How a Bay Area Engineer Who Decided It’s Not Worth It Anymore Does Money

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Melissa (not her real name) is 34, and she works in the Bay Area as an engineer or “tech drone.” 

So, Melissa, tell us a bit about your finances.

My finances are great, but when I was younger I made many mistakes—such as cashing out a 401(k) when I was 22.

(I ended up owing taxes, I bought a house too young in California at the behest of my parents, they helped out but I wasn’t ready for the payments or settling down since I lived in Southern California at the time. I’ve since moved to the Bay Area.)

Now my finances are great because I make enough to save the maximum in my 401(k), as well as a Roth IRA and other financial investments.

However, because I am frugal, I struggle to spend money without feeling guilt. I rarely eat out, because all my friends including myself are always stuck at work.

Do you have one of those workplaces that provides food?

Unfortunately, they took that away!

So you pack your lunch then? And dinner? (I am assuming you eat dinner at work often.)

Pack lunch and dinner or skip it.

Nice.

I figure if I eat a full breakfast and lunch I get plenty of calories. I can always eat a late night snack and not feel bad.

What about rent? Bay Area housing is some of the most expensive there is, right?

The rent is way too high. So ridiculous, my biggest expense.

Are you in a studio? Or in a bigger place with roommates? How far away are you from your office?

Studio! I like having peace. I live about 14 miles from my office, which is 45 minutes in traffic. Rent is $2,300 a month.

So I will ask the question on everyone’s minds: is it worth it? Not like anyone can just wave their magic wand and change cities and careers and lifestyles, but it sounds like it takes a lot of work and money for you to work.

I’m coming to the conclusion that it’s not worth it anymore. Everyone is overworked and stressed and we never have time to see each other because there is always a deadline.

The work is challenging and the people you work with are some of the smartest technical minds, so that was why I moved here.

But there must be more to life than work! So I am considering taking a year off because my finances are in a good spot.

The mini-retirement!

I don’t want to relocate, and I know I can find another job, but I feel like I spent too much time working and worrying about money. Now that my finances are in a good spot, I shouldn’t worry about taking some time off.

I’ve definitely known people who have done that.

Yeah, the original plan was to retire early but I think the break is a good idea.

So let’s jump back up to that idea of you being frugal and worried about spending money. Do you currently have a lot of extra money?

Yes.

What do your accounts and portfolios look like, roughly speaking?

I have ~$500,000 in various retirement vehicles and investment accounts. I have more than 2 years worth of savings for my monthly expenses. Outside of rent I probably only spend $600 a month on food, gas, utilities, etc.

So it does look like you could take some time off and still be okay. 

Especially if I move out of the Bay Area.

Would you continue to contribute to your retirement/investment accounts without a paycheck? Or would you let them chug along in the background?

I would contribute to retirement vehicles accessible to me like a Roth. I’d continue to invest because investment accounts pay more than CDs. I can just use dividends to pay bills.

Excellent. Did you always expect to be earning this much money? Or were you surprised to be able to earn and save so much?

No! My first job I made $34,000.

I figured I would only work a job if I liked it. Money shouldn’t be the thing that drives your life. I think money gives you freedom to choose, though.

What choices have you been able to make?

Moving to the Bay Area. Also, the choice to stop working now.

So what do you see as your long-term career and financial goals? Are items like homeownership in your future?

Possibly. Lots of downsides to owning.

That’s right, you’ve already had that experience! You mentioned it at the beginning and I forgot.

So homeowning vs. renting. GO.

It’s expensive in California to own, and not worth it for the mortgage deduction, because interest is front loaded. After three years it didn’t even drop me a full tax bracket.

And then upkeep such as appliances breaking, it’s all you. Property taxes rise, you pay the water bill, etc.

I ended up renting it out when I moved and being a landlord sucked.

Are you still a landlord? (I mean, you did imply past tense.)

Nope! Sold it! Never been happier. Stock market always beats out property, unless you’re in the uber-luxury market.

What do you feel like you do really well financially, and what do you wish you could do better?

I do really well at saving and prioritizing savings and spending and making good financial decisions after all the bad ones. I wish I could feel less guilt about spending and I wish I saved more. I only started saving big when I was 27.

And yet you still have far more saved than the average American. SO MUCH MORE.

Yeah. I also made some good financial choices are the right time. Even now I believe in the stock market, since I won’t be cashing out savings for another 30 years.

I wish that people will start saving more when they hear this story. You can do more cool things with your life when you have freedom.

Very true, though I suspect most people save just about as much as they can, relatively.

Do you have any other advice for Billfold readers?

Enjoy your money too. It’s not all about saving. I like to spend it on experiences.

 

Photo credit: Wilson Hui

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