Reader Profile: TVO

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.

Next in the series is FMF reader TVO. He answered my questions (in red below) as follows:

Please tell us a bit about yourself.

I am 25, male, single. I graduated from college with a BS in Biochemistry in 2008. Presently, I am working for an international oil service company. I have been with the company since I graduated so I consider myself blessed in today’s environment.

I, like a majority of Americans, did not have a clue about personal finance growing up. My parents are both penny pinchers, so rather than calling them ‘frugal’ I think the better term is to describe them as ‘cheap’. I still have problems now as I sometimes look at the ‘sticker’ price instead of the ‘overall cost of use’ price when buying large ticket items. My interest in personal finance started after I stumble upon personal finance blogs right after I started working. These personal finance blogs, including FMF, gave me a lot of knowledge and help me formulate my views on what I should do with my money.
 
Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).

I pretty much have a desired situation by most standards. I make roughly 50k/year pre-tax in a low cost of living area. The company that I work for provides housing for their employees on campus so I do not pay rent. I have used that money instead to max out my 401K and my Roth IRA for the last two years.

Take home pay (post-tax): ~$2000/month

My monthly expenses are described below:

• Groceries: $250
• Shopping (clothes, office supplies, etc.): $150
• Gas/Car Maintenance/Insurance: $200
• Eating Out (personal): $100
• Health Insurance (domestic): $100
• Misc: $100
• Utilities (cell phone, internet): $100

My current investments:

• 401K: 48K
• Roth IRA: 17K
• Taxable Account: 12K
• Emergency Fund: 8K

What are the current financial issues you're facing (saving, paying off debt, etc.)?

Financially, I do not have any major financial issues at the moment. I have no student loans as I had a full scholarship when I was in school and I am currently debt free. The only caveat is that my emergency fund is not as large as I would like it to be but, I am putting what I don’t spend into it monthly.
 
What are your plans for the future (retire early, build your career, etc.)?

My current job is very stable as there are probably only a handful of people in the world that do what I do. I love the profession I am in and I can see myself working here for a very long time. For the time being, I will continue what I am doing currently and gain as much experience as I can. I do travel a lot for my work as I have to be on site for my job. Last year alone, I had extended stays in Japan, Australia, Russia, France, Sweden and Norway just to name a few.

In the long term, I would like to do what my current boss is doing. He has been in semi-retirement mode for the past couple of years as in he isn’t travelling anymore (I am, he telecommutes if needed) and is training someone new (me). The best way to describe his position is that he is a technical advisor in my profession. He is currently in his mid-70s and the company, under his request, has been transitioning for me to succeed him when he finally does put it up.

Another long term goal of mine is to eventually buy a house. However, I do not plan to look for a house anytime within the next 5 to 10 years as I love to travel for my work.
 
What's your best piece(s) of financial advice and/or your general philosophy on personal finances?

My best advice that I can give to someone my age is networking/promoting yourself and building relationships based on trust. When I entered the company, I did not know what I was getting into and the company likewise, did not know what I have to offer. I quickly got along with my co-workers who had been in the company for a while and showed me the in and outs of the oil industry. Over time, I got along with a technical mentor who took a liking to me and soon after, I started (and still am) working under him.

Since I travel, I have also networked and promoted myself externally with people and clients all around the world. Once you gain the knowledge and the experience within your profession and you meet clients and offer solutions to their problems, you are building a relationship based on trust. I have people in the industry asking me for guidance when they are reluctant to ask someone else and that makes me feel like I have gain their trust and that they trust my judgment. Sometimes you might get a surprise reward. For instance, two weeks ago, someone I met in Malaysia surprised me with luxury suite and field pass tickets to an NFL game; you just never know what may happen.

Comments

[Luis]

Despite not learning much about personal finance growing up you appear to have swinged it at the right time in your life. Do you have much free time left for dating (i.e. finding a life partner)? Dating can get expensive so I'd budget for that also.

[Keith]

You may want to slow down, or stop temporarily, the money you are putting into long-term retirement funds and funnel that money into your emergency fund until it is built up to a full 6 months of living expenses.

[Ben]

I agree that it is probably wise to beef up the emergency fund a bit - or consider allocating part of your taxable as your emergency fund. It may be worth exploring whether you can get into a high-interest checking account. I am in one right now that has 2% APY up to 25k. There are a couple of other banks in my state that average between 2-3%.

That said, you are doing amazing. I am a few years older than you (and make a higher salary), but you are well ahead of me vis-a-vis net worth. (Grad school = $$$).

Aside from adding to your emergency fund, keep doing what you are doing. I think it's reasonable to forgo buying a house considering how much you travel, but other posters on this site might disagree. I don't think houses will hit 2006-2007 levels again for quite some time. Continue to bank that money. Plus, not having living expenses, rent, mortgage, etc is a huge benefit to you right now.

You're in a very good position. Keep up the good work.

[Jane]

You're in a pretty good position, TVO. Your take-home pay is a bit low, but your expenses are incredibly low since you don't have to pay for housing. Housing is currently about 20% of my gross income.

How large do you want your emergency fund to be? It's currently 8 months at $1,000 of expenses per month. Do you see yourself being in a position where you would take a job elsewhere and you would have to find a place to rent/buy?

Traveling extensively is amazing, but that can make having a relationship difficult. Is that something that concerns you?

I agree with Ben that buying a house doesn't make sense. Something I would caution against though is that you have no idea when you might want to buy a house - you can change your mind on that quite easily. So I would consider setting aside a small amount of cash savings each month once you're happy with where your emergency fund is towards buying a condo/house. A 20% down payment can be quite expensive and if you're waiting until you want a large house with a wife and kids to buy a house, then your down payment can be significantly higher than if you were just buying for yourself.

[Tuan]

@Luis: I am away on travel for probably 6 months out of the year, so I don't necessary have free time. I'm happy being single but like everything else in this world, my mindset probably will change over time.

@Keith/Ben: I agree that I need to build up my emergency fund. I did not mention that I get an end of the year bonus which is a significant portion of my take home pay. Like the past 2 years, I'll put %50 in my emergency fund and the other %50 I donate to our local CSA.

[Old Limey]

You are doing very well financially and your future seems secure but you don't appear to have what I would call a "Life Plan". Life should be much more than being all work and no play. At some point in your life I would think you would get tired of all the business travel and want to put down some roots, get married, get a home, have children and develop many, many, other interests.

Your current lifestyle seems to work for you at present but it wouldn't be for me. I worked hard during my 36 year career as an aerospace engineer, enjoyed my work very much, have invested exceptionally well and lack for nothing, but now at the age of 77, when I look back over my life nearly all of the activities and pleasures that counted the most also involved my wife, children, grandchildren, or friends and other family members. My personal hobbies and activities have also been a very important source of great satisfaction and pleasure. My old company is still prospering without me and working there was great but I don't miss it and I am so glad that I retired when I did at age 58.

When you become wealthy, life is much more than just counting your money (which I still do of course), it's about all of the other things that bring you joy and give meaning to your life.

[Rick Francis]

It sounds like you have a great financial start, I don't think it makes any sense to buy a house for yourself- if you are traveling 6 months out of the year you want a landlord to maintain an apartment for you. If you get your boss's job in a few years will that give you the ability to settle down? If not you may want to investigate other options- as you never know when you will meet someone and want to settle down, get a house, have kids, etc.

As for the emergency fund- it doesn't all needs to be cash in a savings account. You could take money out of the taxable investment account to cover an emergency- and if there is no emergency you will should get better returns over the long term than a savings account.

-Rick Francis

[Eric]

Tuan, you definitely seem like you're on the right path. Keep it up!

P.S. Thanks for contributing to the fansub community. ;)

[08graduate]

+1 to Rick Francis. I'm your age, and most of my emergency fund is not in cash. As long as the taxable account is a diversified basket of stocks, and no employer stock, I feel comfortable counting on 50-75% of it being there in an emergency. Sure, the emergency _might_ be job loss caused by a broad economic downturn that also crashes the stock market. That's what the margin of safety is for.

[Tuan]

Just got back from overseas where the internet is restricted so I wasn't able to reply.

@ Old Limey - I truly appreciate your words, it is always good to hear someone's different perspective. To be honest, I do believe I am missing something. Now does that mean I want to settle down, no, not really. I think I am in that searching phase on what really gives me, using your words, 'great satisfaction and pleasure'.

@ Rick & 08graduate - Rick, yes. If I strive to be a technical advisor then I will have the ability to settle down. I do not want to consider my taxable account as an emergency fund on paper but in reality it is so I agree with both of you guys, it just gives me some flexibility.

@ Eric - Thanks, I'm over on Saizen so give me a hollar sometime.