Mike: Why don’t you start by introducing yourself?
Rich Person: I am 31, and my husband is 33. We have been married for three and a half years. I am a statistician and I work for a hospital in the research department. He has an MBA in finance and works for a bank. You can guess where the money comes from!
Mike: Your husband?
Rich Person: Indeed.
Mike: Can you tell us what your household income is?
Rich Person: Yeah, so this year we’re going to make about $360,000 total.
Mike: And you consider yourself “rich”, yes?
Rich Person: Absolutely, although it feels really weird to say that, and I have a lot of guilt about it.
Mike: Oh, interesting. Why is that?
Rich Person: Probably because neither of us grew up with any money at all. He was raised by a single mother who did her best, but had pretty bad financial habits; I had two parents and a stepparent who were all frugal but since nothing was ever frankly discussed, I didn’t learn much about money growing up.
We had everything we needed, but rarely what we wanted, if that makes sense. We both also spent most of our adult lives (which so far have been spent in college) really scraping by—we both had to live independently so we worked through undergrad and grad and got no help from our families.
Mike: Where did you and your husband go to college?
Rich Person: We both went to public state schools near our homes (we grew up in different cities). I got Pell grants and scholarships for undergrad, but it still didn’t cover everything so I have about $80,000 in student loans, mostly from grad school. He didn’t get as much help and a MBA is more expensive than an MS, so he has about $120,000 in student loans. When I think about $200K in student loans, my head spins. But then I think about our annual income and it seems proportional.
Mike: But your husband also knew he’d be pursuing a high-paid career too, right? So there was a plan of some kind—a vision that the debt would be manageable?
Rich Person: Yes, and actually we don’t regret the loans at all. We both like our jobs very much, and there’s no way we could be where we are without them.
Mike: So tell me about how you guys became “rich.” Was it gradual, or sudden?
Rich Person: Well, as you know, starting out a career in banking in 2008 was not the most confidence-inspiring prospect. His salary was $58,000 but we had no confidence in the stability of his job. My salary at the hospital right out of school was $48,000. Before we were married that felt tough (separate rent, bills, groceries, etc.) although a lot of that is because both of us reacted to growing up poor pretty badly—as soon as we had a few extra bucks we were buying rounds and ordering the filet.
Mike: This was in the middle of the recession, right? Maybe you were trying to jumpstart the economy?
Rich Person: We were dumb, and we both did stuff like that even when we were in school and struggling. I liked to treat my friends and would do so down to my last dollar, but thankfully I didn’t turn to credit cards. He had quite a bit of consumer debt when we got married from overspending that we paid off the first year we were both working our “real” jobs. He’s great with other people’s money, but his money is very much an emotional thing. We gradually got raises over the next couple of years, and then in 2011 he got his first real bonus, which just sent us over the moon. That was $65,000, which ended up being about $38,000 after taxes.
Mike: That’s somebody’s salary!
Rich Person: His bonus in 2012 was $85,000, and this year it will be $100,000. And the big, big change is that his base salary went from $65,000 last year to $160,000 this year.
Mike: How did that happen?
Rich Person: He got a new job with a major jump in title and responsibility. He’s the vice president of corporate finance at this new bank.
Mike: So we hear titles like that often. But what does that mean he does?
Rich Person: It means that now he has a fresh MBA to boss around! No, kidding. Sorta. He does manage someone now, and the department is brand new so with any luck he’ll be managing more soon. So corporate finance basically means they give and manage and split up loans to businesses. His new bank is relatively small so the businesses also tend to be small.
He also works 80 to 100 hours a week. Otherwise you’d be talking to him! He basically is home to sleep. He does usually get at least one full weekend day, though. And I work from home now so I’m always here. So, now with his basically $260,000 plus a $35,000 signing bonus and my $65,000 salary, our combined income is $360,000.
Mike: Your salary is much lower than your husband’s. Does that feel funny to you? Or it doesn’t matter because you’re married?
Rich Person: It doesn’t feel weird. We recently moved across the country for his new job, so rather than lose me my company decided to let me try working remotely. I used to have a nice big office while he had a cube, so that was pretty great. And honestly, it sounds kind of whiny to say it, but I often feel like a housewife with a full-time job.
Mike: Because you’re at home and your husband makes so much more?
Rich Person: Since he’s not able to spend a lot of time at home and he makes the big bucks, we’ve got a setup where I basically do all the house stuff, financial stuff, grocery shopping, pet care, and home decor decisions. We are both fine with that, and he does help out whenever he can. We’re in constant communication about things and neither of us feels bitter about our lot.
Mike: When you say financial stuff, does that mean: He basically hands over his paycheck to you and you figure out where it should go?
Rich Person: Yup. I pay the bills, I manage the budget, and since he’s pretty spendy-spendy, I give him an allowance!
Mike: How did you determine what that allowance would be? Can you talk about how much you decide goes into savings, or other accounts?
Rich Person: Sure. And this is where the irresponsibility remains. We have a great cash budget with wiggle room built in, and yet we blow it pretty much every month. We have it in a Google spreadsheet. We budget $400 per month “free cash” for each of us. In January he spent about $800 and I spent about $600. But I have a hard time being strict about this because we aren’t going into any debt for it.
Mike: What happens when you go over that “free cash” allowance? I mean, where are you dipping from?
Rich Person: There is a line item in the budget called “Excess cash flow” and for February, that is $6,202. So I mean, so what if I get dinner from the Whole Foods deli for $41? I have a hard time not doing stuff like that.
Mike: Is this excess cash supposed to go somewhere if you’re not spending it? Like a savings account? Or an investment account?
Rich Person: Well yes, we do have about $93,000 in a savings account and it’s basically an emergency account. We have about an equal amount split between a 401(k) and a Roth IRA.
We aren’t really saving for anything, though. We own a home in our old city that is small and has a $1,000/month mortgage. A family member is going through a rough time, so she is actually living there rent-free right now. We feel awesome that we can afford to help in that way, plus we know our house is being taken care of.
Mike: That’s really terrific.
Rich Person: I guess if we decided to buy another house in our new city we would get more focused about saving toward a down payment.
Mike: Did you buy the house after you moved, and your husband got his big job?
Rich Person: No, we bought it in 2010 when we were making a combined $110,000 a year. The house cost $108,000, and even though the bank kind of pushed us to borrow more, we wanted something we could afford on one income in case he lost his job.
Mike: That was very smart!
Rich Person: That’s one financial move that I am proud of! Plus the retirement savings, that makes me happy.
Mike: How much do you guys have in retirement so far?
Rich Person: About $92,000. He actually hasn’t set up his 401(k) with the new job yet, but we are putting $600 per month of my paycheck into mine.
Mike: So I think we all have different ideas of what it means to be rich. You and your husband went from growing up in families with little money. What did you imagine it would be like to be rich, and now that you are rich, does it live up to what you imagined?
Rich Person: I imagined being rich meant you no longer had any problems and were always happy. As a kid, I was always pretty embarrassed and grumpy about our trips to Goodwill for back-to-school clothes, and I used to daydream about going to the Gap (the Gap!) and buying whatever I wanted.
What I now realize is that the world around me is exactly the same as it was before. I still have to clean up after myself because I’m not butler-and-mansion rich, there are still potholes in the road, there are still ugly, desolate parts of town to drive through—it’s not like everything is perfect and rosy now.
Now, I do tend to walk into the Gap and buy stuff without looking at the price tag, and that gives me a little bit of a thrill and a sense of freedom. But I don’t do that at Nordstrom.
Mike: I think one of the reasons people stay rich is because they do look at price tags! Unlike all these pro-athletes we hear about who spend it all and then have nothing when they’re done with the game.
Rich Person: Exactly. I’m afraid of that happening! This could all be gone so quickly and easily. I didn’t look at price tags once at Macy’s, and ended up spending $1,000 on bedding! I paid it because I was too mortified to put most of it back, but I did go and return it the next day.
Mike: That must have been some good bedding.
Rich Person: I kept the sheets—high thread count is super worth it.
Mike: So, your husband’s big bump in pay is relatively new. When that happened, what were your initial thoughts about what you’d do with the increase in income?
Rich Person: The two dumb things we did in celebration of the new job were to buy an Audi, and rent a huge, expensive apartment. We are planners and budgeters (aspirational, mostly) so we had the monthly income figured out before he took the job.
Mike: Do you both still have student loans? Did you consider using your husband’s raise to pay those off?
Rich Person: We do, and that is our plan for his next bonus. I consolidated my loans at a dumb time because I didn’t know any better, so I have about $80K at 7 percent! His loans are more substantial, about $120K, but at 2.5%. Our minimum student loan payments are about $1,000/month.
The last two years we poured his bonus into the house because it was a fixer-upper, but it’s now in great shape, so we can shift those windfalls into getting out from this debt.
Mike: And you typically pay more than that, or are you waiting for the bonus to tackle it all?
Rich Person: We are currently paying the minimum, because when we moved we left almost everything behind. We had to buy all new furniture. But we’ll be done with that by next month, and if his bonus doesn’t cover my loans (it probably won’t because of taxes) we will put my entire paycheck each month toward the loans. There’s definitely lifestyle creep going on with the furniture, by the way.
Mike: Do describe!
Rich Person: So our old house was pretty much entirely by Ikea, and our couch was so bad, one of the legs was broken so if you moved it at all it would collapse. I got a chip on my shoulder about that couch and I’ve always wanted a sectional with a chaise, so I decided to go for it. It was $4,500. But god, it’s beautiful and comfortable and it’s microfiber so the cats can’t destroy it.
We got a $1,000 desk and two $150 barstools, and we’re shopping for a new bedroom set. The bedroom set isn’t entirely necessary since the one piece of furniture we brought was our bed, but he wants a solid headboard—ours is, like, iron bars. Seems like a silly reason to get a new bed, but I like furniture shopping!
Mike: And you can afford it now! What other kinds of things do you and your husband do now that you didn’t do pre-wealth?
Rich Person: Oh and I got an Aeron chair.
Mike: I don’t know what that is.
Rich Person: It is a $1,000 office chair by Steelcase and it feels like sitting on clouds.
Mike: I see! The chair has its own Wikipedia page!
Rich Person: Ha! Although, humblebrag, the one I got is too big for me so I need to go switch it for a smaller one. The damn seat goes too far out even when it’s all the way back. Anyway. So we both care about food a lot and we like to cook, so we get much better quality groceries now: organic as much as possible, local as much as possible, etc.
We upgraded the cat and dog food, and are helicopter parents to them—we take them to the vet at the slightest provocation now rather than worry about them. One had a stomach bug a few months ago and I was worried about an obstruction and of course it was Friday night, so we took him to the emergency vet and it cost $500 and I didn’t care.
Last year we decided on a Monday that we would be going to Europe that Friday for three weeks. We were lucky to have a cat sitter we trusted and made sure she was available, checked that our regular dog sitter could accommodate our dog in her house for that long, and bought the tickets. It was such a thrill to be able to take such a substantial trip on our own dime. Any previous vacations had been with our parents, so it was really satisfying to be on our own. Kinda felt like the first time you get a legal drink in a bar—like, “I shouldn’t be allowed to do this! Why is the bartender acting like this is normal? This is awesome!”
We drive around in an Audi, that is ba-nuts. I got a new car too, although it is not that fancy and I was going to get it even before he got the new job. It’s a Honda CRV and I love it very much even if it doesn’t talk to me or warm my butt.
Mike: Does the Audi talk and warm your butt?
Rich Person: Oh yeah—you can talk to it to make it do almost everything except steer for you and the passenger and driver seats have their own climate zones. If he wants to be 68 degrees and I want to be 70 degrees, the Audi lady will do that.
Rich Person: Yeah. I bought some “just for his car” sunglasses the other day that match the paint job. I am so dumb. Bleh, it feels silly and wasteful!
Mike: But you also give to charity?
Rich Person: Yes. There is an organization that takes care of stray dogs in our home city—feeds them and builds dog houses for them, and we have always given to them but now we give a lot more. There is a group I recently found out about called Atheists Helping the Homeless in Dallas, and I just wrote them a check and will be writing more. And Planned Parenthood, love them. I’d have 10 kids if it weren’t for PP.
Mike: Do you and your husband want children?
Rich Person: I don’t think so; it’s not anything that interests either of us. Plus I’d basically be a single parent since he’s always at work! He doesn’t want to be an absentee father. If we change our minds about kids we’ll have to restructure our lifestyle and cut his hours down. We have nieces and nephews who scratch any itch we have to be around kids and we have college funds started for each of them.
Mike: That’s really nice.
Rich Person: They are quite young so they’re small accounts, but instead of buying them stuff for birthdays and Christmas we deposit into those. (Although I can’t help it, I still buy them presents.)
Mike: I think Logan had a post about that—about saving for her nephew rather than buying him stuff he won’t care about.
Rich Person: Since we both struggled so much in college and ended up so in debt, we would like to keep them from having to go through the same. My husband feels really strongly about that. They don’t need another piece of plastic junk lying around, but they do need an education. I think they can have a little of both! Oh, and they are the kind of funds where if the kid decides not to go to college they can use it for trade school or I think they can actually just use it for whatever, but if it’s not school then there are tax penalties. I don’t think that every single person must or should necessarily go to a four-year university so I made sure that they can make whatever choice they feel best suits them when they’re 18.
There’s only three of them so it’s not like this will be a billion dollar undertaking, but we like the idea of being the rich/crazy aunt and uncle and helping them out when needed. But to do that without making our siblings grouchy, is the thing.
Mike: Sort of like Rory’s grandparents in Gilmore Girls.
Rich Person: Haha. We shall not spoil them nor undermine their parents’ wills.
Mike: You will make them attend Friday Night Dinners, in exchange for free tuition.
Rich Person: Absolutely. Nah, I don’t like strings-attached gifts. That’s bull—All I want is for them to do their best and be happy, and we’ll try to set it up so they don’t have huge obstacles to overcome in order to do what they want in life.
Mike: So your husband works in finance, but do you guys have a financial planner?
Rich Person: We do, actually. She is the best. She helps us with choosing the right levels of insurance (auto, life, home, umbrella) and the right health insurance plan from work. She set up my Roth IRA, which I rolled over from my old job’s 403(b).
And we have some friends who use her, so when we put money into that friend’s kid’s college fund, she deals with it (college fund college fund college fund!). She also picks out and lords over all our savings accounts, basically – she finds ones with good interest rates and makes sure we don’t drain them to buy a boat without talking to her about it first. This was a rule we set up when we first started working together because we were honest with her about our past financial dumbness. We have not yet hired an accountant, but will be seeing one next week for the first time.
Mike: So your friends use her too, does this mean your friends are also wealthy? And if not, I’d love to hear how you navigate those relationships.
Rich Person: That particular friend is a work friend who is in a similar position as my husband, so yes. His other work friends are generally as rich or much richer than us. But our non-work friends are decidedly not rich. And that can get interesting.
So, example: Over the summer I was hanging out with two friends I’ve known for years and years, and we were outside just drinking and talking (drinking is probably an important thing to stress here). And one of them asked me how much money we make. Since my inhibitions were down, I said, “Oh yeah, totally! I don’t know why people are so weird about saying actual dollar figures anyway! Who cares?!” and I told him.
And then he basically spit it back at me five or six times that evening. That was pre-new job, so I think I said in the range of $200K, and he kept referring to me as “200,000 Dollars.” And it sucks, because I really like this person. I still do, and I chalk it up to drinking and me being dumb.
That is one bad example. Generally with the rest of our friends, everything is cool. We don’t invite them out if we know we’re going to spend $300 on dinner, because we don’t want to put them in a weird spot. When we hang out we go to regular places for dinner or drinks and we all pay our own bills, so that’s fine.
Mike: So that friend who knows, does he treat you guys differently now?
Rich Person: The next time we hung out I felt a little bitterness from him, but every other time after that it’s been okay. I don’t talk about money with my friends (anymore), and I try really hard to not sound like Lucille from Arrested Development when I’m talking about mundane things.
Like, I don’t bring up stuff that happened at the country club. Yes we had to join a club. And I say “had to” because it’s very much a work/network-y thing.
Mike: Oh, that’s definitely a rich person thing.
Rich Person: I feel much more comfortable with my non-moneyed friends. I don’t really enjoy the club socializing because it feels like work to me, if that makes sense.
Except the club itself is kind of cool because the food is really good, and if you buy a wine locker and store your wine there they bring you a giant spread of snacks that never stops all night. But I have to be a nice polite lady with social graces and conversation skills, which naturally I am not. I can’t wear my pajamas there, which is lame. I had to up my wardrobe game because it has a dress code.
Mike: Yes, I imagine it does. And lots of ladies lunching.
Rich Person: Yup. I don’t think I’ll ever be that? I don’t know. I’m more comfortable drinking at home than judging people over some white zin. I feel like a fraud sometimes when I’m there because I’m not highborn like a lot of them.
Mike: So we talked about your friends. But what about your families? You guys didn’t have much growing up, and now that you do, do they ask you for money? I mean, you are already allowing one of them to stay in your house rent-free for now.
Rich Person: Nobody has asked us for anything. I think they’re all curious about how much we make and I haven’t really told them. Before we moved, my little nephew asked “Are you guys rich now?”
And I didn’t really know what to say, so I told him that relative to the rest of the world we are all already very wealthy, but that we will have a little bit of extra money now. He was cool with that answer. I guess I would have to take any requests on a case-by-case basis. I feel like we shouldn’t loan any money that we aren’t comfortable with never seeing again, you know? Like, set it up as a loan, but be totally okay with it never being paid back.
Mike: I think that’s the right way to think about. Especially when it comes to family.
Rich Person: Yeah, I don’t want to fight about money. That’s uncomfortable for everyone.
My parents are in much better spots financially now than when we were growing up, so I don’t think it will come up with them. With his mother, given her history with money, I’ll never be surprised if she asks and we will probably always say yes.
He has tried managing her money for her and it gets weird because the parent-child role switches, so that doesn’t work. At this stage in her life we think it’s unlikely she’ll completely overhaul her attitudes toward money, so I think we will be taking care of her in some capacity for quite a while.
Mike: Yes, I understand a lot of how that is as someone who will be financially supporting my parents in their old age.
Rich Person: She did a great job raising a great son, she still works, she is a sweet and loving person, she just can’t manage money worth a damn. Even if we were strapped for cash we would always help her.
Mike: I think we covered quite a bit today! Anything else we should talk about that I haven’t brought up? What do rich people dream about?
Rich Person: Hahahaha. Let me think. A few nights ago I dreamt about a kitten who fell into a storm drain and so we put a lifejacket on one of our cats and sent her in after him. There was a helicopter search at night and everything. My husband thinks if you remember your dreams you aren’t getting quality sleep, so he never tells me his dreams.
I guess to sum things up I pretty much feel like the same person I always was, just with a lot more ability to do what I want. It’s true that money doesn’t make you happy, but it sure gives you a certain kind of freedom.
Previously: A Friendly Chat With A Rich Person ($140,000)
This Rich Person moved to the south and doesn’t even need a butt warmer.
Have questions you’d like this Rich Person to answer? Email Mike with “Question for a Rich Person” in the subject line.