Mike: Michelle, who are you and what do you do?
Michelle: I’m 26, a senior corporate tax accountant, and I live in Rockland County in N.Y.
Mike: How much do you earn, and what are your benefits like?
Michelle: At my current position, I earn $75,000 a year base. No bonus, but at the end of the year, we’re given stock options based on our performance evaluation, and what the board of directors authorizes. We have health, dental, vision insurance, tuition reimbursement (50 percent of four classes per year), and a company matched 401(k) plan. They’ll match half of the first 5 percent you contribute. I just accepted an offer for a new job though—I’ll be making $78,000 there, with a target bonus of $7,800. Health, dental, and vision are all included. I’ll have a 401(k) with a 50 percent match of the first 8 percent I contribute, and the tuition reimbursement for a grad degree is $15,000/year.
Mike: Wow. Is your new position also a tax accountant job?
Mike: Did you negotiate the salary for the job?
Michelle: No. I thought about it, but I think with the bonus and increased tuition reimbursement that I got a good offer. I’m going to renegotiate once I finish my master’s degree.
Mike: Are you also in school right now?
Michelle: Starting grad school on Monday!
Mike: Oh wow, and working a full-time job at the same time? How does that work?
Michelle: I’m enrolled at Northeastern in their online M.S. Taxation program. Its actually custom designed for working professionals, so you take classes when its “slower” at work and when it’s busy season that’s kind-of when you take your winter/summer break. Plus, with the online learning format, I don’t have to be in class specific days and times, so it lets me be flexible in when I’m doing assignments/reading and all of that.
It’s expensive, but traditional programs don’t really work for me. The busy season is usually March-May 15th and thats when traditional spring finals are, so it wasn’t going to work out with working full-time.
Mike: What’s the cost of the program?
Michelle: Its $1,345/credit hour, and I have to take 30 credits I believe, so tuition is $40,350. No room and board or meal plans, luckily, and I managed to find the first textbook I needed through Barnes and Noble as a rental/
Mike: When you’re done with the program, how are you going to use the degree to advance your career?
Michelle: Once I have my master’s, I can become a licensed CPA in New York state. That will allow me to start my own practice on the side prepping people’s income tax returns. If I want to stay in corporate tax, I can advance to a manager level and beyond, if I choose.
Mike: And I’m sure that means you’ll be earning a lot more, too?
Michelle: Yes. Definitely into the six-figure level as a manager.
Mike: This may seem like a silly question, but when did you know you wanted to be a tax accountant?
Michelle: Haha, I love when people ask me that!
Mike: I’m sure it didn’t enter your mind as a kid!
Michelle: When I was in high school, I was in the top 10 percent of my class, but I didn’t apply to any colleges. I didn’t see the point when I didn’t know what I wanted to do—especially because my parents definitely weren’t in a position financially where they could help me pay for it. I got a full scholarship to the local community college, but only if I enrolled in their business honors program, which I did. My very first class, at 7 a.m., was accounting, and I liked it. I guess I like the structure of it—that A+B always equals C and that’s always the right answer. I hated science where you had to do those lab reports and you never knew if what you got was right. UGH. HATED THAT. After community college, I had my choice between a (more) local business school and a top-tier university further away and I chose the closer option. It was through that school that I got my first internship, which ended up being in tax, which I loved. Plus, growing up in a house where money is tight—I always thought, “I want to be able to always take care of myself,” and I knew that tax was definitely a stable career choice—there are always going to be tax accountants!
Mike: Did your parents talk to you about money?
Michelle: They did in the context of making sure that I understood to never be in debt. We didn’t really talk about their finances openly. There were definitely times as a kid where sometimes we had to have spaghetti for dinner the night before pay day, or when we couldn’t afford to, you know, rent a violin to be in orchestra. They did their best though. But definitely, I took away this fear of being without money and having to eat spaghetti every night. They were terrific, loving, caring parents, but they just didn’t have those conversations openly. We heard bits and pieces when they were talking, but we never had a sit-down discussion about how I should manage my money.
Mike: Did you have an allowance?
Michelle: No. I think they might have tried it once, but I don’t think it lasted. By the time I really wanted things I was almost 16, so I just started working to fund that.
Mike: What was your first job?
Michelle: I worked at a store called Mandee as a store associate. I was like, convinced it was the ONLY job for me and I talked to the manager when I was 15, but I guess in New York the hiring rules are pretty strict when it comes to age. The minute I turned 16, I was right back in there with a completed application
Mike: When you started earning money, what did you do with it?
Michelle: I spent it. For a little while I had a savings account to put some of it in, but I started to get really involved in sports and needed equipment, and then there was the freedom of being able to go out with my friends now that we could all drive, etc. etc. I never really felt like there was anything to save for, I guess.
Mike: Did you have to borrow money to go to school?
Michelle: Yes. That was a big fight in my house, trying to get my dad to co-sign on my loans. I got two years on scholarship for the community college, so some of my pay back then was going to cover books and activities fees and all of that. Once I graduated from the two-year school though, and got into the four-year university, I had to take out loans. I think in total it came out to about $35,000. My mom came into some money during my last year and gave me the money to pay for one semester. I love her so much for doing that for me. If I had gone to the four-year university from the beginning, I think I would have come out with close to $160,000.
Mike: Why was your dad hesitant to cosign your education loan?
Michelle: He was close to retiring and didn’t want to be on the line for my debt. My parents are like, adamant about not being in debt. When they were younger, they ran up their credit card and had to go through all the struggles of paying them off and I think at that point, now that they were free he didn’t want the chance of it happening all over again. I mean, I was trying to tell him though—I was definitely going to have a job post-graduation and I was definitely going to be making money to pay the loans back. I went to Pace to finish up my bachelor’s and they are super super connected in the city and metro areas.
Mike: How quickly were you able to land a job when you were done with school?
Michelle: Immediately. I had an offer even before I graduated. I worked with the career and co-op team at Pace to do that, though.
Mike: And you’ve been steadily employed since? Or were you affected by the recession at all?
Michelle: Steadily employed, luckily.
Mike: That must have made your parents feel good.
Michelle: Haha, yeah. They’ve never been the type to admit it out loud (pride goeth before a fall, you know), but they’re definitely happy that I’m doing well.
Mike: And now that you’re a tax accountant, do you help them with their finances? I’m sure friends and family members ask you money questions all the time.
Michelle: My parents still have their own tax accountant and since my experience has been primarily in corporate tax, I didn’t feel comfortable taking their stuff over. I still don’t even do my own. I DO actually do my fiancé’s tax returns, though. And I answer tax questions all the time.
Mike: What’s the most common question you get?
Michelle: I’ve had a lot of friends ask me to just do their tax returns. I just got a question the other day on what type of business structure would be more beneficial to a friend who was thinking of starting a photography business. I get like, super nervous answering those questions though. I look up the tax law, and I know that it’s right, but because I’m still so “new” in the business and my focus has been primarily corporate, I’m always like, “OMG WHAT IF IM WRONG?!?!” I think after I get my master’s degree I’ll feel more comfortable.
Mike: Do you live with your fiancé? What’s your housing situation right now?
Michelle: I live with my fiancé, and our adorable corgi Rufus. He owns his house—he has a mortgage on it.
Mike: How much is the mortgage? Do you split the payment?
Michelle: This is going to make us sound so old-fashioned, but he handles the mortgage/utilities right now, so I’m not entirely 100 percent sure the exact amount of the payment. I think close to $1,300 a month. I give him $1,000 a month to cover mortgage, taxes, and part of the utilities, but he definitely puts in more than I do at this point. We’ve been talking about trying to rent out the house and then just renting an apartment ourselves because the house costs so much a month, and its so much extra space we don’t NEED right now.
Mike: What does he do for a living?
Michelle: He’s a partner at a full-service IT firm, and he also writes comics.
Mike: Awesome. What do your other expenses look like?
Michelle: I pay $350/month towards my student loans from undergrad, that’s the minimum. I was paying more, but then I ran into trouble with my credit cards and made paying those off more of a priority. I’ve got a car that I’m leasing (but will buy at the end) for $237 a month, car insurance is $150/month, cell phone is $80/month. That’s really it as far as bills go. Total, the bills eat up exactly one of my paychecks per month. The other paycheck goes to food, gas, and lately: wedding fund.
Mike: What is your wedding fund goal?
Michelle: $30,000. Let me tell you, though, weddings. Ugh. That whole thing is a sticker shock.
Mike: It all depends on what the two of you want! What are you hoping for?
Michelle: We booked the venue already! We have a lot of family traveling in so we wanted something with a hotel attached or nearby. The original venue we booked went into foreclosure! Panic panic panic then we found the place we’re going to be using now. I know, for a fact, that there are cheaper ways to do everything—and we’re trying. The fiancé is bartering out his website development services for invitations at the moment, and we’re hosting our own engagement party as a BBQ at our house. I’m the one sitting crunching the numbers and pulling my hair out about how its going to work and what money goes where, and he’s very laid-back and kind-of like, “We’ll do what we have to do to make it work.” He helps calm down how neurotic I am.
Mike: Have you discussed how money will work in your relationship? Joint accounts and such?
Michelle: We have very different money handling styles and views. My parents weren’t always the best with theirs, so I am super neurotic and have to know where everything is at every single minute. None of that actually helps me manage my money though—I do a terrible job at that, accountant and all. His parents were very good with credit and their money and he’s more laid back with his. He doesn’t need to know exact balances, or exactly how many days it will take for him to pay off his credit card. I would do good to take a page out of his book. We’ve discussed joint accounts and so far we’ve agreed that we’ll have one for the wedding and then after probably a combined checking and savings for bills/trips. We’ll each also have our own separate checking accounts though for our “fun money”. Because if he saw what I spend on shoes, he would go nuts—but I’m sure I would feel the same if I saw what he spent on comics.
Mike: What does your debt situation look like?
Michelle: Terrible, honestly. And I think, in the grand scheme of things, it isn’t really as bad as it could be but because my parents were so like DON’T BE IN DEBT it makes me feel worse. Right now, I’ve got around $26,000 left to pay on my undergrad loans, and close to $10,000 in credit card debt.
Mike: What is the credit card debt from?
Michelle: I’d say about half from not ever having a savings account for emergencies, and half spending on trips and clothes and other things like that.
Mike: Speaking of savings: What does that look like? Do you have emergency savings and retirement money?
Michelle: I’m lucky in that I was smart enough to sign up for every 401(k) plan and the match I was ever offered. I think I have close to $15,000 in those accounts now. I have one that’s from my old job though that I need to work on rolling into my current plan. I do have emergency savings now, and I try to keep that account around $1,000. I know the common marker is six months of expenses, but right now with saving for a wedding, trying to pay off debt, and being safe in my job security, I can handle just $1,000. The plan is to bump it up though.
Mike: What do you like to spend your money on? Shoes, I guess. And you fiancé likes comics, but what else?
Michelle: He’s a huge Pearl Jam fan, so when they’re in town this October he wants to go to both of the shows they’re having at the Barclay’s Center. So, definitely concerts and music. We love to travel—and he travels for the comic conventions he goes to, so that factors in also. I’d say for me it’s dinners out with friends, personal care stuff like getting a manicure or a haircut here or there. We were spending a lot of money on fixing up some issues with the house too, and when we first got our puppy we spent a LOT on him between initial vet bills, and food, and toys.
Mike: Do you consider yourselves “good” with money?
Michelle: I think my fiancé is. I don’t think I am so much, but I’m working on getting better. He’ll take cash out of his bank account and be more careful with spending it, whereas I swipe without thinking a lot of the time and realize later that I maybe didn’t have to spend $50 on groceries when I had food in the house. We both pay all of our bills on time though, and are paying down our debt so in that sense we’re both good. Psychologically, I think I was so afraid as a kid of never having money or never being able to have enough that now that I make enough, I spend it to feel better, if that makes any sense.
Mike: Oh, definitely. I think that’s a common thing people struggle with. What’s the biggest purchase, outside of your education and home, that you’ve made?
Michelle: We took a trip to Mexico this past February that was pretty expensive. I think close to $4,000 for 8 days, 7 nights all inclusive. And the wedding. The wedding is going to be the biggest I think.
Mike: Do you want to fund the wedding yourself? Or will parents be helping?
Michelle: A majority of it we’ll be funding. My parents are going to pay for my dress, shoes, hair/makeup and some of the photography. His parents are going to pay for rehearsal dinner and the florist. The rest is on us though. His parents also gave us money to help pay for the engagement party.
Mike: How far off is the wedding?
Michelle: Its next year, August 31, 2014. :)
Mike: Hmm! What else? Who pays for dinner when you go out?
Michelle: We talked about a lot! I hope its comforting for people to find out that even accountants aren’t the best with their money choices! Sometimes I feel like I’m that character in Confessions of a Shopaholic—like, she writes that column for how people should invest and all that, but she’s got mountains and mountains of clothes and collection agencies are calling her every day. My situation isn’t that bad but sometimes I feel like I should have it more together especially since I do tax.
By 30 I want to have it all together—retirement accounts being funded as much as possible, no debt owed to anyone except a mortgage. To me that’s total freedom. Because then, you have to work, yes, but if your job situation is SO BAD that you JUST CAN’T, you can walk away and be okay for six months, you know?
As for dinners out, if we’re going out with my friends then I pay, and with his friends he pays, but generally, if we just go out, he pays—mostly because I cover the groceries. We figure it evens out that way.
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