How a Woman Who Got a MBA to Double Her Earning Power Does Money

Grace (not her real name) is a 30-something marketer in Colorado.

So, Grace, how much are you making?

$113,000 annual with 10 percent bonus target.

How does that compare to your expenses? Where is your money going?

I put in 7 percent to my 401(k) to max my company match and max out a Roth IRA each year. I also max out my contributions to a high-deductible HSA plan that I never withdraw from — I really treat that as retirement savings.

My husband and I spend about $2K/month on rent (we don’t own any property).

I also have about $55K in student loans left, to which I contribute at least $1,000/month toward.

Do you never withdraw from your HSA because you don’t have a lot of healthcare expenses, or because you pay for healthcare expenses (that aren’t covered by insurance) out of pocket?

Out of pocket. Luckily we don’t have too many expenses, and it makes more sense to us to just let the HSA investments continue to grow.

For sure.

So tell us more about your student loans. A few months ago you published a piece on The Billfold about going back to get your MBA and increase your earnings potential — it looks like the degree came with its fair share of debt as well?

It sure did! I managed to get about $40K in scholarships, but it still left me with about $80K of debt. My mom generously gave me a $20K loan, and the rest are federal grad loans.

When I got my full-time job, I received a $30k signing bonus that went straight to my mom, so I paid her back after my two years of grad school.


After advising from a student loan officer, I decided to use the graduated payment plan because it lets you direct the maximum amount of funds to your highest interest loans. So even though my minimum payments are relatively low — about $350/month — I use the rest of the $1,000 I set aside to pay off the highest-interest loan.

So you’re putting money towards your student loans, you’re putting money towards retirement, you’re paying rent… what else are you doing with your money? Do you have any goals besides retirement and debt repayment?

My husband and I have never owned property, but that’s always in the back of my mind. We’re happy renting but it definitely makes me nervous thinking about retiring while still paying rent. I feel kind of bullied into buying a house eventually. We are saving for an imaginary down payment on something, but still no concrete plans.

Otherwise, food and entertainment are big expenses for us.

We used to live in huge cities, and one of the reasons we moved to Colorado was the cost of living — which is absolutely awesome for what you get.

So I’ve heard.

Do you think that our generation will bring “rent when you’re retired” into fashion? Because that’s one of the questions I keep asking myself — whether I need to buy just because that’s appropriate for the next stage of my life. I love renting! Someone else takes care of all the stuff for you!

I totally agree. I wonder about that a lot. I worry that we’re all following an outdated algorithm for saving that assumes a paid-off mortgage is providing housing for us in retirement. I have grandparents who actually left paid-off homes to go back to renting, exactly because the upkeep is just so trying. So it’s all backwards. 🙂

I also am a big fan of renting. We are actually renting a full-on house here in Colorado, so we have the two-car garage, the backyard, we mow and garden. I feel like I’m reaping all the benefits of homeownership in terms of privacy and space, but without all the pain.

See, there you go.

So let’s switch topics for a second — I know you wanted to discuss whether you thought your graduate school debt was worth the salary increase, so let’s talk about that. What are your thoughts?

For me, grad school was completely worth it, even with all the debt. The previous career path I was on had a ceiling of maybe $80K, even if I worked it until I was 65 and retired. My MBA let me catapult all that and immediately jump to a higher income bracket.

Prior to my degree, I just felt constantly behind and that I was never saving enough. Now my husband and I are more than comfortable. And all the qualitative gains from my current career vs. my previous one, in terms of how much I’m learning, being challenged, and enjoy my work, are so worth it.

Your initial debt was $80K, do you have any idea how much it’ll be with interest once you finally pay it off? Will it go over six figures? I’m curious whether you’ll end up putting roughly a year of your current salary towards debt repayment (only not all at once).

Keeping up my $1,000/month repayment for my federal loans, I’ll end up paying around $10K in interest on top of the $60K in principal, and should be paid off in about six years. I’m hoping to direct my annual bonuses toward debt repayment to accelerate the process, which should help a good amount.


Did you have debt prior to the loans? Undergrad debt, car loans, credit card debt, etc.?

I have weird feelings about debt. Credit card debt absolutely terrifies me; I’ve never carried a balance even when I was making $28K in a very expensive city.

I’m lucky enough to not have undergrad debt, but my husband does, which he’s still paying off.

I also dislike car debt. We bought a new car several years ago, but I went out of my way to pay it off in half the time my loan was scheduled for.

Student loan debt gets a huge pass in my mind. I was definitely raised prioritizing education, and having to pay for it was just part of the package. Even though $80K is a lot of money, for me it doesn’t seem like much — but $1K of credit card debt sounds scary!

It sounds like you and your husband keep at least part of your finances separate, then. You’re paying down your debt, and he’s paying down his. Do you keep your finances totally separate?

No, not completely. We have separate checking accounts, but shared savings accounts. We pay rent out of our shared account. I make more money than he does, so I take care of our shared credit card bill out of my checking account. Our paychecks go into our personal checking accounts, we take care of our own loans, and we put whatever is leftover into our shared savings where rent comes from.

So when my husband and I first started dating, I found out after a year or so that he had a few thousand dollars of credit card debt. As you can imagine, I was terrified. I basically told him it was a dealbreaker for me. He reprioritized and paid everything off!

Awwww. ❤️

Yes, classic romance.

A couple more questions before we’re out of time: what do you think you do really well financially and what do you wish you could do better?

The two are kind of one and the same for me. I’m lucky to have the ability to spend below my means without really counting dollars and cents. When I lived in super-expensive cities, I would automatically purchase the cheapest store-brand products I could find and only shopped by price. But I didn’t monitor my credit card bills and overall spending. As I made more money my spending also grew, but never enough to carry debt.

At the same time, I’m also really bad at knowing exactly how much money I have. I function on a high-level understanding of my finances. Right now I feel like I have “a lot” of student loan debt, and feel very good about my retirement savings, but my husband always criticizes me for never budgeting. I definitely don’t know how to budget, at least on a spreadsheet.

Do you not track your money at all? Just kinda check your bank balances?

Yup. I was like that when I made $28k/year, and I’m like that now.

But you managed to avoid credit card debt when you made $28K, and you’re living below your means and paying off student loans now, so… it could be worse. In many ways, you’re doing fine.

Yep, I’ve been fine somehow. I think it just drives me husband crazy that I can’t tell him how much I spend on food each month. I more so have a general knowledge that our joint credit card bill is usually $3,000/month.

I think your credit card app could probably tell you — most of them track transactions by category! But that’s another solution for another time.

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

I’ll tie back to spending on grad school: it doesn’t have to be a debt driver! I also want to give one more shout-out to my fellow ladies and encourage them to consider MBAs. We need more women leading companies out there.

Photo credit: Jasen Miller, CC BY 2.0.

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