Our Cash Confessional series, in partnership with Bank of America, takes a personal and anonymous look into how people of all ages and incomes spend their money in the span of seven days.
To see the other installments of Cash Confessional, click here. This series is completely volunteer-based; if you’re interested in keeping track of your own spending and having it featured, email Kylie at [email protected]. This week, I spoke with a 28-year-old male that makes $100,000 a year. Here’s how he spends his money. -Kylie
Industry: Banking & Finance
Position: Senior Financial Analyst
Yearly salary: $100,000
Extra income: $68,000, which stems from my four properties that I rent out on Airbnb.
Who do you bank with and why: I have multiple banks and accounts across many institutions.
I have a checking account and two credit cards with Bank of America. I like Bank of America’s ATMs for convenience and cash deposits. BAC also was my first issued lines of credit many years ago – so I maintain those still on my credit report and history. Combined credit available ~$20k.
I also bank with Charles Schwab and they are my ‘main’ bank. I have a checking account with them, which is linked to my direct deposit for my 9 to 5 job. I also have a Brokerage and Roth IRA account with them for a combined balance of ~$110k. I also have an additional credit card through Schwab for ~$12k.
I bank with USAA as well, being prior military. I have a Mortgage loan, Credit Card ~$10k limit, checking (rarely used), savings(rarely used), and home/auto insurance.
I also bank with Navy Federal and have my remaining mortgages here, a credit card ~$15k limit, and checking account (rarely used).
I also have a Discover credit card with a ~$7.5k limit
I also invest partially with a Fintech app called ‘Acorn’ which rounds each transaction made to the nearest whole dollar and invests in index funds at my discretion.
I have a 401k through my employer with Hewitt for ~$35k in balances.
All together I have 1 brokerage account, 1 IRA account, 1 401k account, 4 checking accounts, 1 savings account, 6 credit cards, 3 mortgages, and home/auto insurance. I never maintain any credit card balances and pay in full, on time, every month. I value building my credit score. From 2010 to current, I have increased my score from 550 to nearly 800. If I can do it, anyone can.
Savings: I am always putting away money for retirement and savings. I find this very important for my financial security and stability and an early retirement. In college, I maxed out my financial aid, Pell grants, and any type of scholarship above and beyond the cost of tuition and invested in the stock market (to the maximum allowed). Call it lucky or good timing, but I started college in 2007 at the bottom of the market. This investment, while all my other friends were buying clothes, liquor, cars, or un-needed items allowed for compounding growth. I turned a cumulative $25k investment into $75k over the next 4 years. I sold the day I graduated and paid off all $45k in student loans with $30k remaining. It was an amazing feeling to never once worry about student debt or be saddled with that burden. Since then in 2011, I have dedicated saving as much as I could of each paycheck upwards of 20-25% after taxes into my Roth IRA (up to the yearly maximum and then to my brokerage account). I also currently put 6% into my employer sponsored 401k to receive the 6% match. Since 2011, through saving and capital appreciation now have ~140k in Brokerage, Roth and 401k balances. My goal is $200k by year end and $1MM by 35. I invest 80% in indexed funds and ETFs and 20% in a few single stocks in an attempt to get a little extra ‘alpha’ (thanks FB and AMZN).
Mortgage number one: $940, but it provides a $1,100 income.
Mortgage number two: $1,600, but this provides a $1,600 income.
Mortgage number three: $1,700, but I Airbnb this property and make $3,000 on average with it.
Rental number four: $525
The first of the month is always fun, as it is an extremely heavy outflow of cash to cover the cost of three mortgages and one rental. I own three properties and rent them out in various manners and the fourth property I rent from, staying when mine rents. I own 1 property in South Carolina currently on a month to month lease for $1100 and the mortgage is $940. I own a second property in Charlotte renting for $1600 with the mortgage being $1600. I have a third property uptown which I pay $1700 for and rent on AirBnb for average monthly earnings of $3000. I live part-time in a fourth property that I rent from someone else for $525 a month.
Mortgage number one (month-to-month for two years now) and mortgage number two (24-month lease) are fully rented, and I do not live or stay at these locations. I currently live at my third location in the heart of uptown, but when it rents on AirBnB, I stay in the fourth location in Plaza Midwood (AirBnb rental income covers both units and nets me an average monthly profit of around $700).
A note to point out – My cost of living is entirely free and I make a profit above and beyond while earning equity and writing off mortgage interest. This also helps me compound wealth overtime. I plan to get another unit by the end of this year to continue AirBnb rentals.
Number of roommates: I do not have roommates; I don’t typically bode well with them. I prefer living alone for many reasons but rent my entire place on AirBnb an average of 10 days a month. I have odd tendencies, weird schedules, and OCD like cleanliness. I like to go out on the weekends too and come home late.
Neighborhood: I live in the heart of uptown, within walking distance to all restaurants, bars, clubs, venues, and activities. I believe it is labeled Fourth Ward but I’m more in the center of all the wards on Tryon Street.
Utilities: My electric bill averages $100 a month and the HOA pays for water, trash and sewer.
I opt out of natural gas for heat and use space heaters instead if needed during winter. My tenants pay for their own electric, gas, cable, water, and/or internet.
I don’t have cable; I use a shared family plan of Netflix and utilize a jailbroken Amazon Firestick for the Kodi app, $0 a month.
Internet is $20 a month.
Car payment: $0. In sticking with my goal of early retirement and aggressive savings, a car has never been important to me. I drive a 2004 Ford, which was less than $1,000 at an auction. It’s reliable, looks decent and gets me to where I need to go. I live Uptown, so I rarely drive anyways.
Car insurance: Because I have an old car, paid in full, my insurance is $200 a year or $17 a month. I drive less than 2,500 miles a year.
Transportation costs: Maximum $25 a month in gas, most of my transportation costs are Uber or Lyft reliant, especially after a week of drinking. This averages to $50 a month.
Phone bill:: I have been a customer of Sprint for nearly 6 full years with an unlimited data plan. $83 a month.
Insurance: My mortgage’s insurance is escrowed so I factor that into the total cost of the mortgage. I opt out of health care insurance (dental, medical, vision, etc.) as I am a healthy, young, single male. This will change if I get married or have kids, but as of now I pay everything cash which includes dental x-rays, cleanings, prescription drugs, doctor visits or elective care. I do my shopping and call/ask around. It isn’t nearly as expensive as you’d think. I haven’t been to a hospital in over 10 years; I’ll pay the IRS fine.
Any extra costs not previously mentioned: $12 a month Apple Music and additional cloud storage.
$100 a month in beauty products, toiletries and miscellaneous cleaning supplies to maintain an AirBnb rental.
I do not belong to a gym; I utilize my work location gym and have friends whose gym I use.
I do not pay a parking garage fee as I walk to work. I utilize the public library for book rentals. I also don’t belong to or use any recurring subscription or fee based services (such as Bark box, food delivery, Amazon, etc.)
I do, however, allow for miscellaneous budgeting of being a landlord myself. Some miscellaneous expenses include AC recharges, septic tank pumping, lawn maintenance, etc. The average cost comes out to $1,000 a year. These are paid at the time of invoice and are unpredictable.
Three financial goals:
Retire by 35.
Have 10 income earning and producing properties.
Never worry about money again.
Money Diary: How I spent my money last week
Day one: Monday
My weekday rituals are pretty consistent and don’t vary much. I start the day off with a coffee every day either from Rush or Starbucks, in today’s case – I chose Rush ($2.77 + $0.23 roundup with Acorn Investing – $3).
Ate lunch at TruTaco uptown and saved a portion later to eat for dinner to save money ($8.60 + $0.40 roundup with Acorn Investing – $9).
Worked out at a friend’s gym and saved on a membership cost before retiring early and going to sleep afterwards.
Total spent: $12
Day two: Tuesday
Today I chose to get my morning coffee from Starbucks ($4.38 + $0.62 roundup – $5).
Ate lunch at Chick-Fil-A for $6.39 + $0.61 roundup ($7).
I worked out after work, then met some friends for dinner at Bakersfield and had a few drinks ($32.05 + $0.95 roundup – $33) before going out for Mardi Gras in the Epicentre after and joining some other friends out for drinks ($17 at Tin Roof and $10 at Whisky River – $27).
Total spent: $72
Day three: Wednesday
Typical coffee ritual – this morning, however, was Rush ($2.77 + $0.23 roundup – $3).
For lunch and dinner, I ate leftovers from the weekend. $0
I went to Target and bought a Bolthouse Juice ($6) and then Venmo’d a friend for $25.
Total spent: $34
Day four: Thursday
Typical Starbucks AM coffee run was $3.77 with a $0.23 roundup to total $4.
I had lunch at Ink-N-Ivy for $15.
I bought my ticket to this year’s St. Patrick’s Day Bar Crawl for $26.81 plus a $0.19 roundup for a total of $27.
Venmo’d another friend for $20 before going out for the evening and hitting multiple Uptown bars: Ink-N-Ivy ($15), Valhalla ($5), Lenny Boy ($9), Kandy Bar ($30).
I Uber-ed home for $7.50 with a $0.50 roundup – $8.
Total spent: $133
Day five: Friday
Typical coffee ritual, but Rush this morning ($3.73 + $0.27 roundup – $4).
Lunch was at Taco Bell ($7.01 + $0.99 roundup – $8).
I got gas for $5.01 with a $0.99 roundup ($6 total) before hitting the ABC store prior to going out for $12.20 and a $0.80 roundup ($13 total) and bought another round of St. Patrick’s Day Bar Crawl tickets ($26.81 + $0.19 roundup – $27).
Total spent: $58
Day six: Saturday
Saturday was just a long day of eating and drinking. I had brunch at littleSpoon ($16.24 + $0.76 roundup – $17), drinks at Selwyn Pub ($38.36 + $0.73 – $39), drinks at Jack Beagles ($23.51 + $0.49 – $24) and then Ri Ra for a night of dancing and drinking ($15).
I Uber-ed home for $6.78 with a $0.22 roundup for a total of $7.
Total spent: $102
Day seven: Sunday
I slept all day, read a few books and spent zero dollars.
Total spent: $0
Total spent: $411
Food and drink – $291
Transportation – $21
Miscellaneous – $99
What I learned:
1) Focus on investing in yourself and for your future. Sometimes it’s tough and sometimes you’ll wonder how it’ll work out. Short term sacrifice for long term reward.
2) Also don’t forget to live and have fun in the present. My one life philosophy that keeps driving me, is that no one deserves anything but anyone can earn something.
Build your financial know-how with free tools and information to help you make more confident decisions. Visit the Bank of America Better Money Habits site today.