your career (it sounds like that might have been the situation for Margo). The median income for young attorneys in my jurisdiction is shockingly low – I think it’s about 40k.
Anon
It depends – this firm obviously skews high paying for lawyers, but I had a lot of friends whose first 5 ish years out of law school we’re along those lines (lower stakes criminal defense, family law).
Anon
I work in compliance and it is absolutely the most bone dry boring experience I’ve ever had. Five years, two companies, and ready to change careers over it (when the economy gets better).
Anon101
I think it totally depends on what industry you are in. Compliance for financial services, esp on the buy side, has been an extremely rewarding career for me and I’d never swap with my Legal counterparts. I can see it being bad if you are siloed in 1 type of work (like AML only in a big bank) or in healthcare, etc.