The following is the latest post in my "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.
If you're interested in contributing to this series, then drop me an email. The series seems to be very popular with readers and I need a steady stream of new ones to keep it going.
Also, please leave constructive comments, questions, and so forth. Simply telling someone what a mess they have, how they have made poor decisions, and so forth is not helpful. There is a way to say, "That was a mistake, but here's what you can do to correct it" that both acknowledges the problem and offers a solution. It's this sort of feedback that this series is intended to solicit.
Next in the series is FMF reader LS. She answered my questions (in red below) as follows:
Please tell us a bit about yourself.
I'm a recent college grad, age 23, living in a large US city and supporting myself for the first time. By "supporting myself" I mean that I live entirely off my own income, but I also was fortunate enough to receive a large sum of money which I don't touch (more about that below).
I actually work two jobs, one that is part-time and seasonal and one that is more steady. I enjoy the seasonal job very much but don't see much room for growth there; I do not enjoy the steady job and am planning to leave it in the next year or two. At this point I have no idea what career or field would be more rewarding for me.
Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).
My situation is unique because when I was 20 I unexpectedly inherited a large sum of money (over $100K) from a relative. My parents (who are very financially responsible) encouraged me to put it all in the hands of a financial advisor, so I did. After I graduated from college I used some of it to pay the bulk of my student loans; the rest is split between a Roth IRA and a non-tax-advantaged investment account. I eventually would like to move away from having the advisor, but since I have a large sum to potentially squander and not much investment knowledge, it seems to make sense for now.
As for the nitty gritty: I net about $2400 every month from the steady job; the seasonal work varies quite a bit (as one would expect from seasonal work), so I've had months where I've made another thousand+ on top of that, and months where I've made nothing additional.
I still live like a college student, and I keep my expenses below $2000/mo, excluding repayments on my student loan and charitable donations. (That's pretty good for my area, which has a high cost of living - I spend almost $700 on rent and live with three other people.) I donate at least $200/mo to my nonprofits of choice. At the end of the month I usually have about $200 to throw toward my student loan when living off only the steady income. I also am trying to put everything from the seasonal work toward my student loan, so I'm expecting to pay it off by the summer, at which point I'll start investing the money from the seasonal job.
If you're like me, you probably enjoy the reader profiles in part because you're a little nosy about how others are doing, so here's the full breakdown of my current net worth:
- $113K invested
- $23K in a savings account (my emergency fund is $11K; I'm saving the rest because I will probably owe a lot on my taxes - I received a lump sum from the inheritance last year and didn't pay state taxes at the time. Anything above $11k after tax time will be invested.)
- $4K student loan
What are the current financial issues you're facing (saving, paying off debt, etc.)?
Financially, I really am in a fortunate position. My student loan should be paid off soon, and I have about five months' expenses as an emergency fund. My biggest struggle is actually striking a balance between wanting to spend as little as possible, and making the most of this opportunity I've been given. I feel guilty when I take trips or buy a fancy meal, but on the other hand, there's more to life than money and I often feel that I should be more willing to spend on experiences. I try to save as much as I can, but I'm not sure there's a good reason for me to be saving so much. Any input the readers have would be helpful - and yes, I realize and appreciate how fortunate I am, and I know these are nice problems to have.
What are your plans for the future (retire early, build your career, etc.)?
I really have no plans at this point. I haven't settled on a career, so I don't know how long I'll want to work. I plan to move around more before settling down, so I'm not worried about saving up for a house (although if and when I do buy a house, I'd probably liquidate some investments to make a big down payment). I've been considering grad school, so I'd probably pay as much tuition out of pocket as I could, but at this point I'm leaning away from grad school anyway.
I think that's probably part of why I feel unfocused - I'm not really saving for anything or spending for anything in particular.
What's your best piece(s) of financial advice and/or your general philosophy on personal finances?
I don't think I have any tips that FMF readers don't already know, but I will say that setting a good example for your kids is invaluable. My parents are extremely frugal and have saved a lot for retirement. But, when they do spend money on dinners out or trips, they are willing to spend to have an enjoyable experience. I am still trying to be as frugal as them, but I'm very grateful to have them as financial role models.