Money Snapshot: An Environmental Scientist Shares Her Thoughts on Salaries, Debt, and Living Simply
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For today's Money Snapshot, we're talking salary, net worth, debt, and more with reader Apa, who lives in the Midwest and works as a environmental scientist. She notes, “We pay our credit cards off each month and live a relatively minimalist/frugal lifestyle. I have an aversion to purchasing new things and creating waste, so we often buy things used and use Freecycle/Buy Nothing groups. Three years ago, we made half as much money as we do now while my partner was a resident and I worked for a nonprofit.”
She adds, “I'm a first-generation college grad and my partner is a first-generation American. Our thinking around money is greatly influenced by our backgrounds, and our current situation is somewhat overwhelming for us as we learn to be comfortable with debt and making so much more than anyone else in our families. We often talk about how “rich” we are in both disbelief and disgust, and try to figure out how to deal with all the implications. One of our financial goals this year was to actually spend our money.”
Coronavirus update: Because Apa wrote her Personal Money Snapshot before the pandemic, we asked her for an update. Here’s what she wrote:
Our daycare closed for three months, but we kept paying tuition to hold our spot. We're both currently on parental leave with our second child, otherwise I'm not sure how long we could have kept up the telework/no-daycare/reduced-hours arrangement. I have no idea what going back to work in the fall will look like. Other than that, the biggest change is that we spend a lot more money on food now ($1,500+/month). I justify this to myself partly because I'm supporting local agriculture and helping out small businesses.
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: Apa
Location: MCOL college town in the Midwest
Age: 33
Occupation: Environmental scientist in the federal government
Income: $100,488
Family: Partner, 33 years old, a newly minted attending physician; 1.5-year-old child
Household income: Combined with my partner, $231,488
Household net worth: $36,000
Net worth when started working: I started working at 14 and worked my way through high school and college. I've never had a positive net worth until this past year due to student loans.
Living situation: Own home; $1,600/month
Childcare costs: We have a 1.5-year-old in daycare and pay $1,950/month. Pretty sure it's the most expensive in our area, which I have very mixed feelings about.
Other large expenses: We are currently saving about $2,000/month to finish our basement and will soon take out a $20,000 loan. We also are putting money into small projects around our house at around $1,000/month.
We asked Apa if she could elaborate on her mixed feelings regarding the daycare center:
This is an ongoing struggle and we revisit our childcare decision often. Now with the pandemic, I can't imagine making a change anytime soon. The mixed feelings stem more from unease about the privileged environment and lack of diversity at a pricey school than the money itself. I still think $4,400/month (for two kids) is outrageous, but I'm coming to terms with it for now. Once you're there, it's really hard to switch to something that is perceived to be inferior.
Debt
How much debt do you have currently?
$200,000 in student loans (most with 6.7% interest rate) from partner's medical school, $8,000 loan from my government retirement account (2% interest that goes back in account) that went towards the down payment for our house, and $15,000 for a used car we recently purchased.
What does your debt picture look like?
We've never carried a balance on our credit cards, and until this past year never had debt other than student loans. Our current debt is mainly from my partner's med school loans. We are hoping that much of this will disappear through a combination of public service forgiveness and a career program through the NIH. We're only making the minimum payment on our mortgage, which is hard for me. It's also taking everything in me to not pay off my car loan as we save up for a basement renovation. Even though I know it's illogical, I recently upped the monthly payment from $250 to $500/month, just because.
How much are you spending each month to pay down debt?
$2,600, not including our mortgage
How did you pay for school?
I have a graduate degree in a science field. With no resources, I paid my way through undergrad with a combination of merit- and needs-based scholarships, work-study, and odd jobs. I also came to college with two years' worth of credits from AP classes and dual-enrollment in high school. I still did the full four years and accumulated about $25,000 in loans, the bulk of which were from “extra stuff” such as studying abroad, taking expensive field courses, and unpaid internships. (I was determined to not let my family's poverty limit my experience and felt like I had to catch up to my more well-off peers, which in retrospect was idiotic.) In grad school I had teaching assistantships and a research fellowship that paid $35,000/year in addition to paying tuition.
Have you paid off any major debt?
By the end of grad school I only owed $4,000 from the $25,000 of student loans I had from undergrad.
Home debt: Share your theories and strategies.
We bought our first house last year. It's a 1,300-square-foot ranch with three beds and one bath. It's not quite a fixer-upper, but it needs a lot of work, as everything is dated. We saved up for a 20% down payment and took out a $230,000, 30-year mortgage. We were approved for triple this, but we I wanted to prevent lifestyle creep and continue to live simply. We would have bought earlier, but my partner had three years of residency, three years of fellowship, and no certainty in location. As soon as he got a permanent position, we bought our house.
Have you ever done anything noteworthy to avoid or lessen debt, such as cashing out your 401K early?
This probably doesn't count, but I lived for a year at a field station and didn't spend any money at all. Housing and food was covered, and I saved the entirety of my stipend ($100/week). I used it to buy a car when I entered back into the real world.
Savings, Investments & Retirement
How much do you save in retirement vehicles like 401Ks, Roth IRAs, and others?
Around $1,000/month. I get a 5% match and partner gets 10%. After student loans are paid, we'll max these out.
How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
$5,000 in a dependent care FSA and $1,000 in a healthcare FSA
How much do you save outside of retirement accounts?
Right now we are saving between $2,000 and $2,500/month. I manually transfer the money to a high-yield savings account.
Do you have/use a financial adviser or planner?
We interviewed a handful of financial advisors and planners and didn't feel that they were good fits. I can't imagine ever trusting anyone to make better decisions with our money than we could.
Do you have an end goal for saving or are you just saving for a rainy day?
At this point, it's just paying off debt and improving our house. I can't imagine what we will do with all of our future money. We will continue to live well under our means and just save it because it's there. I imagine we will probably end up giving it to family and donating.
What's the #1 thing you're doing to save money, limit spending, or live frugally?
We live simply and try not to participate in the culture of consumerism (for lack of a better term). We tend to not spend money on “stuff.” We (me more than my partner) upcycle, thrift, swap, repair, and share stuff instead of buying it. When we do purchase items, we think critically about why we're purchasing it, whether we really need it, how long it will last, what happens when we're done with it, and what its overall utility is in the long run.
When did you start saving seriously? How has your savings strategy changed over the years?
I've always saved more than I've spent.
How much do you have in cash that's available today?
$95,000
How much is in your “emergency fund,” where do you keep it, and did you include it in the previous question?
Same as previous
How much do you have in retirement savings?
Me: $80,000; Husband: $100,000.
If property values (home, car) are included in your net worth, how much are those worth?
House: $300,000; Car: $30,000.
Spending
How much do you spend on the following categories on a monthly basis?
Groceries: $400
Restaurants, bars, takeout, and delivery: $200
Clothing and accessories: $50
Transportation: $650
Kid-related expenses: $2,200
Entertainment: $50
Health care — premiums and other costs: $6,000 in premium per year for the whole family (partner and I and our 1.5-year-old), plus about $1,000 per year of FSA money.
What's your spending range for these things? What's your average?
Vacations – Range: $0–$2,000
Vacations – Average: $500
Charity – Range of donations: $0–$2,000
Charity – Average donation: $100/month, not including helping out friends and family
Individual items of clothing – Range: $0–$50
Individual items of clothing – Average: $5
Car or Other Vehicle – Range: $2,000–$18,000
Car or Other Vehicle – Last purchase/current main vehicle: $15,000 for a used Honda Fit (still paying off)
Apartment or house – Range: $0–$2,200
Apartment or house – Current main residence: $1,600
Fill in the blank on this question: I could save _____ if I stopped ______, but I don't because _______.
I could save $5,000/year if I stopped driving, but I don't because biking is hard with a kiddo and winters are hard.
How much did your wedding cost, and how much did YOU pay?
2013, $35,000; we reluctantly paid about $5,000. If it was my choice I would have skipped the wedding completely, but we could not overcome the cultural/family pressure.
Wedding: Tell us about it!
Large cross-cultural wedding with multiple events. I hated every moment of it with the exception of the limited time I actually got to spend with friends and family. It was such a waste.
If you own, how much did your home (permanent residence) cost?
$300,000 (still paying off)
Have any large medical expenses (including nursing homes) for yourself or others played a role in your financial picture?
Expecting to cover these expenses for family in the future.
How has your family provided financial support in your adult life, if any?
None. I support both parents occasionally when they get stuck and expect that to increase in the future as they age.
Does your family provide any non-financial support (such as regular childcare)? Please describe.
Only emotional support and encouragement.
Because Apa's life right now is so different from her experiences growing up, we asked her if her parents express their opinions on her financial situation. She had this to say:
No, not really. They are supportive and happy for us, but they often think that we can just magically solve all problems with money. This has caused me to sometimes hide my own stress because it doesn't seem as bad in comparison to worrying about things like how to pay bills, etc.
Money Strategy
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 have been working to convince myself that it's OK to spend my money, and recently hired a housekeeper. My perspective has completely changed after becoming a parent and wanting to maximize my time with my daughter.
What are your favorite resources for personal finance?
I honestly haven't found anything great because there are so many assumptions about lifestyle, values, priorities, etc., that do not jibe with mine. I feel like an outsider but would love to learn from any like-minded people.
What advice would you give your younger self about personal finance?
Honestly, I have no regrets. The only thing I would say is that having money doesn't improve quality of life. If anything, it just gets in the way of it. Focus on what really matters.
Icons via Stencil.
Why do you have an outstanding loan from your retirement and nearly 100k in savings? Just pay that off today.
I think that’s because they are saving towards finishing their basement.
Yeah that’s silly though.
I can’t speak for everyone, but I believe some retirement plans won’t allow you to pay off 401k loans early. We’re dealing with this now – we took out a loan to assist with our home down payment as well, and although we now have the cash to pay the remaining balance in full, we are unable to per my husband’s plan.
This is not a criticism of Apa (my own values are here, too), but I find it really interesting how some families will direct their money to the big house, while others will buy much less house than they can afford but ensure that their children have top-notch educational and enrichment opportunities. I’ve met a lot of kids who grew up in 3,500 square foot homes and were told to figure out extracurriculars and college on their own, and many kids who grew up in modest, split-level homes and whose parents cut checks for Williams or Princeton.
Usual disclaimer: there are families who can afford neither the big house or the top-notch education, and families who can afford both; this is about how families who can afford one but not the other make those decisions.
Thank you for articulating this. My parents were new to middle class, and they spent their money on a house and summer vacation cottage. My siblings and I had zero dollars for a car or college or extracurriculars, and it still incenses me to this day that my parents prioritized a second home over education. They truly had no idea how important it was to save for college. It has made me aggressively save for our two toddlers, as I had to basically undermatch at a college because we did not qualify for financial aid and even if I took out loans, there was still a gap for affordability. I do not want that for my children.
I’m sorry that happened to you.
As much as it’s your parents’ money that they dispose of as they see fit, their income does affect your financial aid eligibility. It has to be that way; you can’t exempt parents who don’t want to pay from paying, because no one actually *wants* to spend all of their disposable income for twenty years on college instead of on fun things.
My parents did this and I wouldn’t say they prioritized the house over education (they’re both teachers). What they did was teach me the value of money and I worked to pay off college and I appreciated it. It’s not in my parents to fund college- they should spend their hard earned money on themselves. If that means a vacation home then good for them. I don’t feel they owe me anything in regards to a college education. Just my opinion.
This is an interesting snapshot. Thanks for sharing.
I have a hard time paying off student loans aggressively at the expense of not maxing out retirement funds, but I know some people just hate student loan debt.
This is a little late in the game (from a comments perspective), but from a money management perspective, Apa sounds like you would fit right into the financial independence community. There are a ton of websites frugalwoods, Mr Money Mustache, Choose FI podcast/website that might align better with your general outlook and financial goals.
I have found these website helpful in understanding various aspects of personal finance and how to think about my savings/spending priorities.
Overall you sound like you are doing a great job despite some of your current stresses. You should feel proud of what you have accomplished so far!
Agree, this post made me think right away of the case studies on the frugalwoods website.
$95K cash on hand but a loan against retirement and a car loan? Why pay interest and maintain way more cash on hand than needed? I think Apa actually might benefit from financial advising…
Personal finance is just that – personal. I didn’t see where she mentioned her car loan interest rate (perhaps I missed it), but it’s certainly possible that if she has an ultra-low APR on the car loan, she may be earning more in a high yield savings account and it makes more sense to maintain the loan. Also, her 401k loan may not allow for early payoff.
While I am generally not in favor of loans against retirement, I disagree that $95K cash with a car loan is unreasonable. We keep about that much on hand for our emergency fund, and that’s where our comfort zone is.