Personal Finance (2019)
Sharing some thoughts based on my most recent job transition.
As a postdoctoral research associate at the University of Virginia a potential budget could have been:
| Concept | Amount |
|---|---|
| Salary | $70,000.00 |
| Income Tax | $15,671.76 |
| Federal Income Tax | $ 7,379.97 |
| State Tax - VA | $ 3,117.54 |
| Social Security | $ 4,193.51 |
| Medicare | $ 980.74 |
| Savings | $39,310.00 |
| 401(a) | $ 9,730.00 |
| 403(b) Roth | $19,980.00 |
| Roth IRA | $ 6,000.00 |
| HSA | $ 3,600.00 |
| Disposable Income | $14,666.24 |
| Monthly Disposable Income | $ 1,222.19 |
Related Expenses
| Concept | Cost |
|---|---|
| Health Insurance | $240.00 |
| Dental Insurance | $ 12.00 |
| Vision Insurance | $100.00 |
| Life Insurance | $ 0.00 |
| Public Transportation | $ 0.00 |
| Concept | Amount (per fiscal year) |
|---|---|
| Annual Leave | 22 days |
| Paid Holidays | 17 days |
Supplemental income opportunities: up to 20% of salary ($14,000.00) per fiscal year. In my experience, I didn’t maximized my 403(b) contributions so I could have a higher monthly disposable income (rent alone was about $1.5k).
Starting with the federal government as a ZP-III (3),
| Concept | Amount |
|---|---|
| Salary | $113,362.00 |
| Income Tax | $ 30,251.54 |
| Federal Income Tax | $ 18,463.00 |
| State Tax - VA | $ 3,117.54 |
| Social Security | $ 7,028.00 |
| Medicare | $ 1,643.00 |
| Savings | $ 39,756.12 |
| FERS-FRAE | $ 4,987.97 |
| TSP Roth | $ 25,168.15 |
| Roth IRA | $ 6,000.00 |
| HSA | $ 3,600.00 |
| Disposable Income | $ 41,306.32 |
| Monthly Disposable Income | $ 3,442.19 |
| Concept | Cost |
|---|---|
| Health, Dental, Vision Insurance | $1595 |
| Concept | Amount |
|---|---|
| Annual Leave | 13 days |
| Sick Leave | 13 days |
| Paid Holidays | 11 days |
Expenses
| Category | Amount |
|---|---|
| Living Arrangement | $2,400 |
| Auto Loan | $366 |
| Groceries | $500 |
| Miscellaneous | $175 |
| $3,441 |
Living Arrangement
I live in Arlington, VA which is in the Washington D.C. Greater Metro Area. I am currently looking for a condo and am aiming to have a monthly payment of 25% of my gross monthly income towards the costs of the mortgage (principal and interests 🏠🏦), property taxes (💸), HOA dues (🛗🏋️🏊🧖♂️), utilities (💡🚰🗑️🌐📺🎶🧺), homeowner insurance, and mortgage insurance. Overall, I have budgeted about 25% of my gross monthly income.
Groceries
I have a pretty flexible budget for groceries compared to a typical Food Plans of about $125 a week. I buy groceries at Whole Foods using the Amazon Visa Rewards card so I get a 5% cash back that helps.
Car
I own a 2016 Kia Soul which I have back home in Puerto Rico and my mom uses. I have SmartBenefits as a federal employee so I have subsidized public transporation.
Miscellaneous
Miscellaneous expenses may include going out every so often or buying a videogame.
Annual Leave
I won’t have too much savings but allocating about a couple hundred bucks every couple months for when I go on break.
Savings
Maxing out my tax advantaged instruments including my Roth IRA, Health Savings Account (HSA), and employer sponsored retirement plans (FERS).
| Instrument | Amount |
|---|---|
| Roth IRA | $ 6,000 |
| HSA | $ 3,600 |
| Roth TSP | $ 19,500 |
| FERS-FRAE | $ 5,000 |
Taxes
Federal and state taxes (income, sales and use, property): $34,000
Allocations
With a gross income of $113,362 I pay an effective tax rate of around 30%. I then save about half of the take-home income. At least 75% of the savings are for retirement in a tax-advantage instrument and the rest are kept in a more liquid form (e.g., stocks that can be sold off and transfered to a checking account in about a week’s time).
| Amount | Allocation | |
|---|---|---|
| Income | $ 113,362 | |
| Taxes | $ 34,000 | 30% |
| After-Tax | $ 79,362 | 70% |
| Expenses | $ 45,362 | 57% |
| Savings | $ 34,000 | 43% |
J. Bayoán Santiago Calderón
Research Economist
🇵🇷 Economist by training. Data scientist / software developer by accident.