Money Snapshot: An In-House Counsel Shares Her Thoughts on Her Money Strategy and Being Debt-Free
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For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader D.C. Attorney in Washington, D.C. She noted, “I like to call my money strategy ‘Dave Ramsey light.' Pay off debt, save an emergency fund, invest 15% while realizing that life is short and I don’t want my last meal to be rice & beans.”
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: D.C. Attorney
Location: Washington, D.C.
Age: 34
Occupation: In-house counsel
Income: $200,000
Net worth: Approximately $100,000
Net worth when started working: I started work at 25 with a negative net worth due to student loans.
Living situation: Rent
(Unfortunately, we weren’t able to reach D.C. Attorney for follow-up questions.)
Debt
What does your debt picture look like?
I am debt-free!
How did you pay for school?
My parents paid for my undergraduate education at a public university. I took out loans to pay for law school at the same public university.
Do you own or rent? How much do you pay monthly?
I rent; my rent is $2,718/month + $320/month for parking. I am now saving for a house down payment.
I live alone in an apartment building close to my office with amenities, a doorman, and a maintenance team just a call away. Renting just makes the most sense for me at this stage in my life.
Have you paid off any major debt?
I paid off approximately $60,000 in student loans! I was not making my current salary for much of that time so it was a struggle at times but I'm thankful to be on the other side!
Have you ever done anything noteworthy to avoid or lessen debt?
No
Savings, Investments & Retirement
How much do you save each month or year in retirement vehicles like 401Ks, Roth IRAs, and others?
I invest 6% ($1,000) per month in my 401k to take advantage of my employer match, so I'm really investing 12% ($2,000) per investing. I know I should be maxing out my contribution, but since the amount contributed counting my employer match exceeds the maximum contribution for 2021, I give myself a pass. My plan is to start contributing the maximum (not counting any employer match) in 2023 after I've met my current savings goals.
How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
None
How much do you save outside of retirement accounts?
I transfer $2,000 to a savings account on the 15th of each month. My goal is to save 10% ($20,000) so I'll apply the extra $4,000 towards a new car!
Talk to us about investments. Do you use a financial adviser or planner?
I do not use a financial advisor or planner.
Do you have an end goal for saving or are you just saving for a rainy day?
Now that I'm debt-free, my goal is to save 10% of my annual income until I have three to six months' expenses in an emergency fund.
When did you start saving seriously? How has your savings strategy changed over the years?
I paid off my student loans in December 2020 and started saving seriously in January 2021. I have been investing 6% in my 401k since I started a job with an employer match.
What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
Renting
Do you have an estate plan in place? A trust?
No
How much do you have in cash that’s available today?
$100?
How much do you have in cash that’s available in a week?
$16,000
How much is in your “emergency fund,” and did you include it in the previous question?
$16,000
How much do you have in retirement savings?
$100–$150,000
How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
None
If property values (home, car) are included in your net worth, how much are those worth?
My car is currently valued at approximately $10,000 and I plan to trade it in for a new car in the next few months.
Spending
How much do you spend on the following categories on a monthly basis?
Groceries: $400
Restaurants, bars, takeout, and delivery: $400
Clothing and accessories: $200 for my work wardrobe, $200 for my weekend wardrobe
Transportation: I don't currently have a car payment but I did just order a new car. The new car cost me $50,000, and I'll trade in my current car, valued at $10,000, and pay $4,000 cash. I don't know what my new payment will be, but I'll probably pay $1,000/mo. to pay it off as quickly as possible.
Entertainment: My parents pay for the family Netflix account and I will occasionally sign up for other streaming services to watch a particular show. Right now I’m paying $4.99/month for Peacock Premium to watch Below Deck and $15.85/month for Audible, but both are essentially covered by my $20/month Amex credit for digital entertainment. I don't track what I spend on books because I'm a big reader and it's just better that way.
Health care – premiums and other costs: I pay $125/month for my health insurance, and my glasses and contacts cost around $600/year. I go to the doctor and eye doctor once/year and dentist twice/year.
What’s your spending range for these things? What’s your average?
Vacations – Range: What are those? In all seriousness, though, the last vacation I went on was with my family to Maui pre-pandemic, and my parents paid.
Charity – Range of donations: My goal is to donate $1,000/month to charity. Rather than set up recurring donations, I like to decide where to give each month based on what's going on in the world. This month [August 2021], I gave $500 to Afghanistan and $500 to Haiti.
Any other large personal expenses?
I spend approximately $50/month on dog food/treats/toys and $400/year for my dog's annual checkup. My apartment charges a $500 non-refundable pet “deposit” and $75/month for pet rent (included in the rent figure quoted above). Our building has a dog park and dog spa so the pet rent is actually worth it. He did recently have a $1,000 surgery and I felt really thankful that I was finally in a position that such an expense didn’t derail my savings goals, I just had a higher-than-average credit card bill that month.
I also budget $200/month for personal care products (haircare, skincare, makeup, etc.), $200/month for personal care services (haircuts, facials, massages, mani/pedis), $200/month for workout studios + clothes, and $200/month for apartment decor. So $2,000/month “fun” money [including the $400/mo. for clothes noted above].
How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
My parents no longer support me financially but my dad assures me all the time they're still my safety net should I need one!
Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I am fairly intentional about my spending, if I'm spending my money on something, it was a conscious decision to do so.
At any point in your life to date, has inheritance played a role in your money situation?
I thankfully haven’t received my inheritance yet, but I would say it still plays a role in my money situation. I don’t save and invest quite as aggressively as I might if I weren’t expecting such a large inheritance from my parents. Still, I hope they live forever, so I do make an effort to remain debt-free, save 10% of my income in an emergency fund, and invest 6% (12% with match) in my 401k, so I’m not exactly cashing out yet either.
Does your family provide any non-financial support?
Being single in your 30s can feel quite isolating, and my parents provide a lot of the emotional support that (I imagine) a partner might.
Money Strategy
Do you have a general money strategy?
I like to call my money strategy “Dave Ramsey light.” Pay off debt, save an emergency fund, invest 15% while realizing that life is short and I don’t want my last meal to be rice & beans.
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 spend money on a cleaning service twice/month and car wash once/month. I also use meal delivery kits instead of going to the grocery. I wouldn't say I don't have time for these things, though; I simply don't like doing them. For example, I like doing my laundry and bathing my dog so I do those things myself.
What are your favorite resources for personal finance?
Dave Ramsey. I recognize his delivery is not for everyone but his general principles were really helpful for me.
What advice would you give your younger self about personal finance?
You'll thank your parents one day!
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I appreciate this entry–it may not be the most aggressive savings/investing-wise, but I think its fairly accurate for a 30-something single woman in DC. Savings, a plan for buying a home eventually, but still living her life. She’s right about how being single can be isolating, so continuing to go out and invest in some self care helps a lot with balancing your mental well being. Thanks for sharing!
Yep, 100% agree with this. It reads as very honest/true to me based on my friend group, where your finances really start to settle into a good place in your mid-30s.
I think this reads like a realistic approach for someone who anticipates a big inheritance. Those who are not in that position would be much more concerned about maxing out retiement accounts.
Not necessarily! I am not at all planning on an inheritance and while I max out my 401k and fully fund an IRA each year (and my HSA), I am just not interested in panicking about it when I could get hit by a bus tomorrow. I am 42 and have about $220k in retirement funds and that’s still leaps and bound ahead of most of America so I am enjoying my life and not worrying about it on a day to day basis. This approach may not work for you, but there are plenty of us out there. I also don’t plan to live much past 80 or earlier if dementia starts to appear which I assume it will given my family history.
Thanks anon, I didn’t think I was doing *that* bad and I found your comment very reassuring :)
Thanks for your comments! I was living in a 400 square foot studio, driving a v practical paid-off car, and didn’t take a vacation well into my early 30s so I’m enjoying having a bit of breathing room in my budget now now. I definitely think my priorities would be different if I was married and have children and there is certainly a “my life looks different than I thought it would at this age so I’m going to try to enjoy the one I have” element to my spending decisions.
I would be interested in seeing contributors mention their career or salary progression. Obviously someone who clerked for two years or work
Not maxing out the 401k in her mid 30s but $2000/month fun money + $1000/month car payment coming up. Uh?? Hope her parents will provide her a down payment on a house/apt eventually or else it’ll be – OMG can’t afford to buy this place is soooo unfair.
I was giving myself a pass on the 401k because, with my employer match, I actually *do* contribute $25,200/year to my 401k which is over the $20,500 limit for 2022 but a few of these comments are making me re-think that I should be maxing out independent of the match so thanks for that perspective! And lol I actually don’t remember writing that I was saving for a down payment, I must’ve felt that’s what I was *supposed* to say when filling this out because I’m (obviously) not *actively* saving for a down payment in DC of all places :) owning just really isn’t a goal of mine while single which makes me feel like the opposite of an independent woman but its the truth!
Not to rain on your parade, but the combined employer/employee limit for a 401(k) plan is $61,000 in 2022. The $20,500 limit is the employee contribution limit for those under 50.
Lol I meant the individual max but point totally taken :) after paying off my loans last year I told myself I’d give myself until the end of 2022 to save 10% while investing the bare minimum to meet the individual max with the match but you all are helping me realize I could and should just max out before too much lifestyle creep sets in.
I was thinking the same thing;). … I really appreciate her honesty in sharing though.
This is truly the most D.C. thing I’ve ever read. Saving for a down payment but buying a $50,000 car that you will park in a building garage for $300+ a month? Yikes.
Commented above but not *actively* saving for a down payment (obviously;) I guess I felt like I was supposed to say I was?
OP, you might have a chance to cancel your $50k car purchase given the high demand for new cars. If so, I’d strongly consider that option. My $22k German SUV, bought used with cash, is often mistaken for new by friends. That $1k monthly payment could do so much more for your future, and spending 50% of your net worth on a car is objectively foolish. David Ramsey would agree.
BIG kudos to you on your charitable donations though:)
Thanks! I definitelyyy gave it a thought as these comments started rolling in :) but you know what? I’ve wanted this exact car for 16 years now, I’ll have it for at least 10 years, and I (perhaps foolishly) feel okay with where I’m at right now? I’ve been single for almost a decade, am definitely having the thought that kids might not be a possibility for me at this point, and can’t imagine retiring because work feels like all I have sometimes. I do appreciate your advice though!
You’re doing fine – enjoy your new car!
I’m saving for a much more expensive one (Rivian – drool), so no shade from me. You do you!
I had to google what that was…niiiice! I’m excited for you to get it one of these days :)
Lots of harsh commenters out there. You have a great job and are debt free; no reason to criticize the car choice.
Happy to hear another rette follows Dave Ramsey to some extent. My takeaway with him is that a) he is smart, though his philosophies do not and cannot apply to every person – you can pick and choose; b) he’s kind of inspirational to me, although my family will not be following the baby steps (ie paying off mortgage early – that money will go into 529s). As a suburban mom, I definitely fall into that trap of longing for a luxury vehicle. But listening to DR brings me back to Earth; c) I’m fascinated by his take on college. On the one hand, great, no need to deal with expensive tuition, on the other hand, I was gobsmacked when I heard him tell a woman with an ambitious son not to send him to a prestigious college for an Econ degree, when the family could well afford it. I’m just not willing to be adopt that stance.
Dave Ramsey needs to go away. His foundational tenets were/are helpful, can’t deny that. But the person DR seems like a crusty old patriarchal white man. Do we really need to support that?
I nominate some women for you to read if you want more savvy inspiration for the next chapter in your financial journey. Michelle is money hungry (personal finance for regular people) , b*tches get riches (hilarious, feminist), or Donna freedman (super frugal, but interesting to see how clever she is) . That’s the tip of the iceberg. Check out motley fool all star money article highlight to get a taste of the myriad of personal finance bloggers and writers out there. There are so many other and more interesting options available if you like ingesting personal finance content.
If you need a male telling you what to do with money try J.D. Roth of get rich slowly. Far better advice and information to be had, I assure you.
OP- I’m ever worried about retirement and your 30s is an excellent time to focus on upping your contributions so they will compound over the next decade. You get to make your own choices and if you know you have an inheritance that definitely is a plus.
Enjoy your new car :) I have purchased two new cars, paid them off early and really enjoy driving what I like.
I’m very impressed with your goal to give a thousand a month in donations or nonprofits- rock on! Also congratulations on paying off your debt. That is difficult. Well done!!
His delivery is definitely my least favorite part but if he appeals to and therefore helps his target audience, I won’t fault him too much ;) But thanks so much for the other recs, I’ll have to check them out! This exercise has helped me realize I should be at least maxing out the 401k so I do really appreciate the comments, especially nice ones like yours!
I definitely wouldn’t have gotten the luxury car if I had college to fund, but your kids will so appreciate your help in that area! My parents paid for my undergrad and it was a big help! They did make me pay for law school even though they had the $ because they didn’t feel I took my undergrad education seriously enough (they were right) and wanted me to have some skin in the game. I actually asked my dad what he thought before buying the car as I was considering 4 options and this was the most expensive and he encouraged me to go for the one I really wanted. Which is funny considering he’s never driven a luxury car himself but in his 60s is considering his first. Maybe once you get the kids through college!