By Karen Mazzola, as told to Alden Wicker
Everyone is talking about the crisis among twentysomethings. We don’t save enough. We’re behind on retirement. Our loans are untenable. We have high credit card debt.
I’m a 27-year-old legal consultant in New York City. I don’t make six figures, but I make a comfortable income. And I like saving. A lot. Maybe a little too much. I max out my 401(k), have a robust savings account and no credit card debt, and I paid off $34,000 in student loans in less than a year. Even my parents think I’m an over-saver, and they save a lot.
What Made Me This Way
I was raised on Staten Island, New York in a middle class family. My dad was a teacher, and my mom worked for the government. We were generally financially secure, though somewhere below what would be termed “comfortable.” But for some reason, I got it into my head at a young age that we were poorer than we were.
It probably had something to do with the fact that both my parents came from poor families. My dad’s parents were both factory workers who lived in Brooklyn in an apartment with no heat. When the factories would close down for a month in the summer, they went on temporary welfare.
My mother grew up the oldest girl of seven kids in a two-bedroom house in Queens. She went to Queens College even though she was valedictorian of her class, because it was all her family could afford. I think she’s always regretted that she didn’t go somewhere fancier, so she’s made it her goal to give me and my brother as much as she could.
For this reason, she tended to spoil us. I had several dozen Barbies, the Barbie dream house, the Barbie limo, the Barbie yacht (that thing had a working blender on it) and nice clothes. Of course, my mom bought everything on sale whenever she could, because that’s just how we roll in our family. And the rest of her money she saved and put in savings bonds … so she could give it to me and my brother later. (She gave my brother the down payment for his first condo and money for his next home with his wife, the result of saving a little bit of each paycheck since the day he was born.)
I saw my parents fight about money a couple of times, and they were separated by the time I was eight. Though I later found out that their divorce was for very different reasons, I think that in my head I at least partly attributed their separation to money, which made me think that more money equaled less discord.
How I Got Four Degrees and Owed Just $34,000
My mom had saved money for college, but she thought it made more sense to go to undergrad for free and then go to a good graduate school. I applied to nine schools, got into all nine and I got four merit-based full-ride scholarships. Out of those four, I chose my favorite, the University of Delaware.
College was basically free. My full ride came with housing and meals. I usually had some money left over from my book stipend, and I would live on that. I rarely ate outside of my meal plan. I didn’t drink until I was 21. There wasn’t much to do in my college town, and campus events were free or very cheap. I didn’t have a car, so I went to the mall maybe twice.
The only thing I paid for was study abroad in Australia (and I went back for free as a teaching assistant the next year) and some summer classes, since I was getting two degrees, in civil engineering and English.
After I graduated, I went straight to law school at Cornell. I used all the money my mom had saved for college, and during the summers I worked at a law firm. The rest of my degree I financed with the maximum amount of federal subsidized student loans.
My second and third years in law school, I was a residential adviser. I loved being an R.A., but saving $10,000 a year on housing was definitely the impetus. I cooked most of my own food. My budget for going out and eating and drinking was probably less than $50 a month. I still had no car. When I did one more year at NYU to get my master’s in tax law, I lived with my dad in his studio in the city, even though all my friends lived in a dorm by the school. By the time I graduated, I had four degrees and only $34,000 in student loans.
The day I graduated from law school in 2011, my mom found out she had breast cancer. I moved back home to live with her on Long Island, and used that time to apply for jobs. I got a job offer in the late fall, right around the time my mom finished with her surgeries and my student loans kicked in. My dad moved to Florida, so I moved back into his apartment in the city.
Transitioning to Adulthood—and Saving Even More
As soon as I started my job, I maxed out my 401(k) by putting in 21% of every paycheck. I put at least $1,600 (half of my take-home pay) toward my student loans each month – more than four times the minimum payment. My mom put $600 toward paying them off as well. The rest of my paycheck went toward roughly $700 for maintenance on my dad’s apartment, $100 for cable, $50 for utilities, $100 for groceries (vegetarianism and home cooking for the win!), $100 to charity, and a little bit to occasionally go out. I also tried to put money in my savings account, but inevitably took it out to put toward my loans anyway.
While it might not be everyone’s idea of fun, I was obsessed with budgeting. Every dollar I spent on things other than loans had a 6.55% surcharge in my mind, because that was the percent I was being charged on my loans. I was really intoonline calculators and I maintained a massive spreadsheet detailing the principal, daily interest I was paying, and how much I would save overall if I paid off my loans faster.
I was spending $5 a day in interest in the beginning, so I balanced this by walking to work—it takes a half hour each way—rather than spend $2.50 each way on subway fare. That also saved me from getting a gym membership and being crushed in rush hour subway traffic. I didn’t go out to eat often, if at all. I never got takeout. When I went drinking with my friends, I only paid in cash because then you can’t get a crazy bill, and you won’t forget your credit card somewhere. When the introductory price ran out on my cable, I cancelled it and switched to a digital antenna and a streaming video subscription.
I will not pay retail on clothing—the most I’ve spent on a single piece of clothing this year was $100 on a deeply-discounted coat. I feel like there are two types of shoppers: hunter/gatherers like me, and farmers. The latter like everything in rows, organized by color and size, and they pay full price for the convenience. But I like to hunt for the one perfect piece and I will not spend more than 50% of the original price. My goal is to get 80% to 90% off. To do this, I go to stores like Marshalls and Century 21 (and then head straight to the sale section) or browse eBay and the local thrift stores.
I have not taken a single day off work since I started 15 months ago. I reasoned that if I quit or got fired (not likely, but you never know), I would get paid for those vacation days. Each one is worth around $300, so I would think to myself, “Do I want this day off or do I want the $300?”
I’m not sure if my bosses have noticed I’ve never taken a vacation day, but they definitely know I’m a saver. At work we generally congregate in the conference room for lunch after everyone gets takeout from various restaurants, but I always bring my lunch. I can’t fathom spending $15 for the convenience of having someone else make a salad for me when I don’t even spend $15 on my whole week of lunches—and they’re healthy (and delicious) lunches with lots of fresh veggies.
So yeah, I’m vocal about it.
My friends make fun of me sometimes, but in a good-natured way. Many are also recent law school grads, and they have incredible student loans, so they understand. We’ll get dollar pizza and Trader Joe’s wine and play video games at my apartment or go to dive bars. Sometimes they’ll comment on the fact that I’m more frugal than they are even though I no longer have loans and don’t pay full rent, but not in a negative way. I think anyone who would seriously criticize you for not spending as much them is a jerk, and I probably wouldn’t want to be friends with them anyway.
Oh, and I never use my credit card. I probably have a terrible credit score, but I won’t need to take out any new loans any time soon. I just really hate paying interest.
Bye-Bye, Student Loans
I paid off my loans in September, less than a year after they kicked in, saving myself over $11,000 in interest. I switched from playing with loan calculators to retirement calculators (I love online calculators), and maxed out my IRA. I check my net worth every day and examine my spending using an online budgeting tool, like the LearnVest Money Center.
In the past, I’ve never had more than $2,000 or $3,000 in the bank because I immediately put it toward my loans. Now I have real money, and I don’t know what to do with it! I’ll probably invest in the stock market or redo the bathroom in my apartment.
I do spend a little more than I used to, and I don’t feel as guilty. If I see a piece of clothing I like, I’ll give myself a pep talk. “It’s $30, you like it, and you can afford it.” I still only buy items when they’re on sale, though.
I feel like my life is pretty full, though I’m terrible at dating. I like to pay for my own food and drinks on a date, and I’ll think, do I like this guy enough to swipe my Metro Card to get there, pay $20 for food, $10 for drinks, and Metro Card it home? The answer is often no. But for my friends? I’ll pay that much to see them. It’s all about knowing what’s worth it to you.
I know what you’re thinking, and it’s true: I’m pretty responsible, but I couldn’t have gotten here without my parents’ help and guidance. I’m incredibly grateful, especially to my mom.
You know what my ultimate financial goal is? I hope to someday be rich enough that my mom never has to worry about money again. It’s probably impossible given her nature, but it’s my hope nonetheless.
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