For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader E in Denver, CO, who works as an aerospace engineer. She noted, “Sometimes I think I jumped into owning [a home] a little bit before I was fully ready (still a little overwhelmed by home maintenance, etc.), but overall I like having the control, and my house has already appreciated $~40,000 after two years, so it seems like a good idea. I took out a $270,000 loan at 4.5% and then recently refinanced to 3.725%, still potentially looking to refinance again.”
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
Location: Denver, CO
Occupation: Aerospace engineer
Income: $95,760, plus $650 a month from renting a room in my house
Net worth: $500,000
Net worth when started working: Started full-time work at 22 with a net worth of about $220,000 — $200,000 from my leftover college fund and $20,000 from working internships and part-time research in college.
Living situation: Own my home. $1,206 for principal and interest, plus $2,700 annually for property tax and $1,500 for home insurance. Plus about $~100 monthly on utilities.
We were curious about what E’s parents thought about her not needing her entire college fund, and she explained:
I don’t know if my parents had very strong feelings about it. Mostly making sure it wouldn’t all go to my head. When we transferred the account over, it was just this very matter-of-fact thing and my dad was sure to emphasize that the account was legally mine and not to spend it all in one place. And my mom mentioned probably not wanting to go around telling everybody about it as it could lead to them maybe treating me different or something. I’ll add too that my dad has always been a hair disappointed that neither of his kids got a PhD (I just got a master’s) and he’ll periodically mention that him and my mom would help support me again if I wanted to go back and get it. And I guess I’ll add that I was encouraged to not really think about the cost of the school when my making my college decision. (Although I was encouraged to apply for lots of scholarships.)
What does your debt picture look like?
Only debt is the mortgage ($260,000), which I won’t pay off for another 29 years lol.
How much money are you spending each month to pay down debt?
$1,206 per month towards my mortgage
How did you pay for school?
My parents paid for school. In addition, my parents also bought me a car as a graduation present (around $20,000) that I still drive. I’ll add that the leftover college fund was a UGMA account, so my parents legally had to give it to me. They had saved to pay for [my education] through grad school at private universities and then I went to an in-state school and got large scholarships and then lived at home for grad school.
Home debt: Share your theories and strategies with us.
I own. I live in a competitive market where houses and rents seem to just be going up, and with a lot of new people still moving to the area, that trend seemed likely to continue. I didn’t have the strictest budget when house shopping but still stayed way under what I was approved for. I also used my leftover college fund, which had grown since graduation, for a large down payment to keep monthly mortgage payments low. I then also rent out one of the bedrooms to afford my expensive hobbies.
Sometimes I think I jumped into owning a little bit before I was fully ready, too (still a little overwhelmed by home maintenance, etc.), but overall I like having the control, and my house has already appreciated $~40,000 after two years, so it seems like a good idea. I took out a $270,000 loan at 4.5% and then recently refinanced to 3.725%, still potentially looking to refinance again if I can find a no-closing-cost option with a lower rate, but we will see. I am not currently looking to pay it off early, as I have a low rate and would rather put more towards retirement where it should get a better average rate of return.
We also asked E about her experience renting out a room in her home:
My experience renting out a room has been very similar to just having a roommate. The only odd things are that I’m much more particular about my roommate trying to fix anything around the house than I would be if I didn’t own it and am generally more uptight about the upkeep of the house than they are. And that I do more or less have veto power in any roommate argument. They’re on a month-to-month lease so we both know that if anything went horribly wrong I have the power to make them leave within the month. But luckily we get along pretty well so haven’t really run into that. Although it can be more cautious going into discussions because there is this sort of uneven power dynamic where it would be harder for them to say no to me than the reverse.
Have you ever done anything noteworthy to avoid or lessen debt?
I did put down a fairly significant down payment on my house ($250,000 for a $520,000 house), and in some ways I might have gotten a better return on that money leaving it in the market, not to mention paying the capital gains tax. But I wanted a lower monthly payment.
Savings, Investments & Retirement
How much do you save for retirement?
16% into a pre-tax 401k ($~14,000, plus 10% company match of $~9,500). $325 a month towards a Roth IRA, plus any dividends from my taxable account, and then I contribute at the end of the year to bring it to the $6,000 max.
How much money do you allocate to other tax-savvy investments/accounts?
$50 a week to HSA, which — plus what my company puts in — puts me at the individual max for the year.
How much do you save outside of retirement accounts?
I save $700 a month towards an emergency fund in a high-yield savings account. I also monthly save in the same account towards my property tax and my home and auto insurance. This is set on an automatic monthly transfer.
Talk to us about investments.
I am all about the low-cost index funds and set it and forget it. I have a good balance of equities and bonds, and domestic and international stocks. Part of my company’s 401k match comes as company stock, and I periodically transfer that to index funds. I do not have a financial advisor as I’d rather not pay someone for something I can do better myself. I will on occasion crowdsource options from a site called Bogleheads.
We asked E whether she learned about investing from her parents, from online resources, or elsewhere, and she said this:
I learned a little bit from my parents, mostly my dad, but only in general terms, like it was better to use passive funds versus active funds because passive do as well on average without the high fees. And my leftover college [fund] was invested in passive index funds, which was a good starting point. I then also do a fair bit of research online and feel comfortable in my ability to do so.
Do you have an end goal for saving or are you just saving for a rainy day?
I have a mild goal of early retirement, but mostly I just want to be prepared and feel secure. “Any problem that money can solve is not a problem if you have the money.”
When did you start saving seriously? How has your savings strategy changed over the years?
I started saving when I graduated college and started making money, but I wasn’t really deliberate about it until I started looking into buying a house and started really running the numbers of different options.
What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
I rarely go out to eat and love coupons at the grocery store. And in all honesty I have very cheap tastes haha.
How much do you have in cash that’s available today?
How much do you have in cash that’s available in a week?
How much is in your “emergency fund,” and did you include it in the previous question?
$20,000 in a high-yield savings account, counted above as money I could get in a week.
How much do you have in retirement savings?
$100,000 in 401k and about $12,000 in Roth IRA
How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
$85,000 in taxable brokerage account, mix of stocks and bonds index funds
If property values (home, car) are included in your net worth, how much are those worth?
House $~560,000, car about $12,000
See more of reader E’s thoughts on spending and money strategy on the next page!