For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader A, who lives in a HCOL area and works as a marketing professional. She noted, “A couple of years ago we decided to change the course of our financial future by flipping the script (as I call it). With three kids, we sold our house and became renters. We paid off my student loan too and became debt-free for the first time.”

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.

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: A
Location: HCOL — within 30 minutes of Boston
Age: 40
Occupation: Marketing professional
Income: $145,000
Household income: $300,000
Net worth: My husband’s and my net worth is $3.2M. We were very fortunate to receive inheritance during our 30s, so that made a big impact in our net worth.
Net worth when started working: I’ve worked since I was 13 but never worked during my college and graduate school years. My first real job was at age 25 and our net worth was maybe $50,000. (I really don’t remember!)
Living situation: Live with husband (same age) and three kids; rent (about $3,100/month for a 3-bedroom apartment)

Debt

What does your debt picture look like?
Zero debt. This part is key because for years we had my student loan and a mortgage to pay off. I borrowed $20,000 for my loan and managed to lock in a super sweet rate to pay it off, which was less than 2% interest. We also became homeowners in our mid-20s and held a mortgage for over a decade. However, a couple of years ago we decided to change the course of our financial future by flipping the script (as I call it). With three kids, we sold our house and became renters. We paid off my student loan too and became debt-free for the first time.

My husband and I both went along with the idea that we needed to be homeowners and were encouraged by my parents to buy a house shortly after we married. It’s the “American Dream,” right? However, home ownership is a massive burden on any plans to save and retire early. Home ownership should NEVER be considered as an investment vehicle, and there’s a common misconception that everyone needs to own.

How did you pay for school?
My parents paid for my college education as they’d always planned. Higher education is highly valued in my family so it was always expected I’d earn a degree and that it would be paid for by my parents. I used money from my grandfather and a loan to pay for graduate school and I deliberately went for a one-year graduate degree in a low-cost area so I didn’t have to take on much debt. I have always been naturally averse to debt.

Do you own or rent? How much do you pay monthly?
Rent — about $3,100/month for a 3-bedroom apartment

If you have children, how much do/did you spend for childcare and/or education?
Our three kids are in public school.

If you have any other large expenses each month, please list them here.
Credit card, which we use for all purchases so we can earn cash back, and it’s paid off each month. We don’t treat it as credit. We only spend what we can afford.

Home debt: Share your theories and strategies with us (including any that lead you to rent rather than own). 
We borrowed money from family for down payments on our first and second homes. Then we used inherited money to put down 40% on our last house. After seven years in that house and having spent an exorbitant amount of money on making all kinds of home improvements and putting an extra $300/month towards principal, we flipped our thinking.

Here’s how I summarize the flip in our thinking. We’d just been going along like almost everyone else of our generation and in our demographic. We went to college, got married, got jobs, bought our first house, started having kids, went to a bigger house, got better jobs, and so on. We were just going on to get on with this expectation that this is what life would look like for the next 30 years. Our 30s were primarily spent growing our careers, having a family, and investing in making our house a very comfortable place to live. We had a modest mortgage ($200,000) and were set to pay it off seven years early, and we never borrowed to make those additional investments. Then, we hit a wall in our late 30s and both felt that this was the wrong approach for us.

We started thinking about what our cost of living was and what our goal should be to achieve that cost of living. After much discussion and a detailed analysis of our spending, we saw the numbers all point to home ownership as a massive burden on our ability to hit our number sooner. We decided that being renters would provide us with a steady cost of living and sold the house. We love being renters and knowing exactly how much our cost of living is each month. No more surprises, and all that money that was stuck in our house and would never grow has tripled in the market.

We asked A if she had advice for readers who are considering a big financial decision, and she shared this:

Trust your gut. If you’re on the fence, don’t rush it; consider it for a while. Journal or confide in close friends and confidants. Consider discussing with a trusted manager or colleague. We spent a full year analyzing our finances and having regular discussions before making our major financial decision (e.g., selling the house), which felt like such an anomaly at the time. In retrospect, I’m glad we spent a year discussing it, even though it felt ad nauseum at times, but it normalized it in our heads and made it more real when we finally decided to take the plunge. We had to discuss how the scenario (of selling the house) would play out too, which really helped too.

Have you paid off any major debt? 
We paid off all debt when we stopped being homeowners.

Have you ever done anything noteworthy to avoid or lessen debt?
Sold our house.

Savings, Investments & Retirement 

How much do you save each month or year in retirement vehicles like 401Ks, Roth IRAs, and others?
That’s difficult to say since it varies each month. Here’s what we do annually though. We max out our 401ks, HSA, and Roth IRAs. I manage our day-to-day expenses, and anything that I don’t need for the next month is transferred to savings. When there’s overflow, I let my husband know how much and he’ll add it to our portfolio to invest.

How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
I max out my HSA. I don’t do FSAs since I learned early it was a use it or lose it prospect, so I just never went there. I should note, and this might surprise a few folks, that we chose to not open any 529s for our kids. Our rationale was that we’d rather not tie ourselves to a fund that limits how we can use it. Rather, we decided to use traditional investment vehicles, grants, and smart choices for educating our children (e.g., state school vs. private college).

How much do you save outside of retirement accounts?
We have a weekly automatic transfer to move $250 to a retirement account. However, we have traditionally operated with me overseeing our monthly expenses. Since we’re salaried, it’s easy to forecast how much money will be in checking at the start of each month. I know approximately how much we’ll need each month so any excess goes into savings. When there’s excess in savings, I let my husband know and he’ll shift that money into our investment portfolio.

Talk to us about investments. 
We had a financial advisor a decade ago and wish we’d never done so. He convinced us to buy VULs and life insurance policies. Then, he invested our inheritance money with such a scattershot approach and fees buried alongside. What happened to us must be pretty common. We are both working full time, raising a family, and spending weekends on home improvement or whatever, that you think “Well done for us that we got a financial advisor” and you meet a couple times a year, hear that everything is fine, and become complacent.

Around the time we started rethinking how we’d been thinking about money and finances, I started digging into how much we were handing over each month to our financial advisor. Within a couple of years, about eight grand was taken away from about a $250,000 investment. Doesn’t seem like too much, but it adds up, and all that money going to him means it’s not being reinvested for us.

We also met with a fiduciary at the time we dove into all of our finances who said, “You don’t need life insurance policies of this size, you don’t need VULs (these are bad!!), and his investment strategy makes no sense — it’s almost like he doesn’t know what he’s doing at all.”

That meeting (which wasn’t cheap) was eye-opening. We ended the relationship and will never use a financial advisor again. However, I would recommend a fiduciary. The difference is that a fiduciary is obligated to look after your money first and not their best interest. They usually charge a set fee that IS NOT hidden within your dividends and interest payouts.

Do you have an end goal for saving or are you just saving for a rainy day?
Yes. We’re working toward a specific number that would allow us to live off of 4% interest and let the “nut” grow for the remainder of our lives. It’s essentially the FIRE model. Once you start thinking about the nut and what you want/need your number to be, it changes how you see money. You don’t see things as “How much do I need to save?” You think about “How much is my cost of living so I KNOW what I need to save?”

It was eye-opening for us, because we stopped trying to save every year and instead took a long look at our cost of living and what we’d need our cost of living to be with kids and after kids have left. Once we figured that out, we determined that we need X amount for our nut. We then took significant measures like selling our house and consolidating our finances and are focused on growing our nut to what we need it to be for us to no longer work for a living but perhaps work for fun or as we want.

When did you start saving seriously? How has your savings strategy changed over the years?
Read above. We started saving seriously in our late 20s, then REALLY started saving in our late 30s. If we’d had the mindset of our 30s in our 20s, I can only imagine what our lives would look like.

What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
We limit our spending, and admittedly, it’s not too much fun. While all our friends and peers have taken amazing vacations and bought new cars, we’ve done none of that. I can’t say that we live frugally though.

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?
Again, selling our house, firing the financial advisor, and doing an overhaul in our thinking from what I can best describe as complacent to intentional.

Do you have an estate plan in place? A trust? 
Yes. We put one in place a decade ago when our kids were young and are revisiting it now that kids are older and our financial situation has changed. I recommend doing it regardless of what you have because it also just simplifies things for everyone around you should the worst happen. My husband and I have been on the receiving end of a clean and clear will and trust process versus a mess that doesn’t have clear ownership — it’s not worth the hassle. Spend the $ and get a will.

How much do you have in cash that’s available today?
$40,000

How much do you have in cash that’s available in a week? 
$40,000

How much is in your “emergency fund,” and did you include it in the previous question?
$75,000 (no)

How much do you have in retirement savings?
$600,000

How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
$1.5M

If property values (home, car) are included in your net worth, how much are those worth?
$1M in a property that we inherited

Spending 

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

Groceries: $2,000
Restaurants, bars, takeout, and delivery: $200
Clothing and accessories: $100
Transportation: $100
Rent/living expenses: $4,000 ($3,100/month rent)
Entertainment: $50
Health care – premiums and other costs: $200

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

Vacations – Average: $1,000 — we haven’t taken a vacation in years but our first planned one would have been about this amount.

Charity – Average donation or giving amount: $1,000/year

Clothing: $600 for the family, I’d say. I use bonus points for myself and buy for the kids when things are on sale.

Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $1,000 a month if I stopped buying quality food, but I don’t because I want me and my family to eat well and we can afford to do so.

If you’re married: When was your wedding, how much did it cost (total), and how much did YOU pay?
Our wedding cost about $10,000 for the entire thing, and that was 15 years ago. My parents paid for it and were happy to do so. My husband and I wanted a quiet affair, and we’re frugal anyway, so we picked a place with a beautiful outdoor garden. I bought a bridesmaid dress and made a weekend of it since family was flying in for it. It was great!

If you own, how much did your car cost?
$20,000

If you have vacation homes, timeshares, or income properties, how much did those cost? (If you have income properties, please tell us more!)
We did not plan to buy a vacation property but ended up doing so during the pandemic. We own it outright, and while we had no plans to own again, at least this time we own it without debt and will enjoy it while we have it. I feel less tied to property after having unloaded our “forever home.” I appreciate this place for what it is for our family now and how we needed it to get through the pandemic, but I could list it tomorrow and be okay with it.

At any point in your life to date, has inheritance played a role in your money situation?
Yes, very much so. We received inheritance in our 30s, and I wish we’d just put it away. Instead, we invested some and used a lot of it to make lots of improvements to our house at the time.

How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
We leaned on family to help fund our first down payment, and our parents funded our college educations entirely.

Does your family provide any non-financial support? 
My mother watched our kids one day every week for nearly a decade, which saved us some money during the daycare years.

Money Strategy 

Do you have a general money strategy?
Yes. Divide and conquer. I handle day to day; husband handles big picture. Fortunately, we’re on the same page when it comes to finances.

We asked A whether this has always been the case, and she shared this:

Yes, and this is most likely a coincidence as it certainly wasn’t something we knew about each other until sh!t got real in the relationship. We’re both just naturally debt averse and financially conservative (ironic since our politics are anything but conservative — in fact, a friend once told me that qualifies us as libertarians). We met in college and I do have memories of noticing him spending money wisely. Meaning, he wasn’t frugal per se but he was conscientious of how he spent money. I wasn’t much different. I had a credit card in my parents’ name during the college years and I was extremely conscious that this was borrowed money, so I didn’t borrow a dime more than I could afford. My kids aren’t even in high school and we have regular discussions about credit cards and debt.

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 became a big fan of spending money to get back time. My husband and I have both seen our careers and income triple over the past decade, so even though we have a clear financial goal that’s attainable within a few years and we know the less we spend, the faster the goal comes, we still treat ourselves to paying for services that at one point we’d have done ourselves. Although, I’ll say that not being a homeowner any more means that we don’t need to make those decisions any more!! It’s wonderful and gives us so much freedom.

What are your favorite resources for personal finance?
My favorite resource is my husband. This is his thing. He reads Mr. Money Mustache, Millennial Revolution, JL Collins, and various other resources. I give him a tremendous amount of credit for digging into this stuff and getting us to the point where we have a strategy that’s simple and doesn’t require any advisors. We do have a tax accountant though.

What advice would you give your younger self about personal finance?
Be intentional. Think about what kind of life you want to live. Is the big house and big yard what you really want even though that’s all you know from your childhood?

A explained why she chose to share her Money Snapshot:

One, there wasn’t much representation from my age group. Two, if younger readers see my story, maybe they’ll think twice about their intentions and financial plans. Three, my husband and I are outliers at this point. I’m not sure that any of my peers think this way — I suspect many are doing what we were doing, which is going through the long slog (as I call it). Just operating under the assumption that you work until 65, must buy a home, must have the newest stuff, etc.

Our financial picture changed significantly when we made the conscious choice to stop operating like this was normal and started discussing what kind of life we want to live instead. I don’t regret any of our decisions, even if I consider them mistakes. We had two dogs and three kids who loved having a big yard and house. Moving into an apartment was a shift, but we’re happier and spend a lot more quality family time together. Plus, we’re no longer stressed about what’s going to break next and how much will it cost.

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