Today we continue the ESI Scale Interview series where people answer questions about their success at working the ESI Scale.
In short, the series focuses on what the interviewee is doing in the areas of earning, saving, and investing. They also get an opportunity to ask ESI Money readers for suggestions if they choose to do so.
If you鈥檇 like to be considered for an interview, drop me a note and we can chat about specifics.
With that said, let’s get started.
My questions are in bold italics and her responses follow in black.
OVERVIEW
Please tell us a bit about yourself.
I’m 29, married to my college sweetheart, and currently living in NYC.
No kids yet, though we hope to have some little ones soon.
I’ve been a long-time reader. If you want to see my profile from 2014, you can click here.
I figured the readers would find it interesting to see how life is different than what I projected 4 years ago. We’ve moved across the country and then to NYC since I wrote that profile.
In 2014, we were really into the idea of early retirement. We were living as frugally as we could, and we were at about $40,000 a year in expenses. With our incomes at the time ($67,000 gross), it was going to be eons before we’d be able to be completely financially independent. And looking back, we cut our expenses too low for our personal happiness level. I worried too much about money and expenses and didn’t go out and have fun with friends enough.
Once we figured out that our road to financial independence would be a longer one — we wanted to spend more and we knew we needed to make more — we stopped waiting on financial independence and started to get creative about actually creating a life we loved, and one that also allowed us to save.
This involved a month backpacking in Europe, two cross-country moves, starting and closing two businesses, and three jobs, and both of us switching industries.
You don’t need financial independence to live the life you want. You need the ability to take calculated risks, and you don’t need to get all the way to FI to do that.
Now, we’ve both found work we enjoy and we’ve set up systems that mean we save but don’t require as much mental energy so we can focusing on enjoying life while reaching our goals.
What is your current net worth?
Our current net worth is $170,652 and breaks out as follows:
- Cash: $42,426
- Brokerage: $12,233
- Roth IRAs: $45,022
- Traditional IRA/ 401(k)s: $70,967
I don’t think we’ll make that goal of $400,000 when we’re 30, but I think we’ll get more than halfway there.
How did you accumulate your net worth?
We’re still accumulating so it’s mostly earned money.
EARN
Tell us a bit about your career.
We both started out in engineering and now work in finance. I still feel like we’re at the beginning of our careers, but we do make more now.
My husband makes $143,000 in salary and has an annual discretionary bonus. Last year it was $36,000. I make $51,000 a year.
My husband’s career has taken priority as we’ve moved around the country for it, and I’ve had a hard time growing my own career as well.
We’ve been very strategic with his career. He’s taken several sideways steps into more interesting and lucrative career possibilities. It’s taken lots of networking to figure out what the right job is, what skills are needed, and who you need to know to get the job.
For my own career, after working as a sales engineer, I spent time as a freelance writer and then moved into finance with a similar process. I talked to people, figured out what was needed, and then got the skills through practice, conferences, continuing education, and so on.
We’ve both managed to find jobs we enjoy and we’ve increased our household income, so we’re happy with our progress.
Do you have a side hustle?
No side hustles. We’re both focused on growing our current careers.
If you were rating these results on a scale of 1 to 10 (with 10 being best), what rating would you give yourself and why?
I’d give us an 8.
We’ve quadrupled our income but we also now live in a really expensive place. I’d also say that we both have the potential to make a lot more.
What are your future plans regarding growing your income?
My plan is to start my own business in a year or two. There are a few more skills I’d like to learn first before going out on my own.
After tax, my salary would barely cover daycare, so if a kid comes soon, my plan is to start then.
My husband wants to stay in his current line of work. He’s actively been connecting with people to learn what it takes to get to the next steps, and to figure out where his gaps are.
I’m sure good things are ahead. : )
SAVE
What percent of your gross income do you save?
We saved 28% of our income last year.
We’ve saved a similar percentage of our income since 2014.
That means we spent $47,000 on taxes, saved $60,000, and spent $100,000. $28,000 of that was rent.
How did you get to this level?
Right now, we’re on track to save $40,000 out of our salaries, plus whatever the bonus turns out to be.
We’re happy with our current lifestyle and don’t feel the need to keep increasing it, but kids are on the horizon and that will change everything.
We keep our rent reasonable for Manhattan by living in a 350 sq ft place that is really run down, but we spend lots of money on health and fitness.
We spend lots of money on continuing education.
We also have added in more convenience food so we both can work out, spend time growing our careers, and stay happy.
We plan to move farther out and keep our rent the same to get a two bedroom so we have space for a kid.
Over the years, the specific strategies we use to save have changed, but the big strategies stay the same. We keep track of our expenses. We make very careful housing and transportation decisions.
When we lived in a sprawling suburb, we had one car between the two of us. Now we don’t have a car and walk, bike, and take the subway. We only take taxis if we’re running late or we’re on our way to an important meeting.
For everything else, we try to buy exactly what we want and only what we need at a reasonable price, but without it taking forever to get what we need.
If you were rating these results on a scale of 1 to 10 (with 10 being best), what rating would you give yourself and why?
I’d give us a 5.
We’re happy with our current savings, but objectively, we do spend a lot.
What are your future plans regarding saving your money?
We plan to keep our expenses the same, but things will change when we have kids.
The big unknown is also figuring out if we’ll stay in NYC and ever buy a house.
INVEST
What are your main investments?
We have ETFs and mutual funds, about 90% stocks, 10% bonds, and 20% international.
We want to save for retirement, but we also want the flexibility to buy a house or have additional money for my future business, so we’re saving in both tax-advantaged and regular brokerage accounts. We’ve automated the savings from our paycheck so we don’t have to think about it.
If you were rating these results on a scale of 1 to 10 (with 10 being best), what rating would you give yourself and why?
10.
I’m happy with our investing strategy. We’re clear about what we want and that has dictated our investing strategy.
What are your future plans regarding investing?
We’re planning to keep our investments the same but put extra money into retirement accounts.
We’re happy with our cash position, we’re still saving into brokerage accounts, and we have the option to do a Mega Backdoor Roth so the plan is to do that at the end of the year this year.
WRAP-UP
What money mistakes have you made that others can learn from?
Honestly, I don’t have anything I’d do differently. We’re not perfect but we’ve made conscious decisions along the way.
Are there any questions you have for ESI Money readers regarding any parts of your finances?
I’d love to hear your tips for living in a high cost-of-living city, on increasing our incomes, and on starting a business while raising a family.
And any other advice you have to give!
Hi there! Great interview thank you! I live in London which is expensive as well, but I always find nice things to do that are not so expensive and I prepare most of my meals myself which is not expensive and healthy. I think that living in an expensive city makes it even more important to know what you really want to spend money on and what is not important.
I also have a question for you, I’m wondering what is the best way to save for a down payment or for starting a business, is that better to keep this money in cash or is it better to invest it knowing the the timeline is 5/6 years?
thanks and good luck for the future!
Claire
I have $15k for an emergency fund, ~$10k in our everyday checking for spending, and $15k for a business & baby fund. Since we’re trying for a family now, that could be used any moment. The brokerage account is meant for the future home purchase with the longer timeline.
thank you for sharing and well done!
How has your family managed living in London? We’re hoping moving into a borough and larger apartment will help us cook at home more easily. When you can only cook half a baking sheet at a time, meal prep takes forever. Do you own a home?
I’m single and I share a big flat with others, we were lucky to find a decent one in a great part of the city.
For now there is no point for me buying a home in London as that would mean getting away from the heart of the city and where I work, leading to more transportations costs and less quality of life as currently I walk everywhere.
We have a great kitchen at home so cooking at home is easy and enjoyable.
Prior to London I lived in LA and in Paris a few years each, and my take on living in big cities is really that you need to recognise what is the most important for you at that time and what you are willing to compromise on. I enjoy being in the heart of the city and for me it’s a luxury to be able to walk everywhere and not use transportations so I’m willing to share a flat with others! I think it’s right for this season of my life anyway 馃檪
“I鈥檇 give us a 5.
We鈥檙e happy with our current savings, but objectively, we do spend a lot.”
I really appreciate your honesty, but also recognize you live in a very expensive city. That probably makes it tough to live on less. Our family of 5 is comfortable living on much less, but we live in a less expensive area.
Does your husband’s job allow you guys to move to a different area or is your current location the only place that would make you happy?
TPP
We’ve entertained the idea of moving home, but it would involve another career change.
We’ve entertained the idea of moving home, but that would involve another career change. I think NYC is where it’s at for now.
Congrats to a young couple having a positive net worth….you are a 1% already I feel. My only suggestion is to max out retirement this year and going forward if possible. Even if it’s a stretch your cash positions seems a bit larger than need be to me, I would eat into that for some expenses if it means you can both max out your pre-tax retirement options. If you are worried about a top of the market etc, remember you can put the money in a 401K but you don’t have to buy equities immediately, you can dollar cost average in however long it makes you feel comfortable. Best of luck
Thanks Chris! I do feel pretty lucky.
You are doing really well. NYC is a wonderful city, but the cost is living is outrageous. You have built up a nice amount of money in you savings. That is a nice foundation to build upon. Plus you have a high savings rate. Keep it up the great work.
Thanks Dave!
If you’re going to start a business, make sure you have a deep understanding of sales and marketing (I’d add that learning sales is probably the number one way to increase you income, but your husband seems to want to stay in his current line of work). In business, sales are first, and they cure all ills.
The idea of starting a business and a family seems pretty challenging to me…good luck, and don’t be hard on yourself if it isn’t all peaches and cream!
Totally agree that sales and marketing are crucial. I’ve worked in both so hopefully that gives me a leg up.
“we spent $47,000 on taxes, saved $60,000, and spent $100,000. $28,000 of that was rent.”
This implies you spent $72,000 on non-rent items and you don’t have a car or kids. I know NYC is expensive but it seems like you could save more. Can you elaborate on expenditures?
I tracked every penny so I know where it all went. We definitely could save more if we paid attention to it more, for sure. Biggest expense is rent, then food, then professional development/health/ self-improvement, then clothing/laundry, then fun/travel. I let the gas off a little bit on trying to reduce expenses when our work picked up in intensity. I would say we’re always trying to watch it and improve a bit, but we have other priorities for our time that we put first. I could spend time trying to save more $, but I found I’m happier overall when I spend that time relaxing, hanging out with friends, or go to the gym. I know there’s a long-term trade-off, but when I run the numbers, our long-term financial picture is in great shape.
It was fun going back and reading your interview from 2014. Thank you for providing that link. I would say you guys have done very well for yourselves over the last four years, particularly with growing your careers and your income! I think you have a prudent attitude regarding FI. It takes diligence, patience, and time for most people to reach FI. Folks have to be careful of all the “get rich quick” schemes that are out there. The tortoise and the hare is not just a nice story, it is a real-life parable that most would be wise to follow.
I think the best advice I would have for you would be to plan your exit out of NYC as soon as you can, for a number of reasons. If you both are in finance, one up and growing area is Charlotte, NC. I think it is the 4th largest banking and financing center in the US now. If you could achieve your career and financial goals in an area like that, you would be so much further ahead of the game in so many areas, i.e. cost of living, taxes, housing, quality of life, crime, weather, outdoor activities, raising a family, etc.
I actually went the opposite in my career. I started in Charlotte, then to NY/NJ, SF, Milwaukee, and Scottsdale, AZ so I’ve been down the path several times of alternating between high and low-cost areas for a career. I would definitely choose the quality of life and a lower cost setting as my priorities, particularly when your family starts to grow beyond the two of you.
Best of luck and congrats on a great start!
Thanks Paper Tiger! We debate NYC vs. home a lot. NYC is a hard place to live.
Congratulations JV – you guys are crushing it – you have quadrupled your gross in 4 years, you have saved a bunch – but more importantly you have reached a phenomenally important insight – you do not need to be completely FI to lead the life you want to live – you are already living it. 3 things for you to think about:
1. Whatever your business is going to be start it NOW -it will be a lot tougher with a new born – now is the time to figure it out – you are right that your salary will barely cover daycare – have you and your hubby already agreed you will give up the W2 work when the baby comes? ( note – it is also really awesome to be close to extended family when that baby comes along…)
2. If you are going to stay in NYC for the next 3 – 6 years would it make sense to buy a wee place in the country 2 hours out – more space, more freedom, more quality of life and possibly a good investment?
3. You guys have been so brilliant and so strategic so far – the next big decision is about NYC – should you stay or should you go? Neither one is the right / wrong answer – y’all just need to figure out what is best for you – please come back in 4 years time and let us all know – good luck !
Thanks Paul! I am so happy I pushed to get on that vision about what kind of life I wanted, and then thought about how I could make it happen now. How many wasted years would I have had if I had just waited for FI in a situation I didn’t like?
You have good points above. Things to think about!
Sounds like you have a good plan and perspective on things. You’re young, so you have plenty of time to continue fine-tuning your finances without stressing out over them. Just stick with it. The power of compounding is real. I’ve never made much money but now my accounts are huge. I just put my contributions on automatic over the last 20 years and basically paid them like a bill. “You don鈥檛 need financial independence to live the life you want” was a good comment also. If you find work you enjoy, its not so bad and you’ll have more longevity doing it. Being able to earn some income for longer isnt always a bad thing even if you make it to FI.
Thanks Arrgo. You caught the message I most wanted to say.
Great to hear a perspective from another couple hustling it out in NYC. Not any amount of money is enough for the city, weekend brunches, dinners and night outs can easily take up all of your paycheck.
Have you guys considered moving to NJ suburbs where there is direct train access to the city?
Bayonne, Hoboken, New Brunswick. You can easily get a luxury 2 bedroom for $2200-$2500 monthly rent especially since you don’t have to bother about a school district.
NJ is high in the list for our next place. I’m seeing a lot higher prices for stuff directly off the PATH though! If you have a hook up let me know 馃檪 Do you all live in a big city?
Our weakness is definitely going for convience options when we both work so much. Taxis when you’re late, eating out, and semi prepared foods from the grocery store are all expensive options.
We live in NYC for a while but moved to NJ suburbs, lot more peaceful ! if you have to commute to NYC daily , recommend Bayonne, check out harbor pointe apartments, I have friends living there and they love it!
Ok thanks! Will look.