How a Project Manager Who Is Endowing a Scholarship Does Money

Margaret (not her real name) is a 31-year-old writer and project manager in Chicago.

So, Margaret, how much are you making?

Between freelance, my current job (I’m hourly), and our rental income?

My husband makes just under $50,000 a year. At my day job, I make $125,000. I probably make another $10–$15K a year in freelance, maybe more, plus just under $40K a year in rental income.

So, all told…. $230,000, about?

Maybe $220–$230K depending on how much time I take off work.

Freelance work, or office work?

Office work, because I’m hourly.

How does your income compare to your expenses? Are you earning “enough?”

Not right now, but that’s only because we just finished remodeling a building and we’re in the process of refinancing so we can cover the cost of the additional work we did on the property.

I think it’s hard to figure out what enough is. I was raised in a house where we got sent to private school but sometimes the lights got turned off — we were always cash poor but rich in other assets. I’m trying to avoid that problem now if we can.

We just bought the building a year ago, and a year ago, my income was about $30K, so things have changed dramatically.

I guess it seems like a lot on paper but in real life it seems like less. Probably because we’ve spent a lot on fixing up our house.

So when you say “remodeling a building” you mean “the building in which we live?” Or a different building?

We bought a three flat. We live in one unit and rent out the others. So it’s all the same building, but we made different choices on our floor. We bought it for land value, which is great, but it also means that we may have spent the same amount if we had torn it down vs. fixing it up.

Got it. So explain a bit about how you grew your income from $30K to $125K (plus $10–$15K freelancing) in a year. Did you start a new job?

I did! I was in grad school a year ago, so that increased my income. The $30K a year was me in grad school (TAship, plus side jobs).

Well, now I’m very curious about your student loans, so here’s where we could do your expense breakdown. Loans, mortgage, any other major expenses, what you put aside for savings, etc.

We just refinanced, so this is what we have going:

Mortgage is $2,800 or so a month, but that includes taxes, insurance, etc. Our two units rent for $3,150 together.

I have a student loan for $65K. Now that we’re done shoveling money at our house (we were spending upwards of $8K a month on it for a while) we will get rid of this in the next year or two.

We also are sending $10K/year for a scholarship. (I know, that’s weird, but that’s me being weird.)

We have a 0% card for our appliances. I think the balance on that is about $5K, but that’s easy.

You’re donating $10K/year towards a scholarship? That is AWESOME.

Yeah, we want to fund it in the next five years. ($10K/yr for five years = full endowment.)

I used to just send a check every year for the amount, starting about five years ago, but I figured eventually we’d want to endow it, so here we are.

I was the recipient of many need-based scholarships + merit aid for my undergrad, so I want to return the favor.

That is both heartwarming and impressive. I love everything about this.

We could be bigger sticklers about where the money is going, but it doesn’t seem all that important right now.

We also have about $21K in the bank, and my husband has a 401(k), and I have a regular IRA that I send money to.

Basically, our rent covers our mortgage and basic expenses. If we wanted to stay here, we could, or if we wanted to rent this out, we’d make good income and could live for free somewhere else, so long as it cost less than $2K a month (our apartment is nicer/could rent for more than the other units).

I also want to buy another building, but I think we’re going to wait on that as I may quit my job to write a book for a year.

I am excited about the book!

So is my agent, but it hasn’t materialized yet! (I keep promising I’ll send him something, but I’ve been busy.) I need to have some dedicated time. That’s part of why we did this — the house buying thing—so we could have flexibility if needed.

Once again: impressed.

So it seems like you and your husband have your finances pretty well under control, at least from the high-level view. You dropped some money into real estate, but you’re going to get money out of it. You’re paying off your loans, you’re not in credit card debt, you’re endowing a scholarship. What do you feel like you are doing well, financially,and what do you wish you could do better?

I’m bad at figuring out what to do with it. Real estate I understand, but it’s definitely something where you throw a bunch of money in one place and then collect returns for the next 10–30 years.

I would like to buy a commercial property, do a triple net lease, and really learn to leverage money better. For our first property together, it wasn’t a bad investment (we cash flow) but it’s definitely one of those things where I think I could have been doing better with the expenses if I had been keeping a closer eye on it (and not working quite so much).

I also think that we should probably save more, though this hasn’t really been something we’ve thought a lot about. I got on the savings bandwagon late (my husband was always good at this) because I incurred additional expenses (medical debt, personal debt) as a teenager and young adult. When your parents aren’t great at managing money, too, you should probably not lend it to them.

I also probably could have gone to a cheaper school for undergrad, but that’s a whole other story. (I went to a state school, but out of state, because my parents didn’t know that a private school might be cheaper — they thought private school = too expensive for us.)

It seems like, reading between the lines, that you learned a lot about money after you became an adult. Is that the case?

Yes. The year I applied to college, my parents made less than $20,000.

I had some knowledge as a kid and was always interested in money, but living expenses (which I had to cover myself, starting in my teens) kind of ate up whatever savings I may have had the opportunity to accrue.

My parents had erratic income — they either made a lot of money (and then spent it) or didn’t make anything at all.

So how did you teach yourself about money? Did you specifically try to learn about finance, or did it come up through “life experience?”

I took a couple of classes. I worked from the time I was a child (did some modeling/acting when I was younger) and I was encouraged to learn more about what I was making and how it worked. Of course, we ended up robbing that account later (and selling my stock portfolio) to pay for a private middle school, but these things happen. I don’t regret going to school there. 😀

I also have half an MBA (working on the other half).

I love that you’re working on your MBA. When did you develop your interest in business/real estate? I’m assuming these interests are connected?

I was always interested in real estate! I worked as a real estate broker in a past life, too. Real estate is fun. A lot of work, but fun. (And with the downturn, not easy.)

Where do you see yourself financially in five years? Another property? A bestselling novel? A fully-endowed scholarship? 😀

In five years, I want to own at least seven units. Our ultimate goal is to get more into commercial (love the triple net lease). We’ll also have a fully endowed scholarship by then, and I plan on having two manuscripts out in the world—or hope, anyway. 😀

It really does sound like you’ve got yourself pointed in the right direction, both financially and to achieve those specific goals.

We’ll see. I also want to start a scholarship at my husband’s alma mater. We’ve talked a lot about that.

Again: IMPRESSED.

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

I think it’s important to give generously in any way that makes sense to you. I think millennials have a reputation for being self-involved, and that reputation is ill-deserved. Do what is important, whatever that is. Also, I think it’s a good idea to be honest about money, and to talk about money. There’s no need to be quiet about it, especially if your information can help someone else, or help you get help.

Basically, money doesn’t have to be a mystery.

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