Three People, Three Salaries: How They Spend and Save
Ever wished you could peek at the spending habits of someone with the same salary as you? We asked three brave writers to reveal just that-their salaries, budgeting strategies, and financial goals for the year.
Heather Yamada-Hosley, Product Marketing Specialist
Location: San Jose, CA
I'm a product marketing specialist for a company that produces flash based storage devices mainly for enterprise customers. Basically, I run the social media accounts and write a lot of content (product descriptions, catalogs, trade show booth banners, etc.). Here's what my day is like.
My education level is a B.A. in Global Economics from University of California, Santa Cruz. Fortunately, my parents started saving for my educational expenses from the time I was born and I also worked for two years as a community assistant, so I didn't have to pay for housing or meal plans during that time. I have made an extreme effort not to incur any debt since I had the fortune of not having student loans.
I rent a three-bedroom, two-bath apartment with two housemates
While I don't always spend the full amount in each category (like clothing), here's a breakdown of my monthly budget:
- Rent: $725
- Utilities: $100
- Roth IRA: $100
- Groceries: $200
- Public transportation: $90
- Phone: $40
- Entertainment: $60
- Restaurants/bars: $100
- Laundry: $20
I use Mint
My biggest money challenges are small purchases (mainly online shopping) adding up. In the past month, I actually unsubscribed from many online retailer email lists to avoid the temptation of sales and such! I've also taken to adding items I want to my Amazon wishlist instead of buying them outright, which gives me time to consider if I really want or need them. This has worked very well so far in decreasing my online shopping spending on unnecessary items.
My financial goals in 2014 are to continue to contribute to my Roth IRA and emergency fund, as well as saving enough money to travel abroad at least once. Any extra money I have after budgeting for my expected expenses (as detailed above) is split 60/40 to go into my emergency and travel funds.
Andrew Cilento, Financial Representative
Location: Long Island, NY
I work for a large financial services company. Right now I'm licensed to sell insurance; next up are securities exams, and I'll become a certified financial planner. I sort of fell into this-I was unemployed over the summer, had a recruiter reach out to me, and decided it was what I wanted to persue both now and long-term. I'm a 1099 employee now, so I sock money into a separate account to cover taxes. My take-home pay ends up being $3,000/month. After a year, this becomes a commission job, at which point I'll be earning more.
I stayed local for college and commuted. I did my first two years at a community college, got good grades, and had a local school offer to pay half of my tuition (which I took them up on). I had student loans
I live at home (I moved back after losing my last job), and I write my parents a check for $1,000/month. We looked at listings for similar-sized apartments in the area and came up with that amount based on that and a percentage of the house's utilities (including cable and internet). I also pay for my cell phone, which comes to about $85/month after a discount through work. Other expenses include dinner, drinks, and the occasional concert or sporting event with friends-that comes out to about $200/month.
I have nine credit cards
- A card for personal expenses that earns two miles for every dollar I spend. Any expense I can put on a credit card goes here, with one exception...
- An Amazon rewards card that earns three points for every dollar I spend on Amazon. When you buy as many things there as I do (about $120/month), it works out very well.
- A business card for business expenses-supplies, client lunches, etc.
I follow (or at least try to) the 50/20/30 rule. 20% of what I bring in goes to savings (5% to my emergency fund, 5% to moving out money, 5% to retirement, and 5% to life insurance); 50% goes to essentials; and the remaining 30% is mine to do with as I please-right now, that's putting as much into savings as possible. I use Moneydance, which I'm not entirely in love with, but it does the job. I've been playing around with Moneywell for awhile now, and at some point I'll take time to move everything over there.
My greatest challenge when it comes to money is replenishing my emergency fund-it took a big hit when I was unemployed. My best advice for surviving unemployment: have 3-6 months' expenses put aside. Als
- Treat the job search like your full-time job. Wake up in the morning, hit the job boards and want ads, and put out as many applications as you can stomach.
- Figure out what you absolutely have to spend money on and don't spend anything else.
- Don't be afraid to flip burgers or ring a cash register while you look for something full-time.
- Above all, keep your head up and try not to lose your mind. Seriously.
Jaime Zepada, Project and Relationship Manager
Location: Bay Area, CA
A few years ago I switched over to a job that has become quite a blessing. It nearly doubled my salary
My big budget items are probably familiar:
- Rent: $1,200 (I live alone)
- Student loans: $400
- Miscellaneous (clothes, books, etc.): Around $100
- Entertainment: Varies a lot (see below)
The first two have stayed pretty static. I've been very conscious of not growing my lifestyle standards as quickly or generously as my paycheck. But entertainment is probably the most troublesome of the bunch.
Here's something that usually happens when you get a higher-paying job
Because of my mostly static expenses and larger income flow, I can do two things that I previously couldn't: shrink debt and start investing. Once I finally had some of that thing, what's it called? ah yes, "discretionary income," I started to chip away at the debt that followed me (with ridiculous interest rates) for many years. I used what's called a "debt snowball" approach. Using this debt snowball, I halved my consumer debt in two years, and brought down my monthly payments, which means more money left in my pocket. Here's the gist of how it works:
- Add as much as you reasonably can to the monthly payment of your smallest debt. Let's say the payment is $50 a month, but you can add another $50, so you'd be paying a cool $100 a month.
- Once that smallest debt has been paid off, use all of that money and add it to the second-smallest debt's monthly payment, and so on. To follow the example above, those $100 bucks will be added to the payment of the second-smallest debt, so if that was $30 a month, you'd now be paying $130.
The second thing I did with this extra money was start investing. I talked to various people who know way more about this than I do, and they all told me to skip the savings account and go straight into stocks, and so I did. I set an investment plan for myself, figuring out how much I could put into investments on a monthly basis, and thought about these funds as if they were my savings.
In order to be successful in investing
For 2014 I have a few goals. First, I want to finish the job of erasing my consumer debt. I'm halfway there, and I can smell the flowers! I also want to keep putting money into my stocks and resist the urge to go for short-run profits. I'm hopeful that by doing these two things I'll grow to be a happy dude with a cane in a few decades.
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Portrait illustrations by Nick Criscuolo.