For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader AL in the Midwest, who works as a paralegal. She noted, “I truly do appreciate anyone’s advice on what I can do better financial-wise!”
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: Midwest, MCOL
Net worth: $70,000 I think ($30,000 in retirement, $35,000 in bank, $5,000 car per Kelly Blue Book)
Net worth when started working: 16, $200; but I started my first post-college job at 22 and was -$60,000
Living situation: Rent; $1,100 per month
What does your debt picture look like?
$0! Paid off my student loans ($60,000) at age 26 thanks to working two jobs.
How did you pay for school?
I received around $1,000 a year from scholarships and worked two jobs while in college as well as after college.
Do you own or rent? How much do you pay monthly?
Home debt: Share your theories and strategies with us (including any that lead you to rent rather than own).
I am saving for a house down payment now, which is why I am currently renting!
Have you paid off any major debt?
Had $60,000 in student loans and then $10,000 in car loan. Paid it all off by age 26/27 by working two jobs and living with several roommates to cut down on rent
Have you ever done anything noteworthy to avoid or lessen debt?
Just working more than one job consistently and having multiple roommates to cut down on rent.
Savings, Investments & Retirement
How much do you save each month or year in retirement vehicles like 401Ks, Roth IRAs, and others?
$600 per month
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 am trying to save $1,000 per month for a house down payment, but it is averaging out to be more around $700 per month.
Talk to us about investments: Do you have/use a financial adviser or planner?
Do you have an end goal for saving or are you just saving for a rainy day?
House down payment, travels, and eventual retirement
When did you start saving seriously? How has your savings strategy changed over the years?
22; my savings strategy has just been making what I believe to be good decisions, such as paying off debt, renting, and not spending extravagantly.
What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
Do you have an estate plan in place? A trust?
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?
$15,000, savings account; yes I did
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?
Car is worth $5,000 according to Kelley Blue Book
How much do you spend on the following categories on a monthly basis?
Restaurants, bars, takeout, and delivery: $200
Clothing and accessories: $100
Transportation: $50 for gas
Rent/living expenses: $1,100 rent
Other major expenses: None, I would love to get into horse riding, but that is not in the budget!
Health care – premiums and other costs: $60 a month, maybe around $300 a year
What’s your spending range for these things? What’s your average?
Vacations – Range: $0–$3,500
Vacations – Average: $2,000
Charity – Range of donations: $20–$100
Charity – Average donation or giving amount: $100
Individual items of clothing – Range: $15–$100
Individual items of clothing – Average: $50
Apartment or house – Range: $500 (when I had roommates when paying off debt) to $1,100
Apartment or house – Current main residence: $1,100
Car or other vehicle – Current main vehicle: Bought used Hyundai in 2015 for $10,000; still going strong(ish).
Any other large personal expenses?
Vacations, I love traveling.
Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $3,000 a year if I stopped traveling, but I don’t because it brings me so much joy.
Have any large medical expenses (including nursing homes) for yourself or others played a role in your financial picture?
No, thankfully myself and my family have been (relatively) healthy.
At any point in your life to date, has inheritance played a role in your money situation? f
No, my family lived paycheck to paycheck growing up (and they still do now) so were not able to financially assist in any way.
How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
I will most likely need to provide some financial support to them once they retire.
Does your family provide any non-financial support?
They have helped me move in the past so I did not need to hire movers.
Do you have a general money strategy?
No debt, have a good emergency fund, and don’t bite off more than you can chew.
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 take a more balanced approach. I hire a cleaning service twice a year for a deep clean but otherwise I do things myself, but will occasionally spend for convenience/joy rather than time saved, I would say.
What are your favorite resources for personal finance?
I really don’t have any favorites, I just go with what sounds right to me, but I do read the “popular” finance books and try to stay up to date on financial issues, mainly through social media.
What advice would you give your younger self about personal finance?
I would have saved more when I was younger (16–22), went to a cheaper college or applied for more scholarships, and tried saving sooner for a house down payment.
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I love reading these, especially from middle class people!
OP, what University did you go to, what is your degree in, and what would you have done instead? If you are worried about being outed, “state flagship” and “regional comprehensive” are fine answers.
You are doing AMAZING. Good for you on making smart decisions, paying that debt off quickly, and living with (or even below) your means while saving for the next step. I took a similar path – working all through college (that I paid for myself), prioritizing loan repayment, and saving as much as I could manage before taking on the big expenses of kids and a house. Now, at 44 – no debt other than a mortgage that’s less than what I could technically ‘afford’, and I can manage daycare payments and save a little for kids’ college each month so they won’t have to drive themselves as crazy as I did in my 20’s to dig out of debt and start my Real Life. Smart decisions now are totally worth it. Great job!
Jeez, I’m a 32-year old attorney in the NE and I make 58k. I love my job prosecuting crimes against children, but it’s hard to stomach my salary.
You should get combat pay. I don’t understand why some of the hardest public service jobs are some of the worst paid.
Even in private practice I made $75k as a first year attorney. It was a very LCOL area but still. $65k seems like an amazing paralegal salary.
Paralegal salaries can vary wildly and widely. I’m a paralegal in a very niche industry with about 10 years direct experience (and another 10 years unrelated general law firm experience prior) and make low six figures with no salary cap in sight.
Canada but I have paralegals in my Federal Government office making near 100k. I think the base is above 65k.
Interesting! Have you seen your salary increase much recently? I feel like paralegals and legal secretaries are in high demand right now, so I wasn’t sure if you’re going to be looking to see how much more you might make if you job searched.
They mentioned their #1 thing you’re doing to save money is renting. I’m pretty desperate to own and see every month spent in my apartment as throwing cash down the drain. Would love to hear how I’m thinking about this wrong!
Maybe renting a smaller/less desirable apartment to save money?
Not the OP, but my take is that while renting doesn’t build equity, owning is way more expensive day-to-day because all the expenses are yours. Maintenance, repairs, utilities, taxes, insurance, etc. are all your responsibility when you own. Comparing the cost of rent to a mortgage payment alone is not a good way to evaluate things. I’m sure there are calculators out there that can factor in how the peripherals add to the total cost of ownership compared to renting, but my guess is the equity you build by owning is negated in large part by all of those related costs you pay over the years.
Oops, I meant to also add: if you consider rent alone to be like a mortgage payment, and also invested the equivalent amount a homeowner would spend on the extra stuff into an index fund for 30 years, the idea of owning a house to build equity becomes far less attractive.
There’s something to be said for being able to pick up and move easily (unless/until you find where you want to be forever). The US has a short memory and it’s not always as easy to sell a house as it is right now.
An Accidental Landlord from the Great Recession
This is very helpful information, thank you!
I think renting is cheaper than owning for, on average, between the first 5 and 10 years of owning. So yeah she’s for sure saving money. I own but would have done way better if I put my down payment in the stock market and rented something similar. You still throw lots of money down the drain in interest, plus you’re more stuck when property taxes increase or you discover you need to spend 80K to replumb the place, etc.
Home ownership is a great forced savings plan, but I don’t think it’s generally a good investment, especially with the current federal tax code. NYT and others have calculators you can play with if you’re interested in running numbers.
Out of curiosity, I took the 1800 she’s paying now as a given (1100 rent plus her 700 savings) and ran it through a calculator. If she sets aside 400/month for repairs, has relatively low property taxes, and gets an FHA loan at today’s average 30 year rate, she only would be able to spend ~ 190K on a house. I don’t know her market or yours, but that is NOT a lot of house in most places in the country.
Even here – L slash MCOL area in the Midwest – that doesn’t get you much. What it gets you is old and built badly, not “New England 1880 house that will stand for another 200 years
MCOL midwest here and $190k is a perfectly respectable home. Not in the fancy neighborhood, it won’t be a new build and will probably come with shag carpet in the basement or some other ’70s relics hanging around, and the school district might be mediocre, but it’s definitely doable. The longer commute you are willing to commit to, the more yard it will have.
I think our definition of MCOL must be different. I am in what I consider to be MCOL in the Midwest – not Chicago. And $190k is not workable and there property taxes are not especially low where I live.
If you can buy a decent home in a safe area for $190k, that’s a LCOL area. MCOL I would say is more like starter homes in the $300-500k range.
She’s in a MCOL in the Midwest. I’m in the same and $190K can get you a perfectly nice house or condo, even in the current crazy market.
Thanks for all this great info. I’ll check out that calculator. I’m currently in DC and 190K would be limiting to say the least.
As another middle class midwest paralegal, thank you for sharing your story!
If you love being a paralegal, by all means, keep on keeping on, but I got really disillusioned when I was training the first and second year attorneys who made more than me for working the same hours, and I had to bust my buns to get OT to make ends meet in the Bay Area.
As a longtime paralegal turned attorney, I really recommend that you look into transitioning into legal operations. Salaries are through the roof, many places will let you do legal ops remotely. It’s really interesting, and it pays much better and has a career path upward in a way that most paralegal jobs don’t. (There’s inherently a ceiling to paralegal jobs.) Look into CLOC (this is a trade group) and see if you can’t start learning about LegalOps by following Mary Carroll of Ironclad on LinkedIn.
You’re doing amazing with your savings and super-big hat’s off to you for being financially responsible. I really loved being a paralegal until I didn’t anymore!
It is so nice to read about someone who did not have family money to help them and worked hard to pay for college on their own. Unlike so many people I know IRL or even on this board, I had to work full time, go to school at night, and pay for it myself to get my undergraduate and graduate degrees.
I also think you should feel proud of how you are doing! Well done!
My strong suggestion is that you target buying a ‘2 family’ or dual unit building- live in 1/2 and rent the other. Do credit check on prospective tenants.
You will have serious help toward your mortgage while you build equity. Rent goes up, mortgage stays the same- and bingo you buy a stand alone house and keep renting both units. Has been a great investment for me.