How a Legal Secretary Who Paid Off $38,000 in Debt Does Money

The most expensive cookies ever.

Alison (not her real name) is a 27-year-old legal secretary who lives outside of Philadelphia.

ND: So, Alison, tell us a bit about your finances.

Alison: Well, I’m 27 years old and I’m a legal secretary, which is both a fancy name for “secretary” and shorthand for “I do everything in a law firm except sign the actual legal documents.” I’ve been at my job for 4 1/2 years and I made about $45K last year. I live in a smaller city outside of Philadelphia and am completely debt-free, after managing to pay off both my undergrad loans, brief graduate school loans (I dropped out shortly after enrolling, which is another story), and my car last year.

That’s fantastic! I briefly considered living in Philly once — it has a reasonably low cost of living compared to other large cities, correct?

Yes, it’s definitely a lower cost of living than in New York or San Francisco, though it’s getting a bit pricier now and it’s not as cheap as the Midwest. I live in the suburbs of Philadelphia (about 35 minutes outside of Center City) and the cost of living is moderately low, though I live near the Main Line (one of the ritziest parts of suburbia) which makes things a bit pricier. I’m around a lot of rich people by proxy.

About how much debt did you have? Did you have to drastically adjust your style of living, or were you earning enough that you automatically had extra money every month to pay the debt?

I had roughly $20,000 (plus interest) in undergrad loans, which seems like a small amount in comparison to some horror stories I’ve read, but I had a sizable scholarship to my university and my parents contributed a portion (about $10,000/year) as well. I had less than $1,000 in grad school loans (I legitimately dropped out after one class!). The final bit of debt was my 2008 Volkswagen, which I bought in 2011 for $17,000 and got hosed on the interest rate (7%) because I had no credit at that point.

I’ve been lucky enough to never have credit card debt, mostly because my mom works for one of the big three credit bureaus and instilled a fear of consumer debit into me at a young age — I only got my first credit card at the age of 26! So I had about $38,000 in debt at the beginning of 2011.

I was only making about $30K a year when I started paying off my debt, but then I was given a raise at my job after the other employee left (I work at a VERY SMALL firm — one attorney and me, basically) and I took over his responsibilities. I went from making $30K to $40K in a year’s time, which was a massive increase. Also, living at home helped me put all the money I’d be using on rent toward paying down my loans as aggressively as possible — I paid rent, but as an only child, my parents were happy to have me as well.

I both love and am horrified by the idea that a single session of a grad school course costs $1,000.

Hahaha, it was actually JUST THE ORIENTATION! I sat in one class and then decided to get the hell out of there, which was hasty at the time but I realized it would have been a waste of everyone’s time and money if I stayed. I did get some bangin’ Panera cookies out of the orientation session though — not quite worth the $800 for orientation, but still.

Wow. Just wow.

Yeah, I sometimes think dropping out at that point was a godsend, rather than the $25K a year I would have spent for a degree that wouldn’t actually improve my job prospects.

I was a global journalism/abnormal psychology major in college (EMPLOYABILITY CITY) and then was going to do my MA in Media Studies at a local fancy liberal arts school.

So how did you transfer into legal secretary work, and do you now see that as a career you’d like to continue?

It’s the oddest story, which I like to tell at parties. After stints doing graphic design work for a major insurance company and working at a travel agency booking the elderly on group cruises, I went back to working at Barnes & Noble as I did in college. One day, a woman comes in looking for a book on secretarial work, I tell her we don’t really sell books like that, but subtly tell her I could probably help her out and pass her my number, against B&N policy.

Turns out she’s my boss’ girlfriend (I didn’t find this out until a year or so after I start) and she gave him my number on a Friday, he called me Monday, I interviewed Wednesday, and started the job that Thursday after being given the keys to the office after my interview. And I’m still here 4 1/2 years (and a notary commission!) later.

I graduated in 2009, probably the worst year to graduate college ever for job prospects, so my job history makes no sense considering my major, which seems about right for people of this generation.

One of the luckiest things I ever did was get my first “real job” in 2008.

I don’t mind the work and my job is usually fairly easy, but I’d like to pursue something more challenging and with actual chances for advancement in the future. My boss mentioned perhaps even helping out with law school if I wanted to choose that path, but I’m not sure.

Not having debt hanging like an albatross around my neck is very helpful though — I know that it doesn’t influence my future job choices. I was able to save about $15K last year!

That is a great story! So B&N doesn’t like it when you tell customers you’re available for interviews?

Hahaha, no, they generally look down upon their employees seeking outside employment WHILE working for them.

I keep my costs pretty low though; one year for Lent (7 years of private Catholic school paid off!) I gave up non-essential material spending (clothes, purses, home goods, etc.) and I’ve kind of stuck with it since, though I do splurge from time to time (nice glasses/purses are my downfall).

I also keep a little Moleskine notebook in my purse at all times and write down EVERY SINGLE TRANSACTION — it’s kind of obsessive, but it works for me. I add them up at the end of each month to see how I’m doing; I could do it electronically with Mint or You Need A Budget, but it’s soothing to me to do it by hand.

Were you also saving while you were paying off debt, or did you tell yourself “debt first, savings later?”

Well, I usually paid extra on my student loans (my payments were about $191/month, so I paid $300/month) and my normal car payment while also putting around $500/month into savings. I got a windfall of $7,000 a few years ago and paid off the entirety of my biggest student loan ($7,500) that way.

Then, once my savings were adequate ($10,000) and my loan balances low enough, I bit the bullet and paid off the remainder of my student loans (around $4,300) off in October 2013 and then impulsively did the same with my car (with about $4,700 left) the next month. I decimated my savings but had no more debt.

I’ve been saving the same way ever since — I manage to put about $500/month away (sometimes $1,000/month) while also traveling (I’ve been to the UK at least one a year since 2009) and participating in the wedding fever that’s striking my peers (been Maid of Honor twice and attended plenty more, including four in the next calendar year alone!)

That’s very impressive. Were you also saving money in a 401(k) or anything like that? Taking paycheck deductions for a retirement fund?

No, as of early 2014, I had no retirement savings whatsoever, partly because I figured it was something to handle much further down the line and also because of laziness. I still don’t have a 401(K), but my plan this year is to finally open a Roth IRA with my monthly savings — I have a meeting with a financial advisor to do just that in February.

However, my boss surprised me in early 2014 by saying I was a participant in a profit sharing plan and he’d been making contributions for me since 2010, which was a nice surprise. I can’t touch it until I’m 55, but it’s a good amount of money to find suddenly out of thin air!

I also get health insurance (and dental insurance, for the first time since being an adult, it was just added to our plan) through work, in addition to my salary. It’s paid out of company expenses like any other bill instead of my paycheck, which is a nice bonus. I can’t really complain about that situation at all.

A 33% raise and a secret profit sharing plan! This sounds like a fantastic compensation program. I have to ask: does your company do a 401(k) match? Because, as you know, not taking advantage of the match is like leaving free money on a table!

No, no matching at all, which is a shame. There’s nothing in the way of a 401(K) at all.

I do get yearly raises though, which is a plus. Nothing like that initial 33% raise, but usually an extra $1,500 or so a year, plus a Christmas bonus.

I think I’m making a lot less than some of my friends (comparisons are evil!) but I’m pretty comfortable in my position. However, thinking about buying a house and/or starting a family (even though I’m single) will always seem kind of out of reach, even though I’m the right age and most of my friends are getting married and buying property!

Let’s jump back to your Moleskine. I used to write down every transaction too. Do you find it helps you spend less? Do you transfer all your handwritten notes into a spreadsheet and calculate your spending by category and try to find ways to save? That’s what I did.

It definitely helps me spend less, because seeing it on the page makes it so much more real than just seeing an ATM withdrawal from my bank account, you know? I’ve been doing it since I started this job because I was so bad with money in high school/college — I’d been working at least part-time since I was 16 and had nothing to show for it because I’d blow it all on crap I’d wear once or read once. Writing everything down definitely helps me curb impulse spending (or spending $400 on a purse).

I don’t transfer every transaction to a spreadsheet, but I do a monthly check-in on a spreadsheet called “GET THAT CASH” that lists the balances of my accounts though. I also keep a list on my computer of what I have to spend each month in each variable category (food, material spending, gas, etc.) and subtract each transaction from that amount and roll over any excess each month. THIS MAKES ME SOUND LIKE A LOT OF FUN, RIGHT?!

I still have my vices though: concerts (I just spent an unwise amount of money in the past month on like four different shows) and travel mostly.

Vices make life fun, though.

Okay, last question: what advice do you have for other Billfold readers? Any fun savings tips or “pay down debt” tips or “give your phone number to your customers and they’ll hire you” tips?

Hmm, in terms of savings tips: keep track of everything you spend AND keep a budget because it helps you see where your hard-earned cash is going AND helps you see what’s most important to you. I cut back on impulse shopping to free up more money for travel/meals out because it’s more important to me. Also, in terms of jobs, I’ve had weird luck but always be ready for opportunities to arise! I always wonder if I’d still be working at Barnes & Noble, sneakily reading magazines behind the counter, if I hadn’t taken the chance on a random stranger.

Also, COME TO PHILLY! We have cheap(ish) rent and a bunch to do, plus we’re only two hours from NYC/DC.

(But don’t everyone come at once, I still like rent for less than $1,000/month!)

Photo credit:
AngryJulieMonday
(cropped)

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