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For today’s Money Snapshot, we talk to reader C, who lives in an HCOL area and works as an in-house consultant, on salary, net worth, debt, and more. “Our spending … seems high right now, but we’re trying not to fall into the trap of discretionary spending that is stalling our goals to save for retirement.”
We received several requests from readers to start our own “money diary” series. we asked Readers willing to fill out a form with lots of details about debt, spending, savings and more! If you want to fill out the form and be considered for a future personal money snapshotPlease Click here to submit your answer! one can see PDF of questions if you want to review them in advance. see others Personal Money Snapshot series Here.
Please note that this is a real person Unlike your usual friendly (blind-skinned, cold-hearted, greedy) blogger who has feelings and doesn’t get anything out of it – so please be gentle in the comments. Thank you! – Floor
Name: C
Location: HCOL area
Age: 47
Job: Mid/large law firm –> in-house for last ten years
Income: $220,000 base, $75,000 bonus, approx. Realized equity of $150,000 per year
Partner: Husband, age 47
Children: I have two kids. One at a private school that costs $40,000 a year; The other kid is in a public school. Also suitable for summer camps, after-school activities, sports teams, etc. We pay about $12,000 a year for it.
Household income: approximately $650,000
Household net worth: approximately $3 million (including home, retirement assets, some pensions, education funds)
Net worth when you started working: I started working out of college at the age of 22 with a negative $40,000 net worth. I studied for three years, then went to law school. When I started the business after law school, I had a negative $75,000 net worth.
Living situation: Own house, monthly mortgage payment of $5,400
Debt
How much debt do you currently owe?
Our only significant debt is (1) our $350,000 mortgage and (2) our student loans of around $30,000.
What does your debt picture look like?
My debt picture is pretty simple – we have a mortgage, smaller student loan bills, and regular household expenses. We have two kids approaching college, so we’re saving more in anticipation of paying college bills soon.
How did you pay for the school?
Since my family could not contribute financially, I went to a university based on the scholarships and financial aid available. I had some family support to help pay for the books or the occasional plane ticket home. At university I always had a job to help cover daily expenses. After college, I worked for a few years to save some money before going to law school. I choose my law school partly based on scholarships, but I’ve also been really careful not to spend too much money while studying law to minimize the credits I need to get.
Is it yours or a rental? How much do you pay monthly?
Monthly mortgage $5,400
Home debt: Share your theories and strategies with us.
We have lived in our current house for 10 years. We originally had a 30-year loan at 3.5%, but a few years ago we were able to refinance a 15-year loan at 2.75%. It increases our monthly payment, but now we have less than 10 years of payments in our current home. We live in a HCOL, but we are fortunate that the value of our home has increased quite steadily over time.
Have you paid off any major debts?
We’ve been paying off our student loans consistently for 25 years, but we’re lucky to have low interest rates on outstanding balances, so it doesn’t make much sense to pay them early.
Have you done anything significant to avoid or reduce debt, such as cashing in your 401K early?
No – we think it’s important to fully fund our 401,000 each year and not touch that money.
Savings, Investments and Retirement
How much do you save each month or year on retirement vehicles like 401Ks, Roth IRAs, and others?
Each of us is accumulating the maximum amount in our annual 401k – this year it will be $44,000. There are employer matches of about $5,000.
How much money do you spend on other tax-efficient investments/accounts like HSAs, 529s, FSAs, and more?
We save about $12,000 per year on 529 accounts for kids.
How much do you save outside of retirement accounts?
Besides retirement savings + education savings, we are not currently saving much additional money.
Talk to us about investments. Are you using a financial advisor or planner?
Over time we have tried to consolidate most of our assets with a financial advisor, but we still have some accounts with older employers. Our financial advisor assists with investment strategies, but mostly simple funds/target pension funds.
Do you have an ultimate goal to save or are you just saving for a bad day?
Our current goal is to be able to pay for our kids to go to a private college, if that’s what they want to do. I want to be able to retire comfortably, but I’m not worried about retiring early. I am worried about gaining strength later in my career as I have seen many women being laid off as they approach retirement. I’d rather save more aggressively now than worry about financing retirement later in my career.
When did you really start collecting? How has your savings strategy changed over the years?
Right after law school, I started to make serious savings while working in a law firm.
What’s the #1 thing you do to save money, limit spending, or live frugally?
Maybe not #1 but we only have one car in our family.
Have you ever made a big money move or investment considering savings, like converting an old IRA to a Roth IRA or superfunding a 529?
I used to contribute to a Roth 401(k) account, but right now that doesn’t make much sense from a tax standpoint.
Do you have an established estate plan? Is it trust?
We have a simple will in place, but it definitely needs an update.
How much cash do you have available today?
$36,000
How much cash do you have that you can use in a week?
$100,000
How much do you have in your “emergency fund” and did you include it in the previous question?
$20,000 in cash in a savings account
How much is in your retirement savings?
$850,000 (me), $800,000 (common, but he’ll get some pension too)
How much is in long-term investments and savings (CDs, index funds, stocks) that isn’t behind the retirement wall?
$250,000 (excluding 529 accounts; $12,000 annual contribution)
If property values (house, car) are included in your net worth, how much are they worth?
House market value of $1.4M; net worth $1 million
Spending
How much do you spend monthly on the following categories?
groceries: $1,100
Restaurants, bars, takeaway and delivery: 750 dollars
Clothing and accessories: $ 300
Public transport: 150 dollars
Rent/living expenses: $5,400 per month mortgage
Children’s expenses: $7,000 (including tuition)
Entertainment: 400 dollars
Other important expenses: We pay $2,300 a month for part-time childcare and housekeeping/cleaning.
Healthcare – premiums and other costs: I’m not sure — your husband’s employer has good + cheap healthcare, which is a huge advantage.
What is your spending range for these things? What’s your average?
Holidays – December: $2,000–$8,000
Holidays – Average: $5,000
Charity – Types of donations: Total annual $4,000–$5,000
Donation – Average amount of donation or giving: $200 per month to the church; $50-100 for other causes
Individual clothing products – Product range: $40–$200
Individual clothing items – Average: $50 (I buy a lot at discounts/saves.)
Car or other vehicle – Main vehicle available: You don’t have a car payment; we paid for cars with cash savings (midsize SUV, $38,000).
If you are the owner, how much does your house cost?
The house was bought for $800,000, with a current market value of around $1.4 million.
If you have vacation homes, condominiums, or income properties, how much did they cost?
We don’t have a vacation home or second property, but this is a future savings goal.
Are there any other major personal expenses?
Childcare/education is our main major personal expenditure.
Fill in the blank in this question: I could save _____ if I stopped ______, but I don’t for _______.
I could save $500 a month if I stopped paying for housekeeping/laundry, but I don’t because [it allows] So that I can work the hours I need without completely abandoning my children.
If so, how has your family provided financial support in your adult life? (Or do you support them?)
We didn’t plan this formally, but we anticipate that we will have to provide some financial support to our parents as they get older.
Money Strategy
Do you have a general money strategy?
Our expenses (and our taxes!) seem high right now, but we try not to fall into the trap of discretionary spending that hinders our goals to save for retirement.
Time versus money — do you spend money to save time (e.g. cleaning service)? Do you donate your time instead of money? What else does this sentence mean to you?
I’m more than happy to pay for any home service we can outsource – I see them as an investment in my career and mental health.
What advice would you give your younger self when it comes to personal finance?
Invest in your 401(k) early!
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