Millennial Money

This 30-year-old makes six figures a year—here's why she still doesn't feel rich

Here's what it's like to live on six figures in LA
Here's what it's like to live on six figures in LA

Gaby Dunn, 30, knows how to hustle. Since leaving her full-time job at BuzzFeed in 2015 to work for herself doing what she loves in Los Angeles, her wide-ranging projects have included YouTube videos, books, television shows, and a podcast about her financial life, "Bad with Money."

"Basically anything that comes up that's in the writing or creative field," she tells CNBC Make It, she'll consider. "I just kind of am like, 'Who, who will pay me?'"

What she earns

The largest chunk of her income comes from her writing. She's sold three books: two written with her comedy partner, Allison Raskin, and one on her own. Her solo book, "Bad with Money," based on her podcast of the same name, comes out in January 2019. For that book, Dunn earned a $150,000 advance, which is paid out over four intervals.

Additionally, Dunn brings in around $2,000 a season from the podcast and various amounts from brand partnerships. She's written for television and has sold several TV shows to major networks, which can bring in up to $50,000 at a time.

The trickiest part of Dunn's financial situation is her irregular income. She says she can go months without receiving anything and then get a check for $20,000.

"When I worked at a full-time job you would get paid every week, but now it could be six months before anything goes into my income," she says.

Gaby Dunn
Source: CNBC Make It

Although Dunn is financially stable now, that wasn't always the case. "When I was in my 20s, I made almost no money. I was freelancing or I would take these really low-paying jobs, or I didn't have jobs," she says. "I realized it was a thing that no one was talking about and everyone just sort of pretended to be on the same level. And so I was embarrassed. I was ashamed.

"I would go through phases where I would have some money and then I would immediately spend it to make up for debts I had gotten into in the past."

The fact that others figured she had it made only made her feel worse. "People assumed that because I was working in entertainment I was just like a millionaire," Dunn says. "That couldn't have been further from the truth.

"There was one day where I was getting comments from people being like, 'Oh, like, rich girl.'" In reality, "that day I was actually looking for quarters in my car because my rent check had bounced, and I was like, there's such a disconnect between what people see me as and what my money situation actually is."

People assumed that because I was working in entertainment I was just, like, a millionaire. That couldn't have been further from the truth.
Gaby Dunn
author of 'Bad with Money'

She continues: "I'm sure that that's the case for a bunch of people and I'm sure that people are struggling and they don't talk to their friends about it. And it's really isolating. I just was tired of it."

The drive to help make money talk less taboo inspired her to start her podcast, through which she explores her own relationship with money in a candid, straightforward way.

"I've just eliminated shame," she says. "It's a waste of time to be embarrassed. If I go into the bank and I just pussyfoot around about what's wrong, I'm not going to get the help that I need."

What she spends

Here's a breakdown of everything Dunn spends in a typical month.

Rent: $2,850

Dunn's two-bedroom apartment is her largest expense, "the most I've ever paid for rent ever in my life." But she says it's worth it. She's able to use the extra bedroom as an office and her dog loves the backyard.

Student loans: $150

Dunn has $24,000 left to go on one last student loan and puts $150 toward it each month. After selling her first two television shows, she earned a combined $52,000 and put nearly all of it toward paying down debt, including student loans, credit card debt and medical bills.

"It was exciting for a second being like, 'Oh my God, I have all this money.' And then it immediately disappeared into eight years of mistakes," she says. "But I'm so lucky that I was able to do that. I was able to fix it."

Dunn currently has around $2,000 in credit card debt, down from a high of $30,000. She doesn't put a certain amount toward it each month, but she works to keep her balance as low as she can. And she's careful about using credit cards so she doesn't run up her debt again.

It was exciting for a second being like, 'Oh my God, I have all this money.' And then it immediately disappeared into eight years of mistakes.
Gaby Dunn
author of 'Bad with Money'

Car insurance and gas: $350

Her car insurance runs $300 a month and she usually puts another $50 toward gas.

Dunn owns her Toyota Prius and, although she says it's in poor condition, she plans to drive it for as long as she can. "I'll die in it," she jokes.

That's in part because she doesn't think it's worth the money to buy a new one. "My car's real beat up, but I can't justify getting a new one," she says.

Donations: $170

Dunn donates to a variety of causes each month, including Planned Parenthood, the Los Angeles LGBT Center and Standing Rock.

Groceries: $160

She spends around $80 on groceries every couple of weeks and splurges to get them delivered.

"I don't spend that much on food," she says. "I buy a lot of vegetables because it motivates me to make them because they go bad. I try not to get so many snacks. That's more recent — I'm trying to eat better."

Gaby Dunn
Source: CNBC Make It

Everything else

Dunn has several other regular monthly expenses, including:

  • Health insurance: $284.75
  • Therapy: $125
  • Cell phone: $147
  • Internet and cable: $146
  • Hulu/Netflix/Spotify: $30
  • Utilities: $150
  • Gym: $40

Her other costs, including recurring business expenses and meals out with friends, vary.

What she saves

Dunn treats her savings an an important but irregular expense. For retirement, she maintains a SEP IRA; it has around $30,000 in it. She adds lump sums when she can, such as the $6,000 she recently put in. She started it two and a half years ago with most of the proceeds from selling a TV show.

She has another $32,000 in her regular savings account, most of which goes toward taxes. Now that she's freelance, Dunn pays taxes quarterly and saves up what she can to be able to cover the cost.

"I pay more in taxes than I've ever had in my life in the last, like, three years," she says. "A lot of times I get paid for something and then I immediately have to pay taxes and then I immediately have to put a lot in retirement."

What the experts say

CNBC Make It asked Pamela Capalad, a certified financial planner and founder of Brunch & Budget, to comment on where Dunn is doing well and how she could improve. Here are her thoughts.

It's great that she's saving for taxes

"I think that the fact that she's actually saving toward taxes and making quarterly tax payments, especially because she's making a good amount of income, is huge," Capalad says.

It's crucial for freelancers to keep track of how much they owe since the expense isn't automatically deducted from their paychecks. Paying taxes quarterly is a smart way to keep up with payments throughout the year.

Capalad also recommends taking things a step further and automatically putting away 25 to 30 percent of any income Dunn brings in, which is typically enough to cover state and federal income taxes, social security and Medicare.

Pamela Capalad, certified financial planner and founder of Brunch & Budget
Source: Pamela Capalad

Health insurance is important

Health insurance is always a worthwhile expense, in Capalad's opinion, and she commends Dunn on making room for it in her budget. "I feel like that's the one thing that freelancers don't consider a necessary expense," she says. "But really, medical bills are the No. 1 reason people end up having to file for bankruptcy."

Dunn is smart to prioritize her space

Having a home she loves, even if it's expensive, matters to Dunn, so she makes sure she can manage the cost, and that's great, Capalad says. "I think what can happen is, especially if you like to be home and you work from home, if your home isn't comfortable, you're going to end up spending the money anywhere else anyway."

Especially when you're self-employed, "it's a series of trade-offs" to decide where to splurge and where to save. For Dunn, that means dedicating a solid chunk of income to her apartment. "You have this rent that now you're paying that you've made a choice about, and now there's other things in your life that you need to cut back on that you didn't really care about anyway," Capalad says.

She should separate her personal finances from her business

Because Dunn is self-employed, Capalad says that it could be smart for her to set up boundaries between her business expenses and her personal ones. "A separate business account for all of her business income to come into would be super helpful, because she could use that account to pay for business expenses and not have everything commingled," she says.

A separate business account for all of her business income to come into would be super helpful, because she could use that account to pay for business expenses and not have everything commingled.
Pamela Capalad
certified financial planner and founder of Brunch & Budget

An independent business account would also allow her to "basically pay herself." Because Dunn's income is so scattered, putting it all into one place and transferring herself a set "salary" each month could help her smooth out her income gaps.

Additionally, Capalad explains, if Dunn's income climbs above $100,000 a year, she could consider setting up an S corporation, which would allow her to officially put herself on payroll and provide certain tax benefits.

Cash flow projections could help her budget

"It sounds like I make a lot of money, right?" Dunn says. "But it's all spread out." When she earns a book advance, for instance, a large chunk of the money goes to her manager, her agent and taxes. It's hard for Dunn to feel like she has a handle on everything.

To make it easier to budget on her unpredictable income, Capalad recommends that Dunn do a 12-month cash flow projection in which she estimates what she'll earn at different points in the next year from sources such as book sales, podcast revenue and brand partnerships. From there, she can work backward to create a tentative budget.

"We're trained to think month to month because we're all employees," Capalad says. "But the reality is that, for a freelancer, that's not the case, so for you to understand what your next 12 months look like will help you be able to budget on a monthly basis on the personal side."

Here are the 3 smartest things to do with an extra $1,000
Here are the 3 smartest things to do with an extra $1,000

She should start an emergency fund

"I think it would be really great for her to have a separate savings account that is a savings cushion," Capalad says.

Student loans, credit card debt and other bills can start to feel like a never-ending cycle, but setting up an emergency fund can take some of the stress out of it. This fund would be money that "can cover her in those months when it feels tight, so that she doesn't have to feel like she has to put money back on a credit card or take on more debt."

While it's great that Dunn puts so much into savings to cover her taxes, Capalad says, it's smart to have some savings that aren't already earmarked for a specific purpose. "It's not going to pay rent, it's not going to pay down debt," she says.

Going forward, Dunn wants to continue to get better with money, and feel more financially secure, but she doesn't put that ahead of her career goals. "I'm bad in the sense that I never really think about the money," she says. "I obviously want to get paid, but I'm so excited to do things and I think about them as long term career goals."

Raskin has warned her a few times not to take jobs that don't pay enough. But for Dunn, the passion is what counts most, not the paycheck: "If it's something I really want to do, then I'll just do it."

Update: CNBC Make It revised the income figure on April 3, 2019, after failing to confirm the previously published number.

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