Welcome to Money Conversations: Volume 1!
As I wrote in my introduction to this series, I’m pretty obsessed with talking about money, and I don’t get to do it often in real life.
Today, I’m writing about a conversation I had with a friend I’ll call “Allie.”
Here are the stats that I’m comfortable sharing:
Name: Allie (changed for privacy purposes! …though I’m pretty sure she has no idea I have a personal finance blog)
Family: Married to a guy (with a full-time job), has one kid (in preschool)
Career: Full-time job in career for which she did not go to college (in fact, she has a Master’s in a completely different field as well!)
Location: One of the most expensive cities in the country
Background: I met Allie in college.
I talked to Allie recently, just catching up on what we’ve been up to since we last spoke. We talk a lot about our jobs, because we work in similar fields. She shared that she was just recently hired for a full-time position after working part-time. While it isn’t the perfect job, she’s very excited to go back to work full-time and not have to worry about freelancing.
Since her daughter has been in part-time preschool while she was working part-time, her daughter will now transition to going to daycare full-time, which will be a huge expense (though it should be somewhat off-set by her full-time salary).
Through the course of our conversation, I found out the following:
- Allie and her husband are carrying quite a bit of student loan debt (though perhaps no more than the average couple in their position at their age?). It doesn’t sound like they have any consumer debt.
Due to her Master’s degree, she personally has student loans, but her husband is carrying loan debt as well (I believe he has a Master’s). I’m not sure of the amount (I wasn’t about to ask), but when I told her that we have about $60,000 in student loan debt, she gave the impression that their total was above that.
It’s interesting that Allie went to school (undergrad and grad) to pursue degrees that she didn’t end up “using,” per se, but is paying down with the money she earns from a job outside of those fields. Of course, despite the names of the degrees on the diplomas, the quality of education she received allowed her to move beyond those specific areas of expertise. I know she also pursued some education in her current career area, but I believe this was some kind of certificate. Anyway, I have heard (read) about this trend among millennials, especially, and it would seem that it’s actually affecting people I know. (I myself have two degrees in a field I’m no longer working in – however, I do have a Master’s in the field I’m now in… plus, I got that degree for free! So there are some similarities there, for sure.)
- She has no idea what their debt-free date is – and she’s not interested in finding out.
She told me that she will continue to pay the minimum, but she knows that she has to pay for daycare for her daughter and that there just isn’t much wiggle room. When I told her that we are aiming to be debt-free in three years, she was super enthusiastic for me. I got the impression, however, that she felt like their debt-free date was so far away, there was no point in figuring it out.
- Allie’s husband writes their student loan provider a check each month, because he wants to feel in control of how much he’s sending them, while Allie signed up for Autopay for the reduction in interest rate, so she doesn’t have to worry about writing a check.
I just found this interesting – it’s really just an example of how differently people view money and spending. While I seem to be more in Allie’s camp (I do have Autopay), I suspect I think about money more like her husband: I want to know where everything’s going out of my bank account, and I check my finances every day. (Okay, I doubt anyone besides PF-obsessives do that.)
- They are going to start looking at houses soon.
You know, this surprised me. I don’t think it should have, though. I was initially surprised because I thought, “But they’re so far in debt that they don’t even know when they’ll be OUT of debt, why would they look at taking on more?” After pondering, though, I realized it was only a few short years ago that my husband and I were thinking the same way. We wanted to move to a house for some stability, to have some control, to not feel like we were “throwing money away on renting,” and we figured that a house is an investment – a good one.
I’ve changed my tune, though – now I’m totally okay with renting for the three years it takes for us to be out from under this debt. It makes it an easy choice when I compare what we were paying for our mortgage to what we’re paying now in rent (it’s like getting $600 free every month!). H & I are also extremely focused on using all of our extra funds to pay down our student loan debt, while Allie and her husband are focusing on staying above water (with that huge daycare bill each month) and making their minimum payments.
- I have no idea whether they have any money for a downpayment.
My gut says no, though we didn’t talk about this topic and I could be completely wrong. She told me about some of the house prices of the kind of place they would be looking for: a small, starter home – probably a townhouse/condo type place, even though she wishes they could afford a single family home with a yard. I’m glad they’re being somewhat reasonable (not expecting to move right into a place that’s completely out of their price range), but I’m concerned that they’ll feel totally trapped into purchasing a home that’s beyond their means. When you live in the kind of area they do, you simply cannot buy a home for under $200,000 that isn’t a complete wreck. If they move too far outside of their target area, they will wind up with incredibly long commutes that will affect their time spent with their little one, as well as with each other!
- They have goals, just like us.
While their goals aren’t the same as mine, I can definitely respect that they have set a goal (buying a house) and are working towards it. Allie and her husband may make a lot more money than H & I do (and, honestly, they probably always will, given their career paths), but it may be that we’re able to put more towards our student loan debt every month because their cost of living is so much higher than ours.
- I love and respect my friend, but I’m glad to be where we are right now.
I am the kind of person who needs to know everything about my money – I need a budget, I need a Mint.com account to track my spending, and I need spreadsheets to tell me when my debt-free date is … at least I have become that kind of person. I’m happy to be financially-focused. I’m glad my friend has secured a full-time job, and I know she won’t go crazy Spenderella or anything – and I’m glad they’ve set their sights on a goal.
Well, that wraps up my first Money Conversations post – I’m excited to hear what your responses are… agree? disagree?
Do you find yourself holding completely different points of view about money from your long-term friends or do you find you have a lot in common? (…Or do those topics of conversation never come up?)
For previous posts in this series, see: