A Conversation With a Tax Accountant Who Earns $75,000 a Year

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?

Michelle: Yup.

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?

…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.

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.

I hope its comforting for people to find out that even accountants aren’t the best with their money choices!

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.

 

Interested in talking with Mike about your job and your money? Send a note.

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25 Comments / Post A Comment

Caitlin with a C (#3,578)

I liked this a lot and empathized a lot. Good on you guys for thinking about all of those expenses. Totally hear you on:

a) being raised on NO DEBT EVER. (I cried when I took out grad school loans because I was scared.)

b) that people-assume-we’re-good-with-money thing. I am an economist, and people assume I know about everything from taxes to investing to, I don’t know, the financial process of buying houses.

Caitlin with a C (#3,578)

@Caitlin with a C (Having serious comment issues.) Some people think economics = accounting = finance = money = all personal finance ever. The things I do know about personal finance, I know from being inquisitive and fascinated and lucky to have been taught well by my parents (and scared). …And so I go to H&R Block, only look at mutual funds, and ask when I don’t know.

clo (#4,196)

My wedding is 8/31/13! It’s a good date! And god weddings are so expensive. But 30K should totally get you the wedding of your dreams. Mine is a lot less but I feel like it’s gonna be pretty great.

facepalm (#4,409)

@clo I got excited because 8/31 is my birthday! Happy wedding day to you and happy birthday to me whoo hoo!

Smallison (#155)

I totally feel this on joining accounts. My fiance and I were just having this discussion last night! He is much like Michelle’s fiance – laid back, not worrying about the day-to-day balance, whereas I want to know what comes out when, and what to expect to see in the account on a daily basis.
I think we’ll settle on me running the accounts, because I need to have all those details, and he just doesn’t want to be bothered.

aetataureate (#1,310)

Man it was like, Okay cool, she makes a ton of money, etc. but she’s still only paid down $9k of her student loans and has $10k more in credit card debt?? What the what?

I guess also this could have been proofread at all.

OllyOlly (#669)

I didn’t realize you could make this much money in accounting before getting your CPA. Maybe if my accounting professor would have led with this I would have majored in accounting instead of filling all my schedule holes with Spanish classes.

I also find it interesting how, as someone making $45k, I often think “Man if I only made $60,000 everything would be easy!” But as this series shows, having X amount of money doesn’t magically make things fall into place. After a certain level of covering your basic needs you are fighting yourself, not your paycheck.

@OllyOlly For full disclosure purposes: I made $56,500 starting out. I’ve been working full-time 4 years now.

Fig. 1 (#632)

Great interview. Also, shout-out to Rufus, not many corgis I know have a mortgage.

@Fig. 1 Corgis gotta corg, and Rufus corgs pretty hard ;)

francesfrances (#1,522)

I feel like this was long, and a lot of questions were asked in an attempt to figure out just where the heck all the money goes!?!? If you make $75,000 AT AGE 26, can’t you spend $50 on groceries without thinking twice? Isn’t that okay? She must be saving a lot of money between the wedding and retirement. I’m just confused.

I suppose this is a typical unfair reaction in that I expect someone making that kind of money to be relatively problem-free. Or not problem-free, but jesus, if guilt about spending $50 on groceries doesn’t go away by the time my salary hits $75,000 (which will probably never happen given I make just over half that), then I think I’d like to quit working altogether because what is the point of life? I’m going to go on that diet where you just breathe air that’s been near food because I clearly can’t afford to be alive. No one can.

….sorry, I’m tired. You are doing a good job, accountant girl. You’re doing a really, really good job.

sherlock (#3,599)

@amyfrances Yeah, I guess I would chalk it up to the wedding expenses? And also maybe paying for grad school without additional loans. Other than those two items, I have nearly an identical financial situation (like eerily similar) – similar age, exact same income, paying about the same for housing, graduated with about $30k in student loans same as her.

When I was in loan payoff mode, I definitely would stress over spending $50 on groceries, but that was solely due to my choice to funnel all of my extra income to the loans. Now that I’m finished with them, $75k is more than enough for me to not worry about spending on that level and simultaneously save for grad school and retirement. I’m not trying to say that the interviewee should have the same situation, or that she’s doing anything wrong, just trying to offer a different perspective in response to your confusion.

Maybe I should clarify a little bit.

I make $75,000 gross. Net, I bring home $48,000 (after retirement contributions, insurance, and taxes). I have bills to the tune of $1,850/month (mortgage/utilities: $1,000, Car payment & insurance: $415, Cell phone: $80, Student loan repayment: $350).

After bills, I’ve got $22,000 left in a year to spend/save. $800/month is going to wedding savings right now, around $300/month to the credit card debt, $120/month on gas, and the rest is basically spent on food, Rufus, and whatever else.

Also: The original loan total after undergrad was $45,000. I miscalculated when we had the original conversation.

I used the groceries as a way of illustrating that I spend money without consciously thinking about whether or not I need something before I purchase it. A lot of that $22,000 that’s left is spent without thinking about it, and that’s something I need to work on.

olivia (#1,618)

If the mortgage is only $1300/month then putting in $1000 for mortgage/utilities seems like a TON. Maybe I’m missing something?

Also, soapbox, but EVERYONE SHOULD NEGOTIATE FOR MORE SALARY, especially women! The new company only offered you $3k over what you were making before as your base salary-I guarantee that they would have give you more money immediately if you had asked for it.

@olivia We live in NY. Taxes are around $9,000/year for us, so that’s why the “mortgage/taxes/utilities” number is quite high.

chevyvan (#2,956)

@olivia I agree, you should negotiate for a higher salary next time around. It’s expected (unless they say “this offer is non-negotiable”). And this is not coming from a “lean in” place. This just comes from my shock when I hired someone and who just accepted my first offer which was a tad too low b/c I expected her to negotiate for a better salary and I had a ceiling. She needed a visa and in hindsight I think she just thought, “If I don’t take the first offer, I’ll have to leave the country.”

jquick (#3,730)

@olivia agreed re salary negotiations. ALWAYS ask more of everything. Weeks of vacation, sign on bonus…everything. They expect it and so you lose their respect if you don’t ask. Remember…they can always just say no. I’m not a morning person, and even negotiated a 9.30-10 am start time (stayed later, of course).

doubledutch (#4,670)

The parts where she talks about doing money with her fiance were really interesting to me. I’d LOVE to see a “Doing Money” interview with a couple on how they manage their money- who pays for what and how they split expenses. Just a thought!

OhMarie (#299)

@doubledutch Me too! My husband and I are 100% joint, but we had $0 each and were already engaged when we started living together so it was just the easiest thing to do. If we had both been starting from some kind of adult financial place I have no idea how we would have split everything.

Amy C (#4,671)

I don’t fault anyone for wanting whatever kind of wedding they want, but I’m so glad that I’ve never craved a fancy wedding. My fiance and I are getting married next month, and the total price (including venue, officiant, photographer, flowers, dress, shoes, and suit) will end up being around $2000, including the J Crew Ludlow suit that he can wear for the next forever. A florist quoted me $180 for a bridal bouquet. I’m going to make my own bouquet from Whole Foods. $180? Come on now.

IStoleTheTarts (#4,675)

@Amy C – My fiance and I are also doing a super small wedding (only a 2 month engagement!), but I think our total cost is going to end up being closer to $5,000. I was super lucky to find an incredible dress second hand for $99, but I am planning to also get a Ludlow suit for my fiance so he can wear it for work as well. Our venue is charging $1800, but that includes the venue, officiant, 1 hour with the photographer (we’re paying for extra time), cupcakes, and one night room stay for us. I’m so happy we’re just having our immediate families. I can not imagine trying to do a big 150+ person wedding.

She didn’t seem to be between jobs. Her old boss should can her on the spot. Her new boss should say forget it. I fear for her..

fennel (#2,494)

@Mackenzie Kelly@facebook

???

Plenty of people interview for a new job while they are still at the old job, and there’s nothing wrong with it. It’s usual practice.

facepalm (#4,409)

@Mackenzie Kelly@facebook Um…why Mackenzie? What Earthly reason is there for firing her on the spot, she’s quitting. Conceivably she interviewed on her own time (pto, etc.) and put in her two weeks notice. How else do you do it lol

jquick (#3,730)

She admits to having “terrible debt”, yet wants to blow $30k in one day. And $4,000 for a weeks vacation? Yeow.

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