Money Snapshot: An Attorney Shares Her Thoughts on Bonuses, Student Loans & Financial Worries


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For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader E, who lives in an MCOL area and works as an attorney. She noted, “I only recently started making the large bonuses [see below], and I started my job making $65,000 a year. In fact, I only broke $100,000 about five years ago. However, we did purchase our residence at the right time and have conservatively approximately $200,000 in equity just from the market increasing, which I did include in my net worth. As my income has risen it has gotten hard not to get into the habit of lifestyle inflation (particularly for my husband), but I do feel like my bonus operates as a forced savings which we do not spend.”

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

house ad for reader favorites bought in October 2022

Name: E
Location: MCOL area
Age: 34
Occupation: Attorney 
Income: $130,000 in base salary, plus bonus, around $170,000
Family: Husband, 38 years old; one child
Household income: $355,000
Net worth when started working: At age 23, net worth was negative $90,000 due to student loans.
Household net worth: My husband’s and my net worth is approximately $775,000 but does not include his pension.
Living situation: Own home; mortgage $2,700/month
If you have children, how much do/did you spend for childcare and/or education?
We had a nanny initially, but then switched to preschool when my child turned 2.5, which was a huge savings. Preschool is $350 a week. We live in a state that allows for pre-pay college to a state university, so we purchased the four-year university tuition plan outright with part of my bonus last year. We continue to put money aside for living expenses for my child, but it’s more of a yearly basis. I had to put myself through college and law school entirely with no assistance from family, and I do not want that for my child. I did receive an academic scholarship through undergrad, but had to work full time (sometimes two jobs) in order to pay fees, books, and living expenses without taking out student loans. I took out student loans to pay for law school tuition only. I worked 20 hours a week (max allowed) to pay for living expenses and worked during the summer and saved the money to pay for living expenses during the year.

Debt

What does your debt picture look like?
The only debt we have is on our residence, which is currently roughly $348,000.

How much money are you spending each month to pay down debt?
I have in years past put a lump sum of my bonus toward paying down the mortgage, but given how low my interest rate is (2.85%), this year I will not and will invest instead. Otherwise, we do not have any debt. After graduating, we aggressively paid off my student loans while continuing to live like a student. They were paid off in three years. We then focused on paying off our vehicles to eliminate debt before we had children.

How did you pay for school?
During high school, I worked full time (sometimes at two different jobs to get around child labor laws) and used the money to purchase anything I wanted or needed (clothing, school supplies, eating out, spending money). I also saved quite a bit and purchased my first car brand new at 17. I obtained an academic scholarship and then worked full time to pay for the fees, books, living expenses — none of which were covered. As a result, I graduated debt free from undergrad. For law school, I took out loans only for tuition, which was approximately $90,000 when I started working. For all the day-to-day expenses and living expenses, I worked during the summer and saved my money and also worked 20 hours per week.

Do you own or rent? How much do you pay monthly?
We own. Our mortgage, plus taxes and insurance and HOA, is $2,700 a month.

Home debt: Share your theories and strategies with us (including any that lead you to rent rather than own). 
We purchased the smallest house in a nice neighborhood within a good school district to avoid having to send our child to private school. We got lucky with the timing of the purchase as the home values have shot up in the past two years.

Have you paid off any major debt? 
Yes, I paid off all my student loans three years after graduating.

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 max out the 401k each year. My husband has a pension through his job.

How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
We have the college pre-pay completed, and we max out our FSA each year.

How much do you save outside of retirement accounts?
We aim for $1,000 per month out of our base salary, and then we save the entirety of my bonus each year.

Talk to us about investments. Do you have/use a financial adviser or planner?
No, but we need one. Right now I keep way too much in a savings account and the remainder, I recently started purchasing index funds through a Fidelity account.

Do you have an end goal for saving or are you just saving for a rainy day?
My end goal is primarily rainy day. My experience of working so much during high school and undergrad has really shaped my perspective on money. I am always terrified that the floor will fall out from under us, and as the primary breadwinner, I want to make sure my child and husband are taken care of in the event something happens. I do have a life insurance policy and disability policy, but even then I feel like it is not enough.

Also, I have a family member that realistically will be needing my financial support next year on a temporary basis to enable them to reestablish after a major life event, and it brings me comfort knowing that I can help them without any major concerns.

When did you start saving seriously? How has your savings strategy changed over the years?
I have always been a saver; my husband has always been a spender. To compromise, I am in charge of all financial decisions and budget, but I do listen to his input if he feels a purchase is necessary.

What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
We try to limit spending, but after I had my child we started spending money on things to make our life easier, such as meal delivery services, Door Dash, cleaning service, and hiring jobs done versus completing it ourselves.

Do you have an estate plan in place? A trust? 
No, but it has been on my to-do list and we need to get one put together. On both sides, we have some family members that we strongly disagree with their parenting styles (parents and some siblings), and we most importantly need to put together the paperwork for who would be responsible for our child.

How much do you have in cash that’s available today?
$100,000

How much do you have in cash that’s available in a week? 
$162,000

How much is in your “emergency fund,” and did you include it in the previous question?
$100,000 is in a saving account and it is included in the cash we have available today.

How much do you have in retirement savings?
$200,000 in my 401k; my husband has a pension and I am not including that in our net worth as I do not quite understand how it will operate or its value.

How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
$62,000 currently in an online investment, included in the cash available in a week

If property values (home, car) are included in your net worth, how much are those worth?
Our cars are roughly worth $20,000 combined. We purchase cars new and then try to keep them until they stop running or need major work. Right now one car is a 2014 and the other is a 2016. Our property value is included in our net worth; I included only $200,000 in equity that was not caused by our accelerated payments (lump sum from bonus). Right now we owe only $348,000 on our house and could conservatively sell it for $800,000.

Spending 

How much do you spend on the following categories on a monthly basis?

Groceries: $1,200
Restaurants, bars, takeout, and delivery: 
$600
Clothing and accessories: $100
Transportation:
$350
Rent/living expenses: $2,700
Kid-related expenses: $1,700
Health care – premiums and other costs:
Our health insurance is through my husband’s job and is a very good plan. We have a $300 per-person deducible and then up to $1,500 per person, up to $3,000 per family. We tend to hit the maximum each year since having our child.

What’s your spending range for these things? What’s your average?

Vacations – Range: $500–$2,500
Vacations – Average:
$1,500

Charity – Range of donations: $5,000 to $10,000
Charity – Average donation or giving amount:
We tend to donate directly to people — often family, friends or others, depending upon their needs — versus donating to private charity organizations.

Individual items of clothing – Range: $200 to $300 for a suit to $5 for T-shirts
Individual items of clothing – Average:
$20 on average. We do not spend a lot on clothing. I enjoy thrift/consignment shopping and tend to get most of my clothes from there. For my child, I shop the sales, and we have been very fortunate with lots of hand-me-downs from neighbors and our family.

Apartment or house – Current main residence: $520,000

Car or Other Vehicle – Range: 2 vehicles: one was about $40,000 purchased new and the other was $28,000 purchased new

Any other large personal expenses?
I anticipate some larger expenses next year to help a sibling with a major life change get back on their feet. My husband and I have already discussed it and are on the same page with what we will give them monthly for up to a year.

I also anticipate additional, more consistent expenses helping my husband’s mother once she becomes unable to work. Currently, we only provide financial assistance towards specific items (dental care, power, groceries) when there is a reason they are unable to provide for themselves. His mother is very low income but continues to make very poor financial decisions and expects her children to assist her upon her request. We had to draw some boundaries early on, but if he comes to me wanting to help her out for a temporary thing, then I would never tell him no.

Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $6,000 or more a year if we stopped going to Disney, but I don’t because it forces me to get out of the office and stop working, and the joy it brings to my child’s face is truly amazing. We could also save $1,500 a month if we stopped the cleaning service and started watching what we ate, but after years of purchasing only the cheapest necessities at the grocery store it feels good to just pick an item and not look at the price.

If you’re married: When was your wedding, how much did it cost (total), and how much did YOU pay?
It was around $5,000 total.

Wedding: Tell us about it!
Simple beach wedding; we had no money so did almost everything ourselves. The only regret I have is not getting professional photos done.

At any point in your life to date, has inheritance played a role in your money situation?
No. However, a grandparent that passed did put money in a trust with the income payable to my husband’s father, and upon his passing the principal is divided among him and his siblings. Realistically it will be around $200,000. However, we hope we are very old before we ever get the payout.

How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
My parents paid for my online study course for the LSAT, and they gave me a loan to enable me to move to my current state so we could get an apartment, as we did not have enough money saved to get the rental truck and pay for deposits and living expenses until my first paycheck. We paid them back that first year but they did not charge interest. Occasionally in law school they would pay for my groceries if they were in town and would always pay if we went out to eat together. They also allowed me to stay on their health insurance for no charge which was a huge cost savings until I aged out.

Does your family provide any non-financial support? 
When they come into town they help out with projects or will babysit my child for a date night, but we do not live in the same state so there is no consistent non-financial support.

Money Strategy 

Do you have a general money strategy?
We aim to save all bonuses I receive, and as they have increased dramatically, we are continuing to do the same thing.

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?
We 100 percent spend money to save time. We have a cleaning service every other week and a weekly meal service that drops off pre-cooked meals for me to bring to work to avoid eating out at lunch.

What are your favorite resources for personal finance?
It would be beneficial to have some, but unfortunately I do not.

What advice would you give your younger self about personal finance?
I wish I would have gone on more trips before kids but we did not want to spend the money.

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