Emily Duncan reads to babies and writes about monsters.
As a youth-services librarian, she orders graphic novels, helps create outreach programs for children and hosts a story time for those under 24 months. As a novelist, she’s in the thick of a three-book deal. The first book in her “Something Dark and Holy” series, “Wicked Saints,” is being released in April.
At 25, she enjoys her work, but she’d like to get her finances to a place where someday she can be a full-time writer and a part-time librarian. Along the way, she’d like to get her retirement plans shored up as well.
“It’s hard to conceptualize something so far in advance,” she says.
Ms. Duncan lives in Cuyahoga Falls, Ohio, and makes $33,000 a year as a librarian, bringing home about $2,180 a month after taxes, insurance and contributing 10% to a retirement account. She also has money still to be paid from her $100,000 book deal. After taxes and her agent’s 15% cut, Ms. Duncan says she still has roughly $40,000 to take home over the next few years.
She currently has about $6,000 in her retirement account and $18,000 in savings.
But Ms. Duncan also has $86,000 in student-loan debt, mostly from getting a master’s degree in library and information science, with rates of about 3% to 6.9%. She pays about $600 monthly on that debt; her income-adjusted payments jumped from $200 when she got the first payment from her book deal. She also has $1,000 on a credit card and owes $6,000 on her 2013 Mitsubishi Mirage.
Other monthly expenses include $137 for a car payment; $124 for internet, electricity, Hulu and Spotify; $80 for car insurance and $40 on gas; about $200 on groceries, $150 eating out; roughly $120 on miscellaneous expenses; and about $50 a month on books.
She pays $720 a month in rent, money that she says she would prefer to use toward buying a townhome some day.
Advice from a pro: Danika Waddell, a certified financial planner at Goddard Financial Planning in Seattle, says Ms. Duncan is off to a strong start. While Ms. Duncan has sizable student debt, Ms. Waddell applauds her for tucking money away for retirement already.
“That’s definitely a positive,” Ms. Waddell says. “A lot of time when people have student loans they just (say), “I’ll just pay those off first,” and then I’ll start saving.”
She would like to see Ms. Duncan use some of the money in her savings to pay off her credit card and as much as she can of the high-interest student loan (a $7,000 balance) while keeping at least six months of expenses in savings. She should transfer the rest of her savings to an online savings account, where she can get a return in the 2% range. Any balance remaining on the high-interest student loan the financial planner suggests paying off with one of her book-deal payments.
Ms. Waddell says Ms. Duncan should save $26,000 to $30,000 for a 20% down payment on a home—perhaps again drawing from her book deal. With 20% down, Ms. Waddell estimates the mortgage would be comparable to what Ms. Duncan is paying in rent.
Once she’s paid off her credit card and the high-interest student loan and has six months of expenses in savings (roughly $13,000), Ms. Waddell suggests Ms. Duncan raise her retirement contribution to 15%.
Ms. Waddell suggests she not go part-time until she has six to 12 months of expenses saved, depending on her tolerance for risk.
Ms. Waddell also says the young writer shouldn’t feel like she has to pay off all of her student debt before she lives a little. “She’s done a really cool thing by getting this book deal. Taking a couple thousand dollars and doing something to celebrate is totally justified.”
Mr. Kornelis is a writer in Seattle. He can be reached at email@example.com.
Appeared in the December 17, 2018, print edition as ‘A Young Librarian’s Goal: Be A Full-Time Writer.’