The Year We Saved $10K: All That Saving Hurt

In this installment of “The Year We Saved $10K,” we have two stories from people in the legal industry.

Mike: In late 2008, my firm made noises about cutting staff. I was a paralegal who hated the law, so I was hunting for a different line of work. I figured that I’d take a pay cut when I switched industries, so I decided that 2009 would be my year of artificial poverty to prepare for a career change: I’d sock away $500 from each paycheck into my 401(k) and see how living on less would work. Sure enough, we had big layoffs in March. Then our firm suffered a massive malpractice settlement that lead to what we staffers called Russian Roulette Layoffs: each week, someone else got let go. I got the axe in December. By that point, I’d socked away $12,000 in my 401(k) for the year (we got paid 26 times a year, and I’d gotten 24 pay checks).

All that saving hurt, since my base pay was $45K, but I’m glad I did it. My hours at my current job are significantly saner, and since I was saving while the market was going down, my 401(k) balance is much healthier than it might have been, since it was took a year of temping (and no contributing to retirement savings) before I found a new full-time job.

Anthony: For the first time in my adult life I have finally managed to put away a significant amount of money. This is equal parts exciting and terrifying. To be fair, it is a joint account shared with my girlfriend, into which we have managed to put away $10,000 over the last 8 months. How did we get here?

For the first time in our three-year relationship we both have attained respectable paying jobs at the same time. Combined, we generally net $4,600 a month, and top out at $5,300 if everything falls into place. In September of last year my girlfriend landed a full-time job as an office manager. She has turned around a dysfunctional office while pocketing overtime almost every step of the way. On top of that she is paid bi-monthly as opposed to bi-weekly which at times turns into an 11 or 12 day working check, plus overtime. These circumstances, especially the regular overtime, work out to an extra $600–800 monthly that we did not plan for when she took the position.

In December of last year I switched law firms and received a pay raise of essentially 20 percent plus a guaranteed commission (net) of $225 a month, which often jumps to $700 when I meet certain criteria. However, I am not a lawyer or paralegal; I am the feared debt collector. Contrary to popular belief, my job is 90 percent awesome, maybe not so much for you. That said, I essentially received a $3 an hour raise plus a guaranteed commission, which essentially was another $600–1,100 that was not previously available. We also managed to land jobs that are within about 2.5 miles of each other with nearly identical hours, making carpooling easy and logical.

My girlfriend’s overtime and my guaranteed commission are two of the biggest factors to our savings, but there are sacrifices that we make that the majority of people just wouldn’t. Oh and did I mention we moved to Miami two years ago with roughly $2,500 between the two of us and no jobs lined up? As best-laid plans go, ours were foiled four days upon arrival and left us scrambling to find a place to live and depleting any type of fallback money. Turns out the cost of living was not what I expected, coming from a modest Midwest town.

First and foremost, rent for a house in Miami is astronomical. Why a house? Because I’m an idiot with a 60 pound beast of a dog that has attachment issues. The dog whines incessantly when kept indoors alone, making apartment living likely impossible. On the flip side, rent is typically $1,600+ for a modest house in a modest neighberhood. Our solution? We pay $650 a month for an efficiency in a pretty good neighberhood with a fenced yard for said whining Beast. All utilities are included. The savings are great, but the three rooms — a bedroom, pseudo kitchen (there’s no stove or sink) and bathroom — leave a lot to be desired. However, did I mention we save essentialy $1,000 a month plus utilities by doing this? This has become a part of a master plan to buy a house on which we will be able to put a nifty down payment, leaving us with a manageable mortgage allowing us to continue to save.

This is just the tip of the sacrificial iceberg.

We do not have cable, nor do we pay for internet at our place. Neither are included in rent but I am lucky enough to pickup a faint Netgear Wi-Fi signal on my tablet which I am forever grateful for, and am currently using to deliver this manifesto. Most people look at you like an alien when you don’t have some type of cable TV. Not having internet is almost shameful, people will judge you. Fret not and hold your head high. At this point, you’re probably shaking your head, thinking “Who does this?” Well, it doesn’t stop there.

I sold my car and lost my cell phone the week before we moved to Miami. That’s right, we share one car and one cell phone. One phone, two people? Your head is spinning, I am sure. All of this contributes to our savings. No utilities, cable, internet, second car payment/insurance, or additional cell phone bill keep our costs way down. The other huge factor? Neither of us has student loans. Again, this is both exciting and terrifying. Our jobs are both relatively stable and we have a stellar work history, but employment, particularly unemployment, can be terrifying. That said, I was always terrified of student loan debt, and couldn’t fathom owing $50,000+ in student loans.

Our monthly payments and overall debt are very managable. We essentially have seven bills that have to be paid each month: rent, car, insurance, cell phone, two credit cards, and Starbucks. We have a minimal amount of credit card debt: about $3,500 which we will likely pay off in full within six months.

There are hidden expenses in all of this. We both have an itch to shop, but the financial blow is greatly limited by the plethora of thrift stores in Miami that house really nice stuff. There aren’t many places where you can find designer dress shirts and shoes between $5–10 a pop, and luckily Miami is that place. I am an avid Buffalo Bills fan, so every Sunday in September through December we go to a sports bar and drop anywhere from $30–70 on drinks and a meal. The NBA playoffs are a similar experience, but we both like to go out so it is not necessarily money we wouldn’t spend and the bill is generally modest. We both enjoy craft beer and concerts. We do meal plan for the weekdays but are avid Chipotle supporters, and spend a fair amount dining out 3 or 4 times a week. We could definitely afford internet and cable, but the savings are too enticing at this point.

We love to travel, and would travel more if saving for a house wasn’t on the top of our to-do list. We flew back back to Chicago last Thanksgiving (literally on Thanksgiving) in which the 5 day trip easily cost us $1,800. We’ve taken weekend roadtrip getaways to Naples, Boca Raton, and an epic weekend trip to Hollywood, FL to see Jerry Seinfeld. We have a November trip to Austin which has already cost us $900 in flight and concert tickets, with transportation and hotel pending. We will cap the year off with another trip to Chicago around Christmas which will surely cost us another $1,500 at minimum.

As life would have it we’ve also had to deal with multiple unexpected financial mini-crises this year. $1,200 on traffic tickets that were neither of ours (long story), $1,200 on a sick puppy (not ours), and $400 on car tires (ours).

Did I mention we live in Miami? We either run at the park or walk the dog every night and go to the pool or beach on the weekend. This leaves us with minimal time at home to enjoy modern amenities like cable. These activities typically cost us no more then the cost of gas and the $1 an hour parking at the beach garage. This is subject to whether we are walking at the beach or making a day of it, in which case food and drinks do factor in.

As we stand now we have an even $10,000 in our super savings account, $1,900 in our to do savings account, and $1,200 in our checking account. Rent is due on the 5th and life is good. We started the year with the goal of saving $5,000 and we were there by April. We hope to get to $20,000 (okay, $15,000) by the end of the year and eliminate all of our miscellaneous debt of roughly $7,000 by early next year.

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