How an Assistant Professor in Memphis Does Money

Photo credit: Nicolas Henderson, CC BY 2.0.

Melissa is a 35-year-old assistant professor in Memphis.

So, Melissa, how much are you making?

I make $64,000 and change, which is new as of this month (the whole university just got a 2.5 percent raise).

This calendar year I’ll also have made about $9,000 in side hustles.

What kind of side hustles?

My side hustles are pretty solidly connected to my day job: I taught a summer class, I’m revamping an on-campus course to be taught online, and I do some consulting on the side.

But none of those things are guaranteed side hustles, so I tend to think of that $9K as bonus money, not incorporated into my monthly budget.

Got it. On that note, tell us about your monthly budget! Where is your money going?

Ha! I use YNAB, and I counted my budget categories in prep for this interview—I have 34. I can’t decide if that seems excessive or not. 😄

But YNAB’s idea about giving every dollar a job really resonated with me, so it works.

I pay $900 a month in rent (for a super-cute two-bedroom house), which is definitely below market rate.

I probably pay more than I should on what I count as “food.” $500–600 a month, but that includes groceries, eating out, and anything else I might buy at Target or the grocery store, so household supplies, shampoo, all that kind of stuff.

I put $500 a month into savings, which is why I reached out in the first place, because I just hit a savings goal!)

Everything else goes toward dog care, car insurance, charitable donations, or gift giving. (I know six women having babies in the next six months, so I’m going to be buying a lot of onesies and board books.)

I also have the Southwest credit card (I thought last week’s article on credit card rewards was super interesting!) because all of my family lives in Maryland, and Southwest has a good direct flight between Memphis and Baltimore. I put $8.25 a month aside for the card’s annual fee.

And I have season tickets to the local gorgeous old musical theater in town with some friends, so that’s about $30 a month toward that.

Oh, and therapy copays. That’s important too!

That’s an impressive roundup! I love that you’re pro-rating your Southwest credit card fee.

Hahah, I used to work on just paying bigger items like that annually, but then it would throw my budget out of whack for that month. Much smoother to just set aside $8.25 a month and not worry about it when the bill comes.

For sure, for sure. So tell me about that savings goal!

I hit $10,000! 😁  !!!

!!!

Which essentially puts me back to where I was when I finished grad school, and is a little more than three months of expenses. Also, it’s a nice round number, which looks good as an account balance.

How long did it take you to save $10K?

Three years, to the month. I had about $10K in savings when I finished my Ph.D. program, but there was a three-month gap between my last assistantship check and my first professor paycheck, plus moving expenses, plus I bought a washer and dryer because the first house I rented here had a hookup but no machines and I decided it was worth my time/sanity to not trek to the laundromat all the time.

So I was down to small dollars when that first paycheck hit in September 2014, and I’ve been building my way back up since then.

I started out saving $150 a month, and as I’ve gotten more used to my expenses and life has evened out, have built that up to the current $500 per month.

Again, impressive.

Thanks. It felt really good to hit that goal.

Not to be that person, but… so what’s your next goal?

Hahaha I’ve been thinking about this a lot, and talking with friends too.

Immediate next goal, I should have about $4,000 in savings (beyond that $10K) by the end of the calendar year, and I’ll use that to open my first Roth IRA. I have a retirement account through work, but I like the idea of having a Roth too.

Long term next goal, I’m still thinking. I want to do more charitable donations, so I’m thinking about those $500 monthly amounts in 2018—maybe half goes to my savings, and half goes to various charities? Or I split it into smaller pies? Remember, I do have 34 budget categories. 😄

For me, this also ties into some larger life choice thought patterns. I’m 35, single, I rent and I love it, and may not ever want to have kids. So the idea of saving for a down payment—maybe, but who wants to do their own yardwork? (Not me.) Saving for someone else’s college education… probably not, although maybe I’ll help my godchildren/nieces/nephews eventually?

This all potentially opens me up to having a lot of flexibility in the future (I hope!) so how do I become a good steward of my money?

I have exactly the same sentiments about yard work! But then I ask myself: “Where will I live when I am retired? Another rental?”

Hahaha yes!

Do you think about the longterm much? Both in terms of your own retirement and any responsibilities you might have to family, etc.?

I’ve been thinking about it more lately. In terms of my own retirement, I just got my quarterly statement yesterday and I have $84K there, which seems like a decent amount? I met with a retirement planner last year, and he said I was pretty well set, and then I increased my contributions by $100 a month just in case, haha.

As for family, I have three siblings, so I have hope that I won’t be the sole person figuring out how to care for my parents.

And for your earlier question about where to live in retirement, I am super-privileged that my parents own a number of properties (the house I grew up in plus a vacation home and some rentals), and they’ve always said each of the kids will get some of that when my parents die. So maybe I’ll just move into the beach house to retire? Not the worst life at all.

Although I hate to think about anything happening to my parents, so that’s both some security and horribly sad.

For sure.

I do want to ask about that retirement planner: all of the online experts seem to be saying NOBODY HAS ENOUGH TO RETIRE, so how do you have enough to retire? 😀

Hahaha SO TRUE! Some days I want to call him up and be like, I read this thing on The Billfold that says no one has enough to retire, did you lie to me last year?

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

So, related to that last thought, I think I do a decent job of balancing planning for the future/the worst while still living my life. I increased my retirement contributions, but also Hamilton is coming to Memphis in 2019 so I kept my theater tickets cause I need to go to that, you know? 😄

Absolutely.

As for doing better, two things: one, my grocery budget is possibly a bit excessive, but I like fruit (which is expensive) and going out to eat with my friends (Memphis has so much good food!) so every month I have the same conversation with myself about how/where to cut back, and it doesn’t usually work. I need to either get serious about cutting back or cut myself some slack.

Two, I wish I knew more about investing and making sure that money in a Roth IRA or retirement and whatever doesn’t go anywhere I don’t want it to go. Do I pay fees on this stuff? I have no idea, and I probably should start reading the fine print on this stuff. The Billfold helps with this a lot.

Awww, thanks! Also, everyone I interview says they spend too much on food. EVERYONE.

Hahah, I know! And then I read posts about food budgets, and it’s so hard to figure out if my spending is normal? Not a lot of single ladies posting about how their food budget is night cheese and grapes and conditioner and sometimes a lipstick at Target that I was too lazy to put in the Spending Money budget category. So I’ll lead the charge!

I’m already planning on doing my food budget differently in 2018 because yes, conditioner and laundry quarters and everything I buy at a grocery or convenience store ends up there. 

Yeah. That category for me is literally called Groceries/Alcohol/Target.

So… maybe it’s actually the conditioner that is too expensive, LOL.

Hahah yes, it’s totally the conditioner! Or trash bags. How/whyyyy? That is the worst part of adulting, for me. The junk I don’t want to buy or spend my money on, but I have to in order to be an even remotely clean and productive human being.

And my apartment is only big enough for a tiny trashcan, so I have to take it out to the big dumpster every few days!!!

I have a friend whose mom gives her conditioner, tampons, and new socks for Christmas every year. When I first heard about it, I was like, that’s kind of boring. But now! Now, I’m like, please adopt me!!

I have definitely put “socks” on my Christmas wishlist before. They make a great present.

Haha they do! Especially fancy running socks, which are expensive but worth it. No shame in that sort of gift-giving at all.

So I have to ask: why do you have 34 individual budget categories but lump groceries/alcohol/Target into a single category? I know that sounds judgmental but I’m really just curious, and I know our commenters will also ask.

No, that’s totally fine, I’m cracking up at my desk because I’ve never thought about it that way before.

I think it’s because in my brain, all of those things are happening at the same time/same trip, and I’m more or less doing the same thing to all of it—that is, consuming it.

Maybe it’s because I don’t actually want to see how much I’m spending on conditioner because that would be depressing? So if I lump it in to a bigger, more general category, I don’t have to worry about it?

Also because I buy a lot of groceries at Target (we have a half-Super Target), and splitting that receipt up between bagels and conditioner is more work than seemed necessary.

I don’t know if any of those are great reasons, but they’re my reasons. 😄

That’s why I don’t split up groceries and conditioner either! But I want to start doing it next year. I’m not going to do it now because it’ll mess up my 2017 Mint Trends.

I totally get not wanting to mess up your trends! But I’ll be interested to read about what you end up doing in 2018!

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

Advice is tough! Especially since I know I’ve learned so much from the Billfold, so I want to return the favor, you know?

But really, when I think about advice, I think about a conversation I had with an old roommate, years ago. She used to get mad at me for buying grapes (which she thought were horribly expensive and thus I must be terrible at finances).

But I love grapes! They’re so delicious, and the perfect snack to eat anywhere, they travel well (I have a snack with me pretty much all the time), and sure they’re kind of expensive but I could do a lot worse, you know?

So eventually I decided that I didn’t care what she thought and I was going to keep buying grapes because they made me happy, and then just cut back elsewhere if I needed to.

So there’s my advice: figure out what your grapes are, that not-too-terrible vice that makes you happy, and if you can, figure out how to indulge it.

It makes the conditioner-buying parts of adulthood much, much nicer when you can get some grapes to go with it.

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