How a Couple in Los Angeles Does Money

“Lizzie” is a 28-year-old accountant at a non-profit. Her husband, “Charles,” is 30 years old and works for a non-profit publisher. They both live in Los Angeles.

So, Lizzie and Charles, how much are you making?

Lizzie: I make just over $55,000.

Charles: I make $26,000 per year at my regular job and then have additional income from freelancing and investments.

So between the two of you, you’re earning a little over $80,000? Closer to $90,000 with the freelancing and investment income?

Lizzie: Yes, that’s about right. Charles’s income fluctuates a little bit, so we’ll probably be more like $87 or $88K this year.

How does that compare to your expenses? Do you feel like you’re earning “enough,” whatever that means to you?

Lizzie: We do earn enough.

Charles: We cover our fixed monthly expenses pretty easily and then usually have money left over to add to our savings. We bring home at least $5,500 per month from our regular jobs, though our monthly income is sometimes a lot higher based on how much freelance work I’ve done.

Our rent, groceries, renter’s insurance, life insurance, and cell phone bills come out to be about $2,300 each month. We are maxing out Lizzie’s 403(b) contributions (that’s like a 401(k) for non-profits) and our Roth IRAs every year, so annually we’re putting about $30,000 toward our retirement.

I also invest several thousand dollars in our taxable brokerage accounts over the course of the year as well. The rest goes into our savings accounts and a CD ladder with revolving maturity dates. Between our retirement accounts, investment accounts, and savings, we’ve accumulated several hundred thousand dollars.

Lizzie: I would like to earn more, so that we could pay our rent without feeling like it eats up too large a percentage of our income. Unfortunately, we work in pretty much the most expensive part of LA, so it’s also more expensive to live here. But I’d rather pay to live here than pay for a cheaper rent with a longer commute.

What’s your living situation like? Tiny apartment, I’m guessing?

Charles: Tiny house, actually.

LIKE LITERAL TINY HOUSE?!

Charles: Yes. We’re renting a 500-square-foot guesthouse. I think that’s the upper limit for it to qualify as a “tiny house.”

Lizzie: It’s not the smallest place we’ve ever lived, though

What was the smallest place you ever lived?

Charles: During the first year of our marriage, we lived in a 300-square-foot studio.

Lizzie: This place has the benefit of an actual wall with a door (a DOOR, Nicole) separating our living space from our bedroom. So way better than the studio. We also don’t have a car, so walking distance is really important.

So you’re renting the tiny house and contributing to your retirement funds. What are your other major expenses? Student loans?

Lizzie: Don’t hate us, but we don’t have student loans. I had some from grad school, but we paid them off right after we got married.

Charles: We were concerned about the high interest rates. They were all between 6–8 percent. I didn’t have any loans from college and had saved money from my stipends when I was in grad school, so we agreed that paying down Lizzie’s debt would be a good use for it.

That sounds like a smart move, and I’m glad you were able to get those paid off!

Lizzie: The other place our money is going is actually tuition, because we’re both currently doing more education.

Oh cool!

Lizzie: I didn’t go to school for accounting, although I worked part time for an accountant while I was in college. I sort of fell into accounting after I finished school and am now working toward getting my CPA license so that I can advance further in my career. I’m taking about two classes per quarter at a local university in order to get qualified to take the exam.

Charles: I’ve started taking classes in finance. My extra schooling is less related to my current career track than Lizzie’s classes are to hers, but I really wanted to learn more about investing and managing finances. I also come out of a humanities background, so I thought that it would be good to develop more quantitative reasoning skills as a part of my ongoing education.

It sounds like you are both really good with money, honestly. Was your interest in money management something you each brought to the marriage, or was it something you discovered together?

Lizzie: I think we were brought together by it, in a way, but we were very lucky that we’re both really frugal. It’s been in marriage that Charles’s interest in investing developed.

We’ve both been talking about where our sort of… philosophies about money came from. Because we’re both very well matched in terms of what our values are and what we want to do with our money.

Charles: When we first got married five years ago, Lizzie told me that I needed to learn everything I could about investing for the long term. I was extremely good at saving money but didn’t really know what to do with it once I had it.

Lizzie: And it’s interesting that a huge part of it seems to really come out of anxiety. Like, we can pat ourselves on the back because we save a lot of money… but we save a lot of money because our personalities drive us to do it, not because we’re good at money.

Charles always says that we’re “two marshmallow kids.” Because if we’d done that marshmallow study where they make the kid sit in front of the marshmallow, neither of us would have eaten the first one. We’d have held out for the second.

Charles: We knew that we were well matched financially after talking about how we would both still be eating Halloween candy during the summer. I like to think that we know how to make resources last and how to plan ahead.

Lizzie: My mom would actually have to throw out my candy when I was a kid. Did you know those little chocolate eggs they give at Easter go bad by July?

Hahahahaha that’s great! I remember making my Halloween candy last until Thanksgiving but never until the next summer.

Charles: I think that the way we manage our finances now reflects some of those same habits. It’s really easy for both of us to avoid impulsive spending because we know that we will enjoy using the money for something else later.

So besides tuition and retirement, what are you saving your money for? What’s the “we’ll enjoy using it later” stuff?

Charles: That’s actually a really good question. One of my main goals in saving money is that it allows us to get through difficult financial situations that might otherwise be really stressful. For example, we never have to worry about how we’ll pay for medical bills or other disastrous events. We also know that we’ll have money to cover rent or groceries if one of us is unemployed for an extended period of time.

Lizzie: I have kind of a different answer than maybe you would expect. We are planning on moving closer to Charles’s parents sometime in the next few years. My parents live about two hours away from us now, so I see them, my siblings, and my siblings’ kids fairly often. But, once we move, I won’t be that close to them. I want to be the aunt who can fly her nephews up to visit for two weeks during their summer vacation, or who can randomly fly down for the weekend because there’s something special happening in their lives.

Charles: Along similar lines, we also want to make sure that we can provide money to help our siblings’ kids pay for college, if necessary.

Lizzie: In case it isn’t obvious, we won’t be having children ourselves. I also want to leave a scholarship fund to the university that I went to. My dad and brother went there, too, and I received a full-ride scholarship, so I want to give back to the school.

Charles: Even though we won’t have our own children, we believe really strongly in making sure that we can help out our family. My parents always told me that we need to think of a family as one extended financial and economic unit, instead of individual households. That way, if we’re ever struggling or our siblings are struggling, there will be a safety net.

Was that something your parents modeled in your childhood as well, with their parents and siblings?

Charles: Yes, I tended to see that a lot with my parents. I’ve noticed that this value was particularly emphasized by my father and his older brother, both of whom were quite financially successful.

Lizzie: For me, money in my family was weird. My mom’s parents were small business owners, but they were also children of the Depression, and my grandmother was very controlling with money and very frugal. My dad’s parents were poor. So my mom’s family doesn’t really talk about money, but they sort of quietly all have a lot of it. My dad’s family very much has the “show off all of the money you’ve got” tendency. But my mom and dad don’t have a lot of money, and really were poor when I was young. I kind of saw my dad desperately faking that we were doing fine, while we weren’t.

You seem to have your finances well under control, and I appreciate that you’re thinking about not only your own future, but also your family’s. Is there anything about money you wish you did better?

Lizzie: This is probably where we argue the most…

Charles: We actually both agree that I need to spend more money.

Lizzie: Charles is a natural-born deal hunter, so when we do spend money, he has to get the absolute lowest price, even if it’s highly inconvenient. I’m tired of taking early morning flights just because they’re the cheapest.

Charles: Lizzie also says I should spend more money on my wardrobe. The other day we were discussing how I haven’t bought any new shirts since before we were married —

Lizzie: And we’ve been married for nearly five years.

I mean, if the shirts are still good…

Lizzie: He did that guy thing where he bought ten of the same style, two of each color, so he’s just been replacing his worn-out shirts with the exact same shirt. It’s like they breed in his closet.

Last question: what advice do you have for Billfold readers?

Lizzie: My advice is actually to not be like us. Or, at least, don’t aspire to be like us if you’re not like this naturally.

Why not?

Lizzie: I was reading all of the comments (the nasty, nasty comments) on the Atlantic article on money and the middle class. Everybody commenting feels so superior to this man who is really financially struggling, in part because of mistakes that he admits he made.

But the problem that I see with that is that it’s really, really hard to just live in a totally frugal manner all of the time, unless you’re kind of psychologically pre-disposed to it. And a lot of his other “huge mistakes” are really just systemic things, or things that yes, he chose, but he couldn’t have known would have been disastrous in the long run.

And the way he lived made him and his family happy and successful for a long time. It’s not their fault that the New York housing market is volatile, it’s not their fault that Stanford is ridiculously expensive, but it feels like sending a kid to Stanford is the only way to make sure your kid is set up for a good life.

Although, dear readers, please do not drain your 401(k) to pay for a wedding. That was a real mistake.

Charles: I think that a lot of people would find our lifestyle to be really onerous or unpleasant. Sure, they would be more financially secure, but it shouldn’t come at the cost of their quality of life. For us, saving, investing, and being extremely frugal is fundamentally important to our quality of life. We really enjoy our lifestyle because it works for us and makes us happy. That may not be the case for other people, so they shouldn’t try to force themselves to live like we do.

Also, we joke that if everyone had our financial habits, the economy would probably be headed toward another major crash as consumer spending ground to a halt!

NOT ANOTHER CRASH!

Charles: All of that said, we are really happy whenever someone wants to learn more about our financial habits or comes to us to ask advice about money, particularly family members. We are concerned that discussing money is so taboo in our society and that so many people don’t have the opportunity to develop financial literacy. So we try our best to offer advice when we can.

Support The Billfold

The Billfold continues to exist thanks to support from our readers. Help us continue to do our work by making a monthly pledge on Patreon or a one-time-only contribution through PayPal.