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Money Snapshot: A Federal Program Manager Shares Thoughts on Paying off Student Loans and Renting vs. Buying

Money Snapshot: A Federal Program Manager Shares Thoughts on Paying off Student Loans and Renting vs. Buying

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For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader C, who lives in the Washington, D.C., metro area and works as a federal program manager. She noted, “I grew up pretty blue-collar and poor, which impacts my perspective.”

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.

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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: C
Location: Washington, D.C., metro area
Age: 47
Occupation: Federal program manager
Income: 
$157,000
Partner: 46, male, and I’m the primary breadwinner
Household income: $220,000
Net worth: $1.1 million, including my husband’s
Net worth when started working: First job with a W-2 at 16, and pretty much $0 net worth
Living situation: Own home

Debt

How much debt do you have currently?
$350,000 mortgage and $16,000 car loan

How much money are you spending each month to pay down debt?
$1,800

What does your debt picture look like?
I paid off my student loans about eight years ago. My debt now is mostly mortgage, which I refinanced when rates were low. I’m considering making extra principal payments but am generally just paying according to the amortization schedule.

I had to buy a new car recently after a car accident, or I’d still be driving my paid-off 10-year-old car. That rounds out my debt picture. I hate debt so I try not to carry a credit card balance.

How did you pay for school?
For undergraduate, I attended a private liberal arts college and received financial aid, including scholarships, grants, work study, and federal student loans. My parents assisted with living expenses. I went back to graduate school after three years working at an Ivy League university and paid through working, some savings from my working years, grants, scholarships, and loans.

Do you own or rent? How much do you pay monthly?
Own; $2,400 payment including mortgage, taxes, and insurance

Home debt: Share your theories and strategies with us (including any that lead you to rent rather than own). 
I rented for a long time, even when I could have afforded to buy something. It made more financial sense and gave me peace of mind. I don’t know if it was the right decision, but I liked having the flexibility of moving if necessary, having a chunk of change in short term savings for emergencies, and not having to worry about maintenance. At the time, I had a decent rent and wanted to live in the city. I would have spent way more on a mortgage for a place that wasn’t as nice or well located.

People say it’s “throwing money away” to rent, but the reality is you will always be spending money on housing expenses to someone else, even if it’s just taxes. You need to look at the full picture and not let others tell you what you should do.

When I finally bought my house, it felt right. I spent less than I qualified for and based my purchase price on what I wanted to spend in payments. I have been a home owner for five years and have a 30-year mortgage (refinanced once — so on year three of the refi) I would like to pay off sooner.

Have you paid off any major debt? 
I consolidated my student debt at a pretty low rate and paid it off with a lump sum payment about eight years ago from short term savings I had. Because it was fairly low interest, it would have technically made more sense to invest that money, but getting that monkey off my back felt so good. Sometimes money decisions are all psychological.

Savings, Investments & Retirement 

How much do you save each month or year in retirement vehicles like 401Ks, Roth IRAs, and others?
I max out my investment in tax advantaged plans (401k, etc.) and so does my husband. So currently ~$46,000/yr.

How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
Limited purpose FSA ~$2,000. I have a HSA but have not contributed to it recently.

How much do you save outside of retirement accounts?
This is an ongoing challenge. We have a savings account that we fund with whatever refunds, bonuses, etc., we might get. We have a regular contribution of $800 per month set up, but withdrawals do happen for home maintenance projects.

Talk to us about investments. Do you have a financial adviser/planner?
No planner… had one who was not that helpful, so I generally distribute across various funds, a target retirement fund, or an index fund. I’m a “set it and forget it” investor

Do you have an end goal for saving or are you just saving for a rainy day?
Just a rainy day/eventual retirement

When did you start saving seriously? How has your savings strategy changed over the years?
I think in my second job out of college when I moved into a shared roommate situation to save rent. In my jobs post grad school, I made a point of saving at least 20% in retirement funds.

What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
I have some room for improvement here! Cooking at home is the one thing that cuts out unnecessary spending for me.

Have you ever made a big money move or investment with savings in mind, such as rolling over an older IRA into a Roth IRA or superfunding a 529?
No. I did roll an old retirement fund into an IRA, more for the sake of staying organized.

Do you have an estate plan in place? A trust? 
No, unfortunately. It’s on my list.

How much do you have in cash that’s available today?
$4,000

How much do you have in cash that’s available in a week? 
$50,000

How much is in your “emergency fund,” and did you include it in the previous question?
That is the amount in the previous question, kept in a basic online high yield savings account.

How much do you have in retirement savings?
$700,000

How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
$0

If property values (home, car) are included in your net worth, how much are those worth?
Home value is about $700,000, car about $10,000 for my husband’s. Mine isn’t included in the net worth.

Spending 

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

Groceries: $800
Restaurants, bars, takeout, and delivery: 
$400
Clothing and accessories: $100
Transportation:
$350
Rent/living expenses: $3,000
Entertainment: $200
Other major expenses: $150, dog food and other dog expenses
Health care – premiums and other costs: $280/mo. in premiums for me and my husband; $2,000–$3,000/yr. in out-of-pocket.

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

Vacations – Range: $1,000–$5,000
Vacations – Average:
$5,000

Charity – Range of donations: $2,000–$3,000
Charity – Average donation or giving amount: I typically give from $100–$500 per charity.

Individual items of clothing – Range: $30–$100

Apartment or house – Range: In my life, $350 (shared house in early 2000s) to $2,400 (now)
Apartment or house – Current main residence: $2,400 all in

Car or other vehicle – Range: $0 to $400/mo
Car or other vehicle – Current main vehicle: $40,000, put a large amount down, $400/mo

Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $200 if I stopped using a cleaner, but I don’t because my husband and I would argue about cleaning!

If you’re married: When was your wedding, how much did it cost (total), and how much did YOU pay?
I got married in 2018, wedding was $15,000, and I paid for all of it.

Wedding: Tell us about it!
I had a small (30 people) wedding at a very nice beach resort. It was an amazing day.

If you own, how much did your car cost?
$40,000 when all was said and done. I’d much rather have my old paid-off car that was totaled last year when I was rear ended!

If you own, how much did your home (permanent residence) cost?
$480,000

Have any large medical expenses (including nursing homes) for yourself or others played a role in your financial picture?
No

Are there any other large expenses in your life, either now or previously?
We renovated a bathroom last year. It ended up costing $40,000, much more than I ever thought it would!

At any point in your life to date, has inheritance played a role in your money situation?
No, but my husband’s father inherited money and this enabled him to gift us a chunk toward our down payment.

How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
My family, none in my adult life, but my husband has received money from his father, both for our down payment and for bills. It’s weird to me, but I realize it’s just how their relationship is.

Does your family provide any non-financial support? 
No

Money Strategy 

Do you have a general money strategy?
Set it and forget it for investing. Otherwise, I try to have minimal debt and live below my means.

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 do hire cleaners once a month, which my husband and I joke is cheaper than marriage counseling. He is messier than I am and less prone to clean.

More recently, I have taken the time vs. money thing to heart when it comes to returning items or complaining or worrying about getting the deals I was supposed to. I think more than time, it’s avoiding the stress. I earn enough that I’m comfortable, so worrying about a 50-cent coupon isn’t worth the stress.

What are your favorite resources for personal finance?
I don’t really follow anything, though I’ve listened to Suze Orman and Dave Ramsey in the past.

What advice would you give your younger self about personal finance?
Do whatever it takes to save for retirement and put down the credit card. I wish now that I didn’t blow so much money on going out and put that toward savings instead! Also, fight to earn what you deserve and don’t accept less.

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