Income Update/Am I saving enough?

I know, I know. The same woman who was so impatient to get back to debt repayment that she made a post about it, is now asking, “Am I saving enough?” I will address what led me to ask this question momentarily. First, an income update…

Part Time Job

As I shared in an earlier post, I picked up a part time job. And…I actually love it. It’s usually two and a half hours per day (a minimum of two hours and a maximum of three hours), Monday through Friday. After I wrap up my day job, I get changed and head over to my evening gig. As of the this post, I have been there about six weeks and I have only encountered two other people, both of whom were wearing masks and who spoke to me from across a room. I go to the site, I complete my tasks, and I head home. I don’t think about it before I show up or after I leave. It’s mindless and when I first started I was listening to music, but recently, I have begun listening to personal finance and business podcasts…

So…umm…what’s the downside? The pay. I am currently earning just $10.00 per hour. While that isn’t a terrible wage, given the cost of my education and professional experience, it seems like my time could should be spent earning a higher wage. And I’m working on that. But for now, the additional income is very much appreciated. For the month of September, I earned the following:

Paycheck (9/11): $195.28 (I, thankfully, did not have to work on Labor Day…)

Paycheck (9/25): $237.23 (I covered someone else’s shift.)

Given how modest my income is relative to the size of my student loan debt, this consistent, additional income will meaningfully help me along on my debt repayment journey.

Additional Responsibilities

At my full time job at University B, I recently took on some additional responsibilities. While this is often an unsaid expectation at colleges and universities (that faculty and staff will perform uncompensated labor in service to the university), due to the nature of this role, I will actually receive a very small stipend. While this labor is significantly more intellectually and emotionally taxing* than my part time job, I was interested in the role because it is in-line with my long term career goals before I learned it came with a stipend.

University B pays us on the first of each month but the HR payroll portal allows you to see your pay stub about a week before payday. I logged in today to discover that the monthly stipend is $200.00 which after taxes and 403(b) contributions (which are a percentage of my salary), resulted in a net increase of $129.85.

While this stipend isn’t life changing by any means, it does represent a very modest improvement in my ability to pay off debt…or save…

*This job requires I work a couple of evenings, during one week, every two months.

DIY Money

Above I shared that while at my part time job, one of my favorite things to do is to listen to podcasts while I work. Currently, I am listening to DIY Money. Hosted by Quint and Daniel, it is straight-talk about personal finance and investing presented in a super accessible way. The show’s outgoing message sums the show up pretty well: “The key to wealth is simple: Live on less than you make, invest the rest, and do so for a very long time.

They have over a hundred podcasts and I have just made my way into the double digits but one of my favorites thus far is, “Like a Roth to a Flame.” In this podcast, in addition to learning a ton about Roth IRAs, one of the key takeaways for me was, “You don’t get time back.” As I went about my tasks, I began to think about my financial journey and where I want to be in five years. Not to be Carrie Bradshaw but, “Is being debt free enough?”

As I progress through even more of the DIY Money podcasts, it is clear that Quint and Daniel are not in complete agreement on this question. Quint believes there are three categories of debt: 1) bad, bad debt (credit cards, store cards, rent-to-own agreements, pay day loans, etc.), 2) bad debt (student loans or automobile loans), and 3) debt (mortgage). He believes that one should only have category 3 debt or a mortgage remaining before one begins to invest. This perspective is pretty Ramseyesque. Daniel agrees that category 1 debt must be eliminated, but thinks investing is possible with category 2 debt remaining depending on individual circumstances (interest rates, stage in life, overall portfolio, other obligations, etc.).

Looking Ahead

I know she has to be tired of me name-checking her by now, but one of the things that stuck out to me the most about DDSW’s debt free post (Double Debt Single Woman Has Paid Off Over $142,598 and is Officially Debt-Free!) was that not only was she out of debt but that she also managed to amass considerable assets along the way. (Note: I am confident I make significantly less than DDSW, so I am not worried about having as much as she has at the end of my journey. Instead, I am looking at it as a model for potentially doing both debt repayment and retirement savings.)

Another somewhat recent addition to my blog reading list is Millennial Mayday. Despite starting off with an enormous amount of student loan debt ($200,000.00), Avery seems to have done everything right. While they have received some support from their parents, they were smart and took on this kind of debt for a six-figure profession (pharmacy), hustled to pay it back, moved back in with their parents, refinanced where appropriate, and invested and saved like a beast. Which is why it’s not really surprising that less than three years into their journey, Avery already has a positive net worth. As I was reading through their debt update posts, I noticed their repayment slowed a bit and Avery explained that with just under $50,000.00 in student loan debt remaining, they have decided to invest even more

For all of the reasons you can imagine, the DIY Money podcast, DDSW’s post, and Avery’s blog have me really thinking about my long term financial goals and what I need to do now to get there…

P.S. I know I was super vague about exactly what my part time job is. That was obviously intentional. However, unlike secrets I plan to keep, like my identity, this is one I will give up once I’ve paid off my debt. I am sure there will be other secrets along the way, and at the end of this journey, I plan to divulge a few.

9 thoughts on “Income Update/Am I saving enough?

  1. Oh gosh, this is kind of a tough question. I’m inclined to say that for now you should stay focused and use the stipend for debt — because you are already saving for retirement via your job, right? I might feel differently if you weren’t saving *anything*. But as it is, I feel like, man, get rid of those private loans! Maybe invest more once those are gone?

    Liked by 1 person

    • Lol, thanks C. I have zero problem doing that and it would actually make my financial life a lot easier (staying focused on one goal). I think I just feel like I was so financially shortsighted in my twenties that now, in my thirties, with even less time left to save, I don’t want to be financially shortsighted again…

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  2. Thanks for the mention 🙂 And congrats on the part time job!

    I agree with C and think you should focus on the debt payment for now. I don’t know about you, but I had some severe anxiety when I was still in six-figure debt especially with some of my higher interest rate loans. The peace of mind to getting under six-figure debt was definitely worth postponing my savings account.

    Liked by 1 person

    • Deserved. And thanks!

      Thank you for the insight. The anxiety is real and it genuinely eases a bit every dollar closer I get towards being under six-figures.

      I think continuing to throw everything I have at my student loan debt makes a lot of sense to me. However, I also realize that if I knew everything about personal finance, then I wouldn’t need to ask questions. Given I am 34 and hope to be debt free by 39, does waiting to save more until then make sense? There is a surprising contingent of Ms. Afro Penny readers who don’t comment on my posts but vote, and shockingly, the current poll results are 75% in favor of saving and 25% percent for using it to pay off debt.

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  3. I voted that your stipend should go towards debt payoff, but I admit I’m torn on this question.

    For myself, starting about eight years ago, I prioritized paying off my mortgage, even though it had a low interest rate. That in turn allowed me to purchase a two-family house and do some necessary (and some unnecessary!) work on it, so in that sense it was a good decision. I did continue saving for retirement at the same time, but I’m significantly older than you, and that is a factor. In retrospect, though, had I invested more and not paid off my mortgage, I would have a higher net worth now – it would just be reflected in a larger 401K and less equity in my house. I’m doing things differently this time around. I’m not planning on paying off my mortgage anytime soon (although I reserve the right to change my mind again!), and am focusing more on building up my 401K. So, that should put me on Team Invest.

    However, having no mortgage DID give me real security in that if I were to lose my job and not be able to find a job at the same salary, I would be able to get by without a problem. Eliminating your student loan debt sooner rather than later will give you the same security.

    So, my recommendation is pay off your private loans first (due to their general evil nature), then your university loans (due to the interest rate on three of them), then reevaluate when you have just your federal loans left. If at that point you’re in a secure job and want to invest more, that could be a great time to do it.

    I’m not sure why I needed to write a novel here – thanks for humoring me!

    Liked by 1 person

    • Humoring you? That was gold. Yea…my poll definitely should have had an “other” option but I had an “other” option on my “Which debt should I payoff next?” post and folks voted for “other” but didn’t tell me what to do. (I will disclose the results of that poll and what it means I payoff next in December.).

      So it seems like your argument is essentially, “Payoff debt now, while it makes your financial situation more precarious, and reevaluate in the future when you are more financially secure.” I can definitely get behind that.

      Thank you for sharing a bit of your journey with me. I am currently single, and there is not “real” likelihood of that changing at any point in the near future so I am beginning to plan for a financial future alone and where I make all the decision for me and maybe a cat. I’m just trying not to mess up as badly as I have the first decade after college. I want to next decade to be better.

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