Money Snapshot: Manager at a Tech Startup in D.C. Shares Her Thoughts on College Choices and Practicing Moderation
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For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader M in Washington, D.C., who works as in a management role at a tech startup. She noted, “I'm fortunate enough to be able to afford almost anything I want, but I don't make enough to afford everything. So if I splurge on a new designer pair of shoes one month, I'll trim back substantially on going out to eat or the like.”
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: M
Location: Washington, D.C., area
Age: 27
Occupation: Tech — I work in a management role in a startup
Income: $250,000 + $50–75k bonus + equity (various amounts — I work at a startup at the moment, so whether this turns out to be valuable is very TBD)
Net worth: About $800,000. This is a mixture of equity in my condo, stock/investments from previous jobs, retirement accounts, cash savings, and personal investment accounts.
Net worth when started working: Age 19 — I finished both high school and college early (college in two years) and started work. I don't remember my exact net worth at the time, but suffice it to say it was within $10k of $0. I graduated without any notable debt — no student loans.
Living situation: No partner; actively dating. I bought a home ~6 months or so ago, but it was extremely delayed new construction, so I walked into quite a bit of equity.
Debt
What does your debt picture look like?
Just a mortgage — $413,000 left (I have no intention of paying this off early)
Do you own or rent? How much do you pay monthly for your house or apartment?
My mortgage payment is about $2,000/month in principal & interest, $550/year for insurance, and about $200/month in property taxes.
How much money are you spending each month to pay down debt?
$2,000 (see above)
Home debt: Share your theories and strategies with us (including any that lead you to rent rather than own).
I own. I expect to be in D.C. long term, and it just made more sense. I bought in an up-and-coming neighborhood and have built a decent amount of equity that way.
How did you pay for school?
I received a full-ride academic scholarship. My parents made quite a bit of money but had this idea that I could work to pay for school, so I qualified for exactly $0 financial aid at the top schools I was accepted to and was facing $200k+ in debt. I opted to go to a state school that gave me a full ride, including housing, and to graduate quickly. As a PSA: If you're a parent and you make so much that your kid won't qualify for any aid, and you have deluded notions that they can pay for school by working because you did, check yourself. While I've done very well for myself, I definitely mourn the opportunities I might have had had I been able to attend some of the top schools I worked so hard to get into.
Have you paid off any major debt?
Just a car loan, but it was pretty routine.
Savings, Investments & Retirement
How much do you save each month or year in retirement vehicles like 401Ks, Roth IRAs, and others?
I max a 401k and backdoor Roth IRA each year.
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 contribute an additional $2,000–$5,000 (it varies widely) per month to savings and non-retirement investments.
Talk to us about investments. Do you have/use a financial adviser or planner? Do you have a favorite index fund where you stick everything? Are you doing a bond ladder or other asset allocation strategy (like value funds or target retirement funds)?
I don't — I do it myself. I generally lean toward index funds and give myself a bit of money in Robinhood each month to play with buying individual stocks.
Do you have an end goal for saving or are you just saving for a rainy day?
I don't, though I'd like to give myself flexibility down the road, and I think money does that.
When did you start saving seriously? How has your savings strategy changed over the years?
Pretty much since I finished college — so, 19. I started with building up cash savings and slowly got into investing.
What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
I try to practice moderation generally. I'm fortunate enough to be able to afford almost anything I want, but I don't make enough to afford everything. So if I splurge on a new designer pair of shoes one month, I'll trim back substantially on going out to eat or the like (all pre-COVID references; right now I basically just wear Amazon slippers).
Do you have an estate plan in place? A trust?
I do have a simple will in place, and I have a healthcare power of attorney that designated my lifelong best friend rather than the default of my parents. They have very different religious views than I do, and I worry that would affect their decisions.
How much do you have in cash that’s available today?
$10,000
How much do you have in cash that’s available in a week?
$80,000 in cash, but I could always liquidate some safe Bond investments if push really came to shove.
How much is in your “emergency fund,” and did you include it in the previous question?
$80,000, which is almost a year of living expenses (assuming I'm spending conservatively)
How much do you have in retirement savings?
That's specific to retirement? About $150,000. I've been maxing an IRA since I started working, and the same for a 401k when it's been available (not true everywhere I've worked).
How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
$350,000 — some of this is personal investments, some is from stock grants and options from previous jobs.
If property values (home, car) are included in your net worth, how much are those worth?
My condo is now worth about $650,000 (bought for $550,000 in an up-and-coming area new — first put down a deposit almost two years ago).
Spending
How much do you spend on the following categories on a monthly basis?
Groceries: $400
Restaurants, bars, takeout, and delivery: $500
Clothing and accessories: $500. Varies widely though — sometimes $0, sometimes thousands. I've been trying to spend more per piece and buy less.
Transportation: About $150 between gas and insurance. Lower right now since I'm not commuting to work.
Rent/living expenses: $2,000 mortgage payment, $550/year for insurance, about $200/month in property taxes
Other major expenses: I have a dog and spent (pre-COVID) $400–$500/month between daycare and walks (and gifts for petsitters).
Health care – premiums and other costs: I'm really lucky — my current company 100% covers my premiums.
What’s your spending range for these things? What’s your average?
Vacations – Range: I play the points game aggressively, so usually have flights and hotels for free (I also, pre-COVID, traveled quite a bit for work), so I would generally get hotel/flight for free and then splurge on special meals while traveling.
Charity – Range of donations: $10–$2,000/donation
Charity – Average donation or giving amount: Generally do $200 or so per month in recurring donations, and then I'll do larger donations throughout the year. I spend a lot on animal rescue charities (a cause close to my heart and my rescue pup), so I'll do things like go in on a table for my favorite's annual gala.
Individual items of clothing – Range: $10–$500
Individual items of clothing – Average: $150 or so
Apartment or house – Current main residence: $550,000
Car or other vehicle – Range: $10,000–$40,000
Car or other vehicle – Current vehicle: Current vehicle is a bit under $40,000. It's the most expensive car I've ever bought, and it was a splurge for me, but I really enjoy driving it, so it's been worth it for me.
Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $400/month if I stopped eating out, but I don't because I LOVE trying new restaurants (or restaurants' takeout at the moment…).
At any point in your life to date, has inheritance played a role in your money situation?
No — my parents refused to pay for college, and I don't expect an inheritance — they've been clear they're not leaving it to me.
How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
Not after I left for college.
Money Strategy
Do you have a general money strategy?
I try to practice moderation. It's like eating — moderation in everything.
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?
Absolutely spend money to save time, within reason. For me that's a dog walker and housecleaner (or was, pre-COVID). I'd imagine that'll expand as I get older and have children.
What are your favorite resources for personal finance?
I use Mint regularly, and I browse the Reddit Personal Finance threads quite a bit.
What advice would you give your younger self about personal finance?
Stop buying things on sale just because they're on sale! The amount of money I wasted shopping the J.Crew sale rack is… nauseating.
Icons via Stencil.
“As a PSA: If you’re a parent and you make so much that your kid won’t qualify for any aid, and you have deluded notions that they can pay for school by working because you did, check yourself. While I’ve done very well for myself, I definitely mourn the opportunities I might have had had I been able to attend some of the top schools I worked so hard to get into.”
I would strongly encourage all parents to keep abreast of the college landscape: admissions, how test scores are used, what matters to an admissions committee, how much school costs, how aid is calculated, how feasible it is to work through (which depends a lot on the job and the school), how much debt students have, and the actual real numbers of how much students make when they graduate.
I think that this is a great idea. How do you go about doing it though? When parents express anxiety about this, they really get reamed out here. Working moms seem at a particular disadvantage b/c they don’t have the social networks readily available to just observe / absorb this from people who may have older kids going through this. Never mind those of us who are first-generation, where our siblings and cousins (and now, their kids) aren’t really a part of that world (community college has rolling admissions and you can work b/c you are likely just a PT student who will be working slowly toward a degree and living at home).
Right?! People try to ask about it here and get called anxious and OCD.
I really appreciated that hypothetical from last week – the various options of schools + options of pay (full load, half scholarship, etc). That poster got FLAMED. I think it’s an exceptionally relevant conversation to so many of us.
She got flamed because she presented it as a current decision and not a hypothetical.
I think that the subject gets flamed generally, but the level of parental anxiety does not seem inappropriate. I don’t hear that IRL, but I think that here, people type their feelings that they’d never say out loud.
Anxious is the only emotion that makes sense. I remember when I had a newborn waiting for her SS# to arrive so I could get a 529 set up for her. Our generation largely has no pensions or other real safety net in old age like prior parent generations often had and to pay for college on top of an adequate retirement fund seems to mandate staying in high-paying miserable jobs as long as possible b/c we could actually outlive any $ we save.
College Confidential. Every so often, look up how much your flagship state U costs and run things through a Net Price Calculator at a few private schools. Keep up with your own alma mater. It’s one data point, but it helps you understand how much things have changed if you see the enormous changes at your own school.
If you do write on this board, do not write obsessively about one particular topic over and over. Maybe ask for general thoughts on how much people are saving, when they are starting to save, what area of the country they are in, do they expect their own kids to contribute (ex., 10% of the total).
People are surprised that I have a (small) 529 for our toddler because they think you can work your way through. They think Harvard gives merit aid. They don’t think about using 529 money for graduate school. They say that you shouldn’t fill out a FAFSA unless you’re poor because $100k is “making too much” to get need-based aid at schools like Northwestern.
On that note, IIRC DC residents could qualify for in-state tuition at many state schools throughout the US. I moved from there a while ago, but we opened up an office there and I was weighing moving back (my in-laws would be close enough for mutual help, so not just for this, but it would put things in favor of DC vs MD or VA because college for two kids will be $$$; I do realize that DC public schools can be iffy but we have friends with kids at a charter school that seems to be OK).
Starting early for saving us so important. As a reference point, my child was born in 2019. Our CFA ran the numbers on kiddo attending my alma mater (small private school). Provided kiddo wants to go there and college costs continue to increase at the same rate, it is estimated to be $185,000 for room and board for one year. Who knows what will happen with college costs in the next decade plus, but that was certainly eye opening to me!
I have funded a 529 modestly, with a goal of funding 2 years at State U (and figuring out the rest). This year, I think we are using funds (so not giving a lot to the 529) b/c we think it would be better to pay for 1:1 math tutoring after the train wreck of virtual learning in middle school, which I feel like even the sharpest most motivated kid would struggle to self-teach.
Harvard doesn’t give merit aid but plenty of very good schools like Wash U, Johns Hopkins and Swarthmore do and a kid who can get into Harvard would likely get some scholarships at those schools (for reference I got a free ride at JHU and I did not get into Yale, the only Ivy I applied to, but I did get into MIT and Stanford).
I think part of the problem is thinking that you have to go to the absolute best school you can get into. I get that a Harvard caliber kid is likely going to be bored at State U. But there are a lot of schools between State U and Harvard and a kid who can get into Harvard can likely find a private college that’s a good fit academically and socially where they don’t have to pay full freight.
I was being very literal: I know several people who think that Harvard, specifically, gives merit aid. Yes, many outstanding schools do, but many also consider the admission to be the merit, and aid is distributed purely based on financial need. The problem is that it leads to all sorts of chaos when their kids are applying.
I get the point you’re trying to make, but as a WashU alum, I’d point out that WashU offers less than 30 full tuition scholarships for an incoming class of almost 2,000. I really don’t think that’s anything resembling a guarantee. The only schools, in my experience, that offer consistent full-tuition merit based scholarships are state schools and lower ranked private schools.
Agree with anon at 3:56. I got into WashU and was offered…a whopping $500 work study stipend. I had a 35 on my ACT, took 10 AP classes throughout high school and scored 5s on 8 of the tests, and my GPA was well over a 4.0. But my mom had recently come into her inheritance (which was essentially their plan for retirement), so all admissions saw was $$$. I ended up having to go to a lower-ranked private school that was actually able to give me the merit-based aid I needed.
Anon at 3:56 I wasn’t saying it’s easy to get a full ride at Wash U or a similar school. But it is possible, and I imagine it’s even easier to get some merit aid that is short of a full scholarship. If you’re talking about private school $50k tuition bills for 4 years even partial assistance can be a huge savings.
I just wish I had thought about this stuff more critically when I went to college. I think lots of overachieving kids get laser focused on certain schools when it probably makes sense to approach it as more of a cost-benefit analysis and find a school where the price you pay is worth the experience and connections. And it’s not a dichotomy between Harvard and State U, there’s a whole spectrum of schools in between and most schools that aren’t Ivy/MIT/Stanford do offer some merit aid.
I really liked the book “The Price You Pay for College” by Ron Lieber as a window into the process and some practical guidance.
To the subject of this:
One thing colleges use to get people to pay $$$ is that 1) alumni networks are more “quality” and 2) entry-level recruiting for our students is better / more than at other schools. You seem to be doing really well! I get that some schools are better to be AT and some schools are better to be FROM. And my parents definitely couldn’t afford to send me where I got in with no aid offers, so I went to State U also. I always wonder though what might have been. Do you think you’ve done really well compared to your State U friends and peers or about par for the course? I have a feeling that State U may have more variety among students (less homogenous than Private U), but your individual hustle is what matters most both out of the gate and over time. I hope so, at least, albeit selfishly.
OP, it sounds like you are doing great! My parents were so disorganized and weird about college I also never got to go to anywhere close to some places I was accepted, but like you I made the best of it. At least we learn self reliance :)