This was obviously not a responsible thing to do. What if someone broke into my apartment and made off with my stash? What if a roach crawled in there and died, and I was too grossed out to ever touch the money again? In other words, why was I living like a woman in the Great Depression, hiding cash in the nooks and crannies of my home, rather than putting it into the trusty hands of a financial institution where it would be safe and maybe even accrue interest?
Though the cash in my tequila bottle eventually made its way to an actual FDIC-insured account, it’s clear that I didn’t have a solid financial foundation — despite my college education, and despite the fact that I’ve been working since I was 14. I didn’t have a good grip on how to save, how to invest, or how to plan for the future. Chalk it up to the young person’s belief that she will live forever. At the age of 28, I’m a writer and producer for a media company in New York — and I still didn’t totally understand how to do these basic things. But as 2015 came to a close, I made a monumental decision: I want to be debt-free by the time I'm 30. That’s when Priya Malani at Stash Wealth stepped in — and changed my life.
Malani, 33, started Stash Wealth in 2012, after she parted ways with Wall Street. She’s got credits at Merrill Lynch, Savills Studley, and Douglas Elliman. In other words, girlfriend knows what she’s doing, and I trusted her completely. At Stash, Malani focuses on a group she calls H.E.N.R.Y.s — High Earners Not Rich Yet. In other words, she works with twenty- and thirtysomethings to get their financial planning in order. Malani’s philosophy is that financial planning isn’t just for wealthy, older people.
Just one problem: I’m not exactly a high earner. At the time of publication, I make a $55,000 salary. And I’m hardly in a position to stash away my earnings: I have nearly $8,000 in credit card debt, and almost $100,000 in student loans. (Sound familiar, millennial friends?) Still, Malani took me on as a client, as she was sure she could not only get my finances to a more manageable place, but also put me in a position to start saving for the future. After a couple of meetings, she addressed me in an email as “Ms. Future H.E.N.R.Y.” And what I thought would be a simple laying of financial groundwork turned out to be a life-altering, emotional experience, that has me rethinking so much more than just how I spend my money. Also, I am not prone to hyperbole.
I really appreciated that, despite her incredible knowledge, Malani never got frustrated with me when I asked simple questions about credit cards, or when I referred to the stock market as “the cowboys of Wall Street.” It’s hard to admit that, despite being a grown-up, you felt like a little kid when it comes to money. Malani never made me feel stupid.
That’s an invaluable quality in your planner, because the first step is revealing just how deep in financial shit you are. I felt embarrassed when I busted open the books for Malani. I found myself trying to explain my way around things, and trying to justify why I was in this situation. But what I quickly learned is that it doesn’t really matter how you got in this mess. All that matters is that you acknowledge it needs fixing.
It’s hard to admit that, despite being a grown-up, you felt like a little kid when it comes to money.
The absolute first thing Malani had me do was fill out a sheet about my monthly expenses: How much I spend on rent, utilities, groceries, and, well, booze. The idea was to isolate where I was overspending, where I could be more flexible, and where I could save more. The concept of saving more seemed outrageous to me. I thought to myself, if I could save more, wouldn’t I already be doing that? I needed absolutely every penny that came my way.
Once she had all that info, Malani put together a stash plan for me: a thorough analysis of how financially comfortable I would be if I followed her savings plan. Okay, more like rich. How rich I would be when I retire. She broke my monthly budget down into fixed, flexible, and future amounts. Fixed costs are my monthly bills — think utilities, cell phone, and student loan payments — plus my rent. (These added up to 75% of my income.) Flexible costs are my dining, entertainment, and charitable donations. (Just 6% went to the fun stuff.) Future costs are my IRA retirement fund and savings account. I was already setting aside 7% between my 401(k) and small savings. But, my savings account had just $80 in it when I started working with Malani, and I was dipping into it between paychecks.
Malani’s calculations showed me that there was 12% of my income I could be putting away into savings, or shifting to my future costs.
What we found is that if I was able to increase my Future amount from 7% of my income to 15% — by doing things like Digit, changing to a more lucrative IRA, and being more careful with my flexible income — I would have an estimated $1,767,173.52 (after taxes) by the time I retire at 65. The way I was going at 7%, I was looking at just half of that.
The key word here: "match." Today, my 401(k) balance is $4,466.40. I've contributed 4% of my pay for two and a half years. If my company had matched at the standard national rate — essentially giving me 50 cents on the dollar up to the first 6% of my salary — the total contributions to my account would be at an estimated $6,723.06 — an additional $2,256.66.
This isn't even taking into account for any growth. A reasonable expectation for the rate of return for someone my age with a diversified portfolio is around 8%. At that rate, my 401(k) would be close to $8,000.
If I had increased my contributions to maximize the match at 6%, and my company matched, the estimated amount in my fund would be $10,154.97. With the 8% growth, my account would be closer to $12,000. That’s three times what I’ve got right now. Ouch.
So, Malani advised I switch to a Roth IRA, an investment fund for individuals whose adjusted gross income is less than $117,000 per year. (This amount changes by state and each year. For more information, click here.)
Immediately I panicked. The 401(k) has always been held up as the gold standard As soon as I got a job, the first thing my parents asked was if it came with a 401(k) option. So, I was just supposed to stop contributing? Even though I had faith in Malani, I asked for a second opinion from a trusted friend and mentor. She agreed with the advice, and so I stopped putting money into my 401(k)and began allotting the same amount of money from my paycheck into a Roth IRA at Capital One. One thing to note about doing this: It comes out after tax. But, Malani and I decided it was better to pay tax on it now then to pay when I’m retiring.
Malani also suggested I set up Digit, an app that monitors your spending habits and sneakily squirrels away money into a savings account for you. The app works on the principle that it will come to know your spending habits so well, that you won’t even miss the money in the first place. And again, Malani was right. In my first month of my new financial life, Digit saved me a little over $34, and I didn’t even notice it was gone.
When we started talking about how I could set up a better budget, I thought maybe a good way to control my money would be to go to an envelope system. You know, take out all the cash I’m allowed to spend each week, and never use my debit or credit cards so I don’t risk overdrafting. I like cash. When I empty my pockets at night, I toss the coins into a shoebox in my room. When the box is full, I cash it in at a Coinstar machine, and use the extra money for groceries. But, Malani held firm. “Digit is your new shoebox,” she said. And to avoid any overdraft fees, of which I paid about $200 last year, she advised me to break up with Bank of America, which was charging me $35 per overdraft, and to move my money to Capital One, where they charge nothing.
It wasn't enough to just start saving more. One of the big questions Malani asked was what I wanted my salary to be in, say, two years. I had no idea how to answer that. I felt like I was being underpaid, but I didn’t have a firm concept of what a reasonable salary would be for someone with my experience. But Malani didn’t ask me to guess how much my salary should be — she asked me to tell her what I wanted.
Malani didn’t ask me to guess how much my salary should be — she asked me to tell her what I wanted.
Inspired by our conversation, I wrote up a proposal for a new job title and job description for 2016, while also listing my biggest highlights from 2015. I've found out that’s a great way to not only convince others that you’re due for a promotion and a raise, and also to convince yourself.
But even armed with this ammunition, asking for a raise is still terrifying — and while it's essential to ask for what you want, it can be tough for women to speak up successfully. If you don’t ask for a raise, you probably won’t get one. If you do ask for a raise, you can be perceived as greedy. No guts, no glory.
And with that number in mind, I decided to ask my supervisor at work for a salary bump from $55,000 to $85,000 — a 54.5% increase. I know the amount I asked for sounds crazy. The projected standard pay raise for 2016 is just 3%. But I genuinely felt I had been undervalued during my time at the company. If I had started out at a more appropriate salary, this increase wouldn’t sound so out of bounds. If I had taken another job somewhere else, I would probably be making more.
So how did the conversation go? It wasn't an immediate yes. My manager was diplomatic and thanked me for coming forward with the ask. She was in the middle of 2016 budget planning, I wouldn't hear anything until early in the New Year. And I didn't even throw up.
I decided to ask my supervisor at work for a salary bump from $55,000 to $85,000 — a 54.5% increase.
We discussed the option of doing a balance transfer to a new credit card, but ultimately I decided against it. It would lower my age of credit history, and since I planned to use my upcoming tax return and year-end bonus toward paying them off completely, it didn’t feel like the right choice. For all the big changes in this process, I was relieved Malani didn't expect me to live on ramen noodles in order to pay off my debts.
in reality, if I’m planning for my future, I need to think about who’s there with me.
So, one night over drinks, I asked him: “Do you want to get married one day? I don’t mean to me, but just in general. Is marriage something you want for yourself?” We talked for a while about whether or not marriage as an institution meant anything anymore. Then, after some light debate and my admission that I did want a wedding one day, he smiled at me and said, “I’d marry you.” And that was enough for me. We didn’t talk about when. We didn’t talk about sharing money. Maybe we should have, but it was a perfect moment, and I didn’t want to muddy it with things like, “Okay, but will we have a joint bank account?” That conversation can come later. I know it needs to happen. For now, I felt more confident knowing that he and I have the same goal for the future: each other.
In the two months since I started Malani’s plan, my finances are in drastically better shape, as is my attitude about myself, and how I view money in general. I feel confident in saying how much I’m worth. Plans for my future with my partner are more clear. I haven’t overdrafted, and my savings account has tripled. Other changes are pending — I still don’t have any word on my new salary, and my debt is still there. But I feel in control. I’m no longer referring to stock market bros as “the cowboys of Wall Street,” and the only thing in my Patrón bottle is, well, tequila.