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 TW. She answered my questions (in red below) as follows:
Please tell us a bit about yourself.
I'm a 24 year old single female living in the Boston/Cambridge area. After graduating grad school, I moved up here to be with my boyfriend (who is currently in grad school). I luckily found a job and have been working about 8 months. My boyfriend and I rent a house with 4 others, totalling six people (one shower :) ). Although I have a car, I try to ride my bike to work as much as possible (probably bike about 75% of the time.)
My job is great - it's very flexible, within biking distance, not too stressful, and they have a complimentary gym (which i use about 5 times a week).
Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).
My annual income is $46,000. I put 25% of this pre-tax in my 401k and receive an employer-match up to 4%. I also have investment income which has been historically $18,000 to $20,000 per year. And I am very lucky to have annual "gifts" from my parents totalling $28,000 per year ($14,000 per parent). It is unknown (meaning I haven't asked) how long these gifts will continue, but I have reason to believe they will continue at least for the next four to five years.
Expenses (per month):
- Rent: $500-600 (may be losing a roommate in the future)
- Utilities: $75
- Gas: $60-$80
- Rock climbing membership/gear (for year): $300
- Eating out: $15-$30
- FSA/health: $55/month ($650 for the year)
- Insurance for auto, renters, other: $145
- Checking: $13,000
- 401k: $8,000
- Roth IRA: $10,500
- Investment account (managed by Dad): $500,000
- Car: $5,000
What are the current financial issues you're facing (saving, paying off debt, etc.)?
I have been very fortunate with my parents giving me annual gifts and a substantial investment account. I also try to be pretty frugal (not eating out, biking, i don't really buy clothes, nor do I spend much money on entertainment other than rock climbing). However, I would like to know how I could live more frugally? What should my future financial goals be? Does it make sense to eventually use some of my investment account for a down-payment on a house?
What are your plans for the future (retire early, build your career, etc.)?
I would like to continue putting 25% in my 401k and saving for possibly a car and house. I am eventually (within the next year) going to open a savings account. As for a wedding, I am hoping to one day get hitched and only pay about $10,000 to $15,000 for that. Another goal (other than saving for house, car, and wedding) is to put my own money (not my parents) in other investment accounts. Lastly, the best thing I think I could possily do is to focus on my career and increase my income.
What's your best piece(s) of financial advice and/or your general philosophy on personal finances?
Saving is a prerequisite to investing. To save more be happy with less.