Anne, 33, lives in Boston and is a supply planning lead for a consumer products company, where she earns $100,000 a year.
Mike: What do you do at your job?
Anne: "I just started the position, and it’s new at our company, so I’m still sorting it out a bit. The basic premise behind it is that my group looks at what our buying team wants to buy and what kind of capacity the factories we work with have to make the product and manage between the two. So, it’s a lot of balancing between what we as a company would ideally want to see for inventory and how the factories want to produce."
How long have you worked at this company?
"I just had my nine-year anniversary, which is crazy to me."
What was your starting salary?
"It was either $28,000 or $30,000. I’m earning $100,000 now with the promotion I just got. The $30,000 was what I earned way back when I was in the customer service department."
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So, you were able to essentially start at the bottom of a company and work your way up. How many promotions and raises did you see within the last nine years?
"Yep, when I started here, I was told that this was a company that happened in a bunch. There are a bunch of people in pretty good positions here. The last promotion I had was my fourth. We get annual merit raises that cap out between 3-5 percent, and every year I’ve gotten to the cap. There was one year we had a wage freeze, and my boss fought for me to have a raise after the fiscal year was over because I had taken on a bunch of work. He was able to do that — it was about a 10 percent raise? I’ve gotten a range of raises with the promotions I’ve gotten."
Did you ask and negotiate for those?
"No. So, on this last promotion, I was all set to negotiate for something. I did my research, and came up with a number. I was so stressed going into the meeting even though I knew I was going to have the job offer. Then they offered me a salary $10,000 higher than what my initial volley was going to be. So, I guess I didn’t really realize just how much of an increase in responsibility this job would be."
So, if they had asked you what you wanted, you would have under-negotiated?
"For sure. And, I think part of that was a terminology thing. When I saw the bonus level I would be at, I realized it was a director-level position even though it wasn’t called that. And, since it’s a new department and job, I didn’t have a great sense of the levels. What I was looking at salary-wise was more a manager position."
Are you single or attached at the moment?
"I am attached. I live with my girlfriend. And our kitten."
And, how is this promotion affecting the way you save or spend or plan for the future?
"A bit. I have a fair amount a credit card debt and pretty much no savings, so I’m trying to use the salary increase to focus on fixing those two things — diverting money into an Ally account for the savings. I’m being a bit thwarted by a decision I made about paying for a part-time MBA program I’m in this semester versus taking out a loan. I’m realizing now that I should have taken a loan because it would have been lower interest than any of the credit cards I have right now and used the money to pay those down. I was just so excited about having the money to pay for it without incurring more debt that I didn’t think it through."
Can you run through your expenses for me? What housing looks like? Household bills? Debt?
"Sure! So, for housing things I only pay the condo fee. When my girlfriend and I moved in, she bought a place and at that time, we decided it would be best for her to be the only one putting equity into it. So, the 'rent' I’m paying is $280."
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So she’ll be the sole-owner?
"Yep. We’re really only looking to be there for five years, so, it makes sense. We were not ready to tie our finances together when we were ready to move in, if that makes sense?"
Yes, and it puts you in a good spot to use your own money to get yourself back on track.
"Yes, exactly! Which is a shared goal for us."
What do your other expenses look like?
"So the rest of the house expenses are cable/internet, gas, and electric. That comes to about $400 a month. Then I have a $90 per month phone bill. My car insurance is $120 and my car payment is $320. My big monthly expenses are my credit cards and tuition. For credit cards, I always pay at least the min and interest which comes to between $550 and $650. My tuition is about $1,100 per month, but that will happily be done in December. For fun things, I buy most of the groceries which is between $300-$400 a month — $400 when I can’t stop myself from buying all the delicious bread and cheese. We are trying to cut back on going to restaurants — right now I’m spending between $500-$700. And, food cooked at home is so much more tasty."
How much credit card debt do you have and where did it come from?
"My total credit card debt is about $14,500, and I have $23,000 left on my undergrad loans, and will be paying $16,000 while pursuing my MBA. I got my first real credit card about four and a half years ago. I had decided I couldn’t live with a roommate anymore and moved to a tiny apartment at the same time I started school, and I didn’t have the saving to actually lay out the money for those things, so credit card it was. I also bought a sofa on a no-interest credit card with the intent of paying it off before there was interest. That was later. Most of the spending, though, has been sort of the frittering away kind where I’m not sure how I spent it. I think it’s a bunch of never keeping track of my money and not really realizing what a bad cycle I was getting into. About a year or a year and a half ago, I started really trying to focus on it, and I’m trying to budget, which has helped to stop it from growing without me realizing it."
The important part is that you are actively addressing it.
Do you throw money at the problem every month with us?
"I should. I always think I will, but then, I’m scared to!"
"Actually the exciting thing I did with my credit card debt ('exciting') was take out a loan with my bank to consolidate it at a lower rate. Maybe I will use that as my thing to throw money at."
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Everyone in that thread is so supportive. Even if it’s just a few dollars that you’re paying off.
"It’s true, everyone is. I was just always nervous about what if I have a bad month and it goes up. But, as you say, supportive people!"
Oh, that happens. We live in the real world! Do you have retirement benefits at your company?
"I have both a pension and a 401(k). They got rid of the pension plan shortly after I started — I snuck in on that. My company matches up to 3 percent on the 401(k). Right now I’m putting in 7 percent. And, then I’m fully vested in the pension plan, though I’m not going to lie — I’m not 100 percent sure what that will mean come retirement time."
"Probably someone in benefits. Though I’m inclined to think of my 401(k) as my real retirement savings, and then the pension plan as a happy bonus."
How much do you have in those accounts?
"I have no idea about the pension plan (happy bonus?). The 401(k) has $42,000."
You mentioned when you wrote to me that earning what you earn now makes you feel guilty.
"It does. I feel like I have friends who do these super-worthwhile things, and are so stressed for money. When we talk salary, it just seems ridiculous to me that I get paid so much and they do not. And, there’s a socializing level of guilt for me. Like, I want to go places and have my friends go, but not have it be a stressful thing."
Stressful because of the income divide? Are you the “high earner” of your friend group?
"Yes. With maybe two exceptions, but they’re sort of individual relationships, if that makes sense. So when it’s a huge crowd, it’s fine, I’m up for wherever. I’m not like I want to do a fancy thing. But for, like, my birthday, I want to go somewhere nice and I want to pay for everyone, because I want to just hang out with my friends. But then that never works out as planned. And: guilt. But, a big part of it is the first thing I mentioned — that sort of, I don’t get why society values/pays jobs the way it does."
It’s the working in finance vs. working for a non-profit dilemma.
"Yea. And for the first several years of my job in my head I was going to leave and do something meaningful, but then I got to a point salary-wise where it would be such a cut in pay that I don’t know how I would adapt. So, I donate to charity, and I spend a ton of time with a mentoring program I love. But, it doesn’t feel like I’m giving back enough, and I sort of tell myself once I get out of my debt hole I can financially do more with my money."
I think that’s true. If you take care of yourself, you’ll be in a better position to help take care of others. And, if you really want to contribute time or money to the things that are important to you, you’ll figure out a way to do it.
"Yea. I think there is a mental disconnect now between what I think I should be able to do with my salary (potentially because I never thought I’d make that much) and what I actually can right now. Because there is that really key part of needing to get myself in a better financial place."
So, you’re in a mentoring program now. Do you have a mentors? People at your company you can turn to for advice?
"I have one person at work I think of as a mentor. (The boss who advocated for that raise for me during the freeze.) I tend to look to my college friends for career advice. They are wise women."
I think that’s great. A few friends and I dedicate one day a month to get together to talk about our jobs and offer advice or address problems we’re going through at work. It’s super helpful.
"It is really really helpful. And, while I think it’s good to have someone inside the company to sort of help navigate office politics, it’s also so good to have outside opinions."
You mentioned to me that you see a therapist as well. You’re finding that helpful?
"I do. I have a tendency to never think I’m doing good enough, and she’s helped a bunch in putting that in perspective. And, I think getting some of that perspective, and the clearing of pressure I put on myself has helped to let me deal with my finances. Because I definitely think that a lot of that frittering away spending was just, how I dealt with being unhappy. I’m not sure that came across quite right. It’s sort of the more okay I am with the fact that I’m not perfect, the more content I am, and the more I’m able to get myself to do the things that help me stay content, like not get into terrible financial holes."
Yes, that makes sense to me. What are your immediate goals?
"I would like to have my credit card debt paid off in a year. I think that would be the biggest burden lifted. Then my other goal is to build a savings account of $5,000 without me dipping into it. And, a final goal is to be more realistic with my budgeting. I use You Need a Budget and I am not good at forecasting my monthly needs."
And that’s ok! You’ll do some trial and error and will figure out what works. I don’t budget. I hate budgeting. I just don’t spend more than I earn, and that’s all that really matters.
The Billfold — which, mind you, is not another personal finance site — aims to do away with the misbelief that talking about difficult money issues is uncomfortable. Instead, they've created a space to have an honest conversation about how we save, spend and repay our debts. Or, why we'll buy a dozen oysters before we pay our rent.