For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader P in San Diego, CA, who works as a Biglaw staff manager. She noted, “I’d like to retire at the latest by the time I get to age 55 (in nine years), or earlier if the market cooperates. I need to get to a minimum $4M net worth to pull that trigger. If I continue on this path and my projections play out as I’ve planned, I should have more than that by age 55, so there is a strong chance I can pull the trigger even earlier.”
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.
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: San Diego, CA
Occupation: Biglaw staff manager
Income: $185,000 plus bonus; bonus is usually around $15,000 and paid in December.
Net worth: $2M
Net worth when started working: I started working full time in 1999 at age 24. My net worth at the time was pretty much $0 as I didn’t have much saved up, but thankfully I did not have any student loans.
Living situation: I live in a single family home (4BR/3BA) at 2,631 square feet, by myself.
What does your debt picture look like?
$613,000 in a mortgage, $25,000 in a personal loan, and $23,000 in a 401K loan. No car loans or credit card debt.
How much money are you spending each month to pay down debt?
I pay principal and interest of about $2,500 a month plus an additional $500 towards the principal. Aside from the mortgage extra payments, I just make the regular payments on the other two loans. I do have plans to pay down the personal loan in 1–2 years’ time.
How did you pay for school?
I paid for school via scholarships, grants, and part-time work. I went to an in-state school (UC San Diego), where the costs were thankfully low at the time.
Do you own or rent? How much do you pay monthly?
Own. Principal and interest is $2,500/month. This is without property tax and insurance.
Home debt: Share your theories and strategies with us (including any that led you to rent rather than own).
My mortgage (principal + interest) is about $2,500. Property taxes and insurance add another $950/month to that. I do not have a jumbo loan for San Diego, CA, as the balance is $613,000. The home is worth $1.1M, so there’s a quite a bit of equity there and the LTV [loan-to-value ratio] isn’t bad. My loan is a fixed 30-year mortgage at 2.5%.
I opted for the 30-year mortgage as it gives me more flexibility with minimum required payments. The 15-year mortgage would have only saved me an additional 0.25% in the APR but I’d be locked into a much higher payment. As it is, I’m currently scheduled to pay off the mortgage in 21–22 years anyways and can accelerate it with extra principal payments if necessary. But it’ll be my choice and the flexibility is valuable.
Have you paid off any major debt?
I paid off about $45,000 in credit card debt in two years (2019–2020).
Have you ever done anything noteworthy to avoid or lessen debt?
None, except to have a laser-like focus on paying off the credit card debt. That means saving where I can and applying the extra cash to pay it off. But that’s not really noteworthy… more common sense I suppose.
Savings, Investments & Retirement
How much do you save each month or year in retirement vehicles like 401Ks, Roth IRAs, and others?
I max out my 401K and my Roth IRA within the first 2.5 months of the year. I have a healthy emergency fund so I can afford to front-load my savings, so it doesn’t really work out to a neat monthly amount. My income is too high to save directly in a Roth IRA so I take the backdoor Roth approach (save in the non-deductible traditional IRA and then immediately transfer it to my Roth IRA).
How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
How much do you save outside of retirement accounts?
I’m currently saving $550/month in a taxable brokerage account. It’s set up to transfer the amount automatically and buy my investments at the allocations I’ve set up.
Talk to us about investments. Do you use a financial adviser or planner?
No, I do not use a financial adviser or planner. I do everything myself. The bulk of my investments are in individual stocks that I’ve carefully selected. I gravitate towards value stocks on that front. I do have some funds in ETFs but it’s only a small allocation of my portfolio (about 25%). That ETF is purely the XLE energy ETF as I believe energy stocks got badly beaten down during the pandemic and they’re poised to rebound as we slowly get back to normal.
We asked P for her advice for readers who don’t have experience in selecting stocks:
I would advise them not to select stocks. Rather, most individual investors are better served by selecting broad asset classes (stocks, bonds, commodities, REITs) and finding the right allocation that they can stick through thick and thin. Along that line, I would recommend the books The Little Book of Common Sense Investing by John C. Bogle and All About Asset Allocation, 2nd Edition, by Richard A. Ferri. If you’d still like to select individual stocks, there is no better book than Security Analysis by Benjamin Graham.
Do you have an end goal for saving or are you just saving for a rainy day?
I’d like to retire at the latest by the time I get to age 55 (nine years), or earlier if the market cooperates. I need to get to a minimum $4M net worth to pull that trigger. If I continue on this path and my projections play out as I’ve planned, I should have more than that by age 55, so there is a strong chance I can pull the trigger even earlier.
When did you start saving seriously? How has your savings strategy changed over the years?
I’ve been fortunate in this regard as I started saving pretty early in my career and just kept it through thick and thin. I didn’t max out my savings immediately but by year three of full-time employment I did. That combination of doggedness and time worked out really well in my favor.
What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
Not to buy stuff I truly do not need.
Do you have an estate plan in place? A trust?
I do have an estate plan in place, as my projections have me exceeding the federal estate tax exemption by age 61 or so. My main estate planning vehicle is a living trust. I learned through the process that I knew a lot more about estate planning than a lot of the attorneys I met. An informed client asking really probing questions really helps to guide towards a desired outcome.
How much do you have in cash that’s available today?
How much do you have in cash that’s available in a week?
Including the above, about $65,000 if I liquidate some after-tax investments as well as take out my Roth contributions.
How much is in your “emergency fund,” and did you include it in the previous question?
$40,000 — it’s in the cash question I answered above. The cash is kept in a high-yield checking account earning 1% APY.
How much do you have in retirement savings?
How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
If property values (home, car) are included in your net worth, how much are those worth?
My home is include in my net worth number. It’s about worth about $487,000 in equity.
How much do you spend on the following categories on a monthly basis?
Restaurants, bars, takeout, and delivery: $40
Clothing and accessories: $0
Rent/living expenses: $2,500
Other major expenses: $25/month towards my pet, a French bulldog. I probably spend another $100/month on hobbies but it’s lumpy. This mean I may have months with $0 spend but then I spend $500 on a new camera lens.
Health care – premiums and other costs: I have employer-subsidized healthcare so I pay $200/month towards premiums and maybe another $10/month towards medications/co-pays.
What’s your spending range for these things? What’s your average?
Vacations – Range: $0–$15,000 per year
Vacations – Average: $7,500
Charity – Range of donations: $0–$500
Charity – Average donation or giving amount: $300
Individual items of clothing – Range: $0 — I rarely buy clothes anymore
Individual items of clothing – Average: $0
Apartment or house – Current main residence: $2,500 monthly minimum payment + $500 extra principal
Car or Other Vehicle – Last purchase/current main vehicle
Purchased a new 2012 Toyota Camry Hybrid in 2012 for $24,500 + taxes.
Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $1,200 a year if I stop spending on photography/electronics, but I don’t because it makes me happy.
If you own, how much did your home (permanent residence) cost?
At any point in your life to date, has inheritance played a role in your money situation?
No. I grew up poor so no one inherited anything. But this next generation coming up will have quite large inheritances from me and my brothers.
How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
My family provided zero support. I support my family with little things that amounts to may $250/month (paying for mobile plans, my parents’ landscaping needs, etc.)
Do you have a general money strategy?
Spend a lot less than I bring in and wisely invest the rest.
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?
Time is more important than money. You can always make more money; you can’t make more time. I would spend money to save time (I have a landscaper and a pool person, for example). When I donate, I donate money rather than time. My time is very valuable and I do not squander it easily.
What are your favorite resources for personal finance?
Anything by John Bogle. The writings of Warren Buffett. Numerous YouTube channels… way too many to mention individually. I listen to the FIRE folks but tend to ignore most of them except the fatFIRE group since in my opinion they waste too much time to save a penny and that’s just not appealing.
We were curious about P’s thoughts on fatFIRE, so we asked her to elaborate:
The only drawback I see is that you do have to sacrifice a bit in the present to save for your future. It’s all a balance and trying to find that balance may be difficult. Friends that are your age may not understand why you don’t want to go out as often or splurge on material things. What works for me is to remind myself that I’d rather be rich than appear rich.
What advice would you give your younger self about personal finance?
Save more and start saving earlier. Take advantage of Roth plans (IRAs and 401Ks) when your income is low, as your taxes will be as well and it’ll give your money even more time to grow tax free. Don’t buy “stuff”… and it’s all pretty much just stuff. Enjoy experiences but be judicious even with them.
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