How a Consultant Who Lives on 63 Percent of Her Income Does Money

Eve (not her real name) is a 31-year-old consultant in the San Francisco Bay Area.

So, Eve, how much money are you making?

Base is $150K, with bonus probably around $160K–$170K.

I also have some other stuff through work—employee stock plan, 401(k) match, etc.—that adds up to about another ~$12-$15K a year.

So $185K-ish total?

That sounds really high! I guess I never added it up that way — I don’t think of my 401(k) match and ESPP plan as part of my salary, even though it’s a part of total compensation.

That’s fair, it’s not like it’s spendable income. I was adding up all the numbers without thinking about context.

When I think about “how much I make” I think $160K, but if I’m lucky and the stars align I’ll make a bit more than that, but like you said, a lot of it is tied up.

How much is tied up in expenses? Rent, debt, etc.

So our rent/utilities/internet/phone = $2K, which is extraordinarily cheap for my location.

We have $8K in a personal loan, and I think $5K in student loans left from undergrad, but that’s accruing at something like 1 percent interest so we’ve never tried to pay it ahead of time.

That’s the only mid-term liability we have at the moment. The student loans will get paid off next week on schedule, and the personal loan as well.

If I’m being super precise, we have current liabilities like credit cards but that’s only a timing issue because we pay our cards off every month.

Talk to me about that personal loan! I wish I had known that personal loans were a thing when I was busy getting into credit card debt.

It’s a bridge loan from my parents for the semester that my husband was in graduate school (before I graduated from business school but after he had exhausted his cash savings).

Instead of taking out graduate school loans which has an origination fee and 8 percent interest, my mom offered to help us “bridge” the gap. I am very grateful for it.

Then after I graduated, I cash-flowed the remaining semesters of his grad school, so I feel SUPER fortunate that we have two graduate degrees between us but no graduate school debt.

That is fortunate! I misunderstood—thought you meant a personal loan from a bank. My parents have helped me out in similar ways and I am also grateful (and I paid them back).

You don’t get more personal than family. 😉

After you’ve paid your rent/bills/debt, what do you do with the money left over? Savings? Do you put even more into retirement? Major discretionary vices?

So here’s how I split everything: I max out 401(k) first of all and I max out my employee stock plan (15 percent of my gross).

Then there’s health insurance and taxes and all of that.

My net pay is split into two accounts: 37 percent goes into Bank A and 63 percent goes into Bank B, and the money in Bank B is what we live on (ideally).

I’ve had to dip into Bank A once or twice, but that’s kind of what I think of as our liquidity fund — whether for emergencies or for a house down payment.

The 63 percent is about $1,600–$1,800 per paycheck; the higher end comes in the last couple months of the year. I try to max out the 401(k) by November and then I get another boost because I pass the Social Security threshold.

My husband just graduated, but he had an internship where he brought in some money, and that money just kind of floats there. I think we saved some and spent the rest but I don’t have a good accounting for that.

Also, the employee stock plan! Every time I get that check, I deposit it all into Bank A. Same with my bonus. So Bank A has 37 percent of my net pay as well as all the periodic windfalls.

This is so great! I have two big questions:

1. Why two banks instead of two savings accounts at one bank (or one saving one checking, or whatever)?
2. Do you get your direct deposit automatically split, or do you do it by hand?

Two banks so that it’s harder for me to get to Bank A — more psychological separation? Our credit cards and our day to day checking/saving accounts are with Bank B. With Bank A, I just have a debit card and I don’t even go there unless I need to deposit a check.

I get my direct deposit automatically split. I didn’t start off with 37/63… I think I first started with 33/67, and I just kept inching up the percentages every couple of pay periods to see how it felt.

This whole system really only started at the end of last year, because we finished paying tuition for my husband. Before then almost everything that wasn’t tied down went to his school.

And you’re happy with the system, I take it?

I’m pretty happy, or at least happy enough not to do too much to change it at this moment.

The one thing we probably should do is to combine finances. We’ve just been lazy and have always had separate accounts, but we probably should have a joint one.

So your husband’s spending comes out of his own account? And household spending…?

I mean, he has his own account, but we basically treat it as one big pot. Plus, we are in California and it’s a community property state, so it literally is one big legal pot.

How do you communicate about the multiple accounts and the big pot?

We don’t do a great job of it, but we do use Mint. We have all our accounts linked and so we know what’s going on at a household level.

What do you think you do really well financially and what do you wish you could do better?

I think I do a decent job of saving and planning ahead; at least, I’m fairly methodical about saving. My husband and I have similar views on spending/saving, so that helps a lot.

In terms of doing better — I want to grow my income and career, and stop being so anxious about retirement and buying a home.

What is most anxiety-inducing about retirement and homebuying, for you?

Well, you need to make and save enough over a compressed corporate working life to fund an extended lifespan.

Yeah, that’s pretty anxiety-inducing.

And medical costs are the big unknown, it takes a lot of money to be sick in America.

And buying a home — I want to buy a home so that I can control costs in the latter part of my life, but if we want to stay in the bay area, which I’d love to do, it’s really expensive.

For sure. What do you see yourself doing in the next five years to work towards these goals?

Keep working and learning and growing my career.

My husband will also be starting full-time work so our household income should increase, but with tech you never know when the next bust is coming.

I used to stress a lot more about this and then I just decided to stop reading all personal finance sites and blogs (except The Billfold!)

Because we are THE BEST LOL.

Hahaha you are!

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

To be honest, I’ve realized that success in life (and finances) is a lot of luck. And all you can do is to prepare yourself so that when an opportunity comes along, you can take advantage of it.

Having a spouse who has the same views on earning/spending/saving as you do, or at least not a wildly divergent view, is tremendously helpful.

I used to compare myself A LOT to people around me—which, in the bay area especially, is the worst game you can play with yourself, because you never feel like you are enough.

Oh! One more financial piece of advice: use index funds and watch your expense ratios.

Would you like to be the subject of a future Doing Money interview? You can be anonymous. Email nicole@thebillfold.com.

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