Money Snapshot: An Accountant in D.C. Shares Thoughts on Renting, Life Goals, and Family Support

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For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader C in Washington, D.C., who works as an accountant. She noted, “Most of my net worth is from family money. My grandparents started a partnership that distributions to family members every year. My parents discreetly opened a custodial account for me and deposited the annual dividends. My parents also fully funded a 529 account, which paid for my undergraduate education.”

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: HCOL — Washington, D.C.
Age: 25
Occupation: Accountant (path: entry-level data analyst -> accounting clerk -> accountant)
Income: $110,000: $50,000 (income) + $30,000 (tuition benefits) + $20,000 (family partnership income) + $10,000 (investment income)
Net worth: About $600,000
Net worth when started working: First full-time professional job at 21. I thought my net worth was about $5,000. My net worth was actually around $200,000 due to a custodial account. (I was unaware of this at the time.)
Living situation: Renting, with roommates

Debt

What does your debt picture look like?
No debt

How did you pay for school?
I am debt free mostly thanks to my parent's 529 fund (undergraduate degree) and my current employer's tuition benefits (graduate degree).

Some things I did “right” to keep costs down: (1) I picked a low-cost school with maximum merit scholarships for my undergraduate degree. (2) I applied to my current role because I did not want to take out any loans for a graduate degree.

Do you own or rent? How much do you pay monthly?
Rent — $900 monthly for my bedroom in a shared rowhouse with other young professionals. Total household rent is ~$4,000.

Home debt: Share your theories and strategies with us (including any that lead you to rent rather than own). 
I've been looking for a 1-bedroom, 1-bath apartment in my current neighborhood, but I think the market is inflated. I have a very good deal for rent currently, and any mortgage would be two to three times the cost of my place. I'm hoping to keep any potential mortgage (and HOA fees) below $2,000 so that I don't run into any cash flow issues.

Savings, Investments & Retirement 

How much do you save each month or year in retirement vehicles like 401Ks, Roth IRAs, and others?
403(b), 15% of income = $7,500
Roth IRA = $6,000
Total Annual personal contributions = $13,500

How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
HSA — $500 annually. I tend to spend most of it on glasses and contact lenses, as I have finicky eyes.

How much do you save outside of retirement accounts?
There are three main processes for saving:

• All partnership distributions go directly into my main investment account. I keep some of it liquid in order to cover the next year's estimated taxes and my annual Roth IRA contribution. Any remaining stays in the investment account as “savings.”
• I have a monthly $200 transfer to a robo-advisor investment account.
• I review my cash accounts each quarter, and any extra cash (beyond a two to three month buffer) is transferred to my robo-advisor account.

Talk to us about investments. 
Main investment account — Uses a financial planner provided by the investment company on a quarterly basis. I'm fairly comfortable with risk here, as I don't plan on spending it in the 10- to 15-year horizon.

Roth IRA — Overseen by the same “private client advisor,” similar comfort level with risk.

Robo-advisor account — Uses a target-date fund set next year. In my mind this is a “down payment” fund. Far less risky behavior here, as I plan to use it in the next two to three years.

403(b) — Uses a target-date fund set at retirement age.

In addition to investments, I have an HYSA — “High” yield account, though the yield has been fairly low for the past 2.5 years. This is cash I keep on hand for emergencies and any spending beyond the norm.

Do you have an end goal for saving or are you just saving for a rainy day?
A few savings or lifestyle goals of mine:

• Saving significant money keeps me from having too much lifestyle inflation. I hope having less cash “on hand” keeps me humble and down to earth.
• Purchasing a small condo/flat in my favorite neighborhood.
• Backpack the PCT. I'd like to have a very large cushion, so that I don't need to stress about being unemployed on this trip.
• Downgrade my hours (in the future) to help with caretaking of my extended family.

When did you start saving seriously? How has your savings strategy changed over the years?
I've always loved personal finance. I started seriously scrimping in high school, but I didn't have much of an income until I started my first full-time job.

I'd say over the years, I've become much less strict with sticking to my spending “categories.” I now mainly focus on my cash flow and sticking with my monthly savings. I've become more willing to spend on nice dinners and travel. In years when I expect large expenses, I set up sinking funds so that I set aside money each month.

What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
Renting a house with roommates. This saves me a ton of money, while allowing me to have a backyard and loads of common space.

Do you have an estate plan in place? A trust? 
All of my accounts have designated beneficiaries. Aside from that, there is no estate plan.

How much do you have in cash that’s available today?
$250

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

How much is in your “emergency fund,” and did you include it in the previous question?
$20,000, kept in a HYSA. I did not include it in the previous question.

How much do you have in retirement savings?
$60,000 total ($5,000 403(b), $35,000 Roth IRA)

How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
$510,000

Spending 

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

Groceries: $400
Restaurants, bars, takeout, and delivery: $300
Clothing and accessories: $20
Transportation: $15 (average monthly bike maintenance)
Rent/living expenses: $1,000
Entertainment: $30
Other major expenses: $100 (team sports); $50 average spend per month on running shoes, camping equipment, etc.
Health care – premiums and other costs: $2,000 annual premium for dental, healthcare, and vision (family of 1); $50 copay

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

Vacations – Range: $10–$2,000
Vacations – Average: $500

Charity – Range of donations: $5–$5,000
Charity – Average donation or giving amount: $500

Individual items of clothing – Range: $5–$500
Individual items of clothing – Average: Workwear $100, shoes $150, special occasion $100, basics $20

Car or other vehicle — current main vehicle: $300 (I bike!)

Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $1,000 annually if I stopped planning my vacations last minute, but I don't because my partner's schedule is less flexible and I value going on vacation with them!

Have any large medical expenses (including nursing homes) for yourself or others played a role in your financial picture?
tk

At any point in your life to date, has inheritance played a role in your money situation?
Per my earlier answer, “Most of my net worth is from family money. My grandparents started a partnership that distributions to family members every year. My parents discreetly opened a custodial account for me and deposited the annual dividends. My parents also fully funded a 529 account, which paid for my undergraduate education.”

When I turned 25, the custodial account was about $400,000.

I'd say the inherited money has had an outsize impact on my life path and net worth. I've never been in debt, so I've been able to save large amounts of money as a young professional that many of my peers are unable to do so.

How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
Past support: My parents have paid for some kind of group lodging for our extended family on planned vacations.
Present: (1) My parents currently pay for my and my siblings' AAA roadside assistance memberships, as they are complete worrywarts. (2) My mom has passed down some valuable jewelry to me for both daily use and special occasions.
Future: In the case of me or my siblings becoming parents, my parents would likely contribute to a 529 plan.

Does your family provide any non-financial support? 
My family provides a huge safety net (beyond just financial). I know that if I were to ever been in a bad financial or personal place, that I always have someone to reach out to, or somewhere to live.

Money Strategy 

Do you have a general money strategy?
Out of sight, out of mind (and vice versa). I deposit excess money into investment accounts and try to live off of the remaining cash.

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