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2014


For the first time in several years, at the beginning of 2014, I shared my personal and financial plans for the year. I had navigated away from sharing personal data on Consumerism Commentary, leaving an opening for Naked With Cash. Over the course of the past two years, eleven readers shared their financial goals and progress with monthly updates, much like I had done from 2003 to 2011.

I wanted to share my financial and personal goals for 2014 because I had gotten away from some of the more personal aspects of life while business need prevented me from sharing some of the details, like income and net worth. It was time to regain some control, so in 2014, I shared more than just my financial goals, but peered into my life for some thoughts on personal development in addition to some new business goals.

My first goal for the year was to grow my consultancy business. I started the year off with a bang, with a few bloggers who were looking to grow their websites — to generate income. I am not interested in marketing myself in this sort of fashion, but I let the community know I was available. I may have taken the wrong approach — rather than setting a high value on my time as a “blog business coach” and pricing my time at a rate commensurate with the fact that I grew a website into a multi-million dollar business in a very competitive environment, I presented myself as someone who would be willing to work with anyone’s budget.

One particular client lasted only two sessions, until he realized that the type of coaching I was offering was not what he wanted. And then he never paid the invoice. And then I ran into him at a conference. And he said he wished he had listened to my advice in the first place. People don’t seem to want to talk about the big picture and look at their overall approach to their business — they just want a checklist. That wasn’t what I was interested in providing, so I moved on. I decided to focus on other areas of my life.

So in terms of income for 2014, my primary source has been writing for Consumerism Commentary. Since I sold the website in 2011, I’ve moved from an employee of the company that purchased the site, writing and advising on a variety of matters, to a paid-by-word freelancer with a responsibility for writing several articles a month plus a flat monthly fee for managing the website’s editorial system. And as the company’s budget for the website continued to shrink, I wrote less. Because I had committed to the second series of Naked With Cash, those four posts a month became the bulk of what Consumerism Commentary had to offer readers in 2014. Unfortunately, several of the Naked With Cash participants and experts did not match my commitment for whatever reason, and for me, the series was a big let-down this year.

That’s the main reason I’m not bringing it back in the beginning of 2015.

Another goal in 2014 was to explore forming a nonprofit organization. I’ve made some progress. I put together an initial board of directors (or trustees) and we’ve had a few meetings. I’ve formed the business entity, registered with the State of New Jersey, and successfully applied for 501(c)3 status. The mission, at least for now, is to support the development of young people into financially capable human beings through effective behavioral education, behavior modeling and reinforcement, and advocating for industry responsibility.

Here’s the issue: we can all agree that financial literacy is a problem in the United States. And as more and more newly-graduated adults find themselves starting their “real lives” in more debt they could possibly handle, there must be some type of education that could be provided to all children of a certain age in this country so they can avoid making poor choices with money and see financial success much sooner.

That theory has been proving wrong. Curricula in financial literacy aren’t ineffective. They have an effect, but it’s not a positive effect. Children who have the “benefit” of financial literacy in their education actually perform worse when managing their own money as adults. There have been a number of studies that come to this conclusion, but other studies conclude that even at best, financial literacy education doesn’t improve financial conditions later in life.

So the goal of my nonprofit is to take another path, recognizing that people don’t learn financial behaviors from courses in school or class trips to a bank. Children learn financial behavior from their role models. And the children at the most risk for future financial distress don’t have positive role models. How do you get positive role models into communities where that might not exist in a family setting? One possibility is working with organizations that all ready provide role models, like Big Brothers Big Sisters. Any other attempt to introduce community-acceptable role models into low socio-economic status neighborhoods might be too much of a challenge.

There is a long path ahead for this nonprofit idea. I’ve also concluded that I have no interest in spending the rest of my life fundraising, so that is one concern. But in the coming year, I’ll explore this further.

At the end of last year, I set aside some money as a donation to my alma mater. I strongly feel that my college education played an important role in forming my identity as an adult, even if like many people my degree and course of study aren’t related to what I do today professionally. I mixed my passion for personal finance with my undergraduate major in music education and came up with an interesting solution. Because I believe that degrees that require internships can be somewhat unfair for students who can’t afford to spend a semester working for free, I took the first step in establishing an annual stipend for an internship. This way, a student who has an opportunity who work with one of the best arts organizations, most of which are located in expensive cities, doesn’t have to worry as much about how they’re going to pay their bills during that internship period.

My interaction with the university also provided me with an interesting opportunity. Last year, I visited my undergraduate college’s new entrepreneurial program and gave a talk to a number of students, sharing my experiences as an “accidental entrepreneur.” My story was significantly different than those of the typical business leaders invited by the university, so it may have helped the students think a little differently about their potential path as, well, mostly start-up founders.

This past year, I continued my personal training and improved my nutrition. This year, I’ve seen some physical improvements. This hard work, working with a personal trainer three times a week and changing the way I eat, is starting to pay off. I thought I would have seen results faster, but I’ll take what I can get.

I wanted to spent more time this year focusing on my personal relationships. When I wrote these goals, it was just a few weeks after a long-term, long-distance relationship ended. It was a couple of months before I entered a new, even longer-distance relationship. I spent a lot of time traveling this year. And I found myself really needing to be the best partner I could be. We’re very happy together, but distance in a relationship can be very painful. Besides a romantic relationship, there are other people in my life, friends and family.

When I set these goals at the end of last year, I intended to do a better job maintaining some of those relationships. Balancing that has been difficult as I try to spend as much time as possible with my girlfriend, as time with her is too rare.

With whatever time I had left for myself, I intended to spend the year working with photography. I did, and my skills are ever improving. I even sold a print of a photograph of San Francisco’s AT&T Park before even trying to sell prints. I still spend most of my effort on portraiture, and you can see some of my work here (and buy prints if you are so inclined). I don’t intend to make a living from photography, mostly because I would hate to do wedding photography, and that’s where the money is. But it has provided me a nice artistic outlet.

I have also begun volunteering with a local nonprofit organization that runs a drum and bugle corps — a highly competitive marching band consisting of only brass, percussion, and color guard that places very high performance demands on the young people who participate. I’m getting back to my roots in music just a little bit.

Financially, my struggle this year was to live off of income from working rather than income from my investments. I barely made it. I’ve depleted my cash-based savings, but I’ve managed to leave my investments alone. The investments come from income before selling my business and proceeds from the sale of that business. I’ve only withdrawn from those accounts for taxes, for sales broker fees (for the sale of the business), and for legal fees. Since inception, the account has grown over 25% even taking those withdrawals into account. I’m in a position where I can just live off the income from the investments for the rest of my life, and starting in January 2015, I may need to begin living partly off these investments.

Some of my friends can’t understand why I haven’t been doing this already. I’m successful, financially independent, yet I’m continuing to work and live mostly like I did several years ago when my business was first starting to grow. I haven’t figured this part of my life out yet. Maybe that will be a goal for next year.

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Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs).

For more information, read this introduction.

Throughout this past year, four Consumerism Commentary readers have shared their financial reports and stories, exposing the results of their daily financial choices. The series ends with this month’s update. Each participant is paired with one of our Certified Financial Planners. The experts will provide insight and guidance that will help our participants take their finances to the next level by the end of 2014. Learn about this year’s participants and experts.

Brian and his wife have two children. They are a one-income family since Brian’s wife stays home. They pay off their credit cards each month, so their only debts are student loans and a mortgage. This month, the focus is on estate planning. (Read Brian’s last update.)

After reading Brian’s comments, you can see video commentary from Jeff Rose, CFP. Jeff Rose appears courtesy of Good Financial Cents and Life Insurance By Jeff. This is the final Naked With Cash update for the year, and includes information from last month, as well as this month’s update and Naked With Cash wrap-up.

Read the full article →

{ 2 comments }

Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs).

For more information, read this introduction.

Over the course of 2014, four Consumerism Commentary readers have shared their financial reports, exposing the results of their financial choices on a day-to-day basis. Each participant is paired with one of our Certified Financial Planners. Throughout the year, the experts have provided insight and guidance to help our participants take their finances to the next level, and as the series is now ending, we are able to look back on the year. Learn about this year’s participants and experts.

Jake and Allie are animal lovers who enjoy their pets and have no plans for children. Both are committed to early retirement. Jake and Allie are both interested in owning side businesses, even though they plan to use their nest egg for living expenses. The couple enjoys travel and make it a priority to take trips throughout the year. They believe that it makes sense to use part of their combined $140,000 income to enjoy life now. (Read their update from last month.)

After reading Jake and Allie’s comments, you can watch a Google Hangout they participated in with Financial Planner Neal Frankle. Neal Frankle appears courtesy of Wealth Pilgrim and MCMHA.org. This month’s Naked With Cash is the last of the year, and includes information on debt reduction and a wrap-up of the year.

Read the full article →

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The National Retail Federation has admitted defeat. Sales over the past holiday weekend dropped 11% over Thanksgiving weekend in 2013 according to the organization in a press release yesterday. The organization reversed course after being highly positive about the prospects for shopping leading up to the announcement of the estimated figures.

Shopping traffic for the weekend dropped 5% or 6%, depending on how you want to calculate it, compared to last year. The Federation tried to put a positive spin on the news.

I avoided shopping this weekend, from Thanksgiving day through today, the so-called Cyber Monday. Don’t get me wrong — there is much shopping I want to do before the holidays in December, but the excessive deal-wrangling this weekend just drives me away from wanting to pursue any shopping.

I’m not so much of a bargain hunter. I am interested in good deals, but most of the supposed bargains you see around Thanksgiving look good and sound good, but just aren’t all that good. And the details that are truly good, whatever that means, are almost always for items I wouldn’t want or don’t need.

For deal shoppers, the best time to buy is generally after Christmas, but there are a few obvious problems with that. First, it’s difficult to generalize. Overall, this might be true, but for any particular item, there’s no way to know. That’s why shoppers rely on Black Friday deal ads. They give shoppers some confidence, even if the resulting deal is not the most ideal price for any particular item. If you buy a gift using a Black Friday ad or Cyber Monday deal, you feel good about saving money, and for the human brain (but not your future self), that’s better than actually saving money.

The best method I’ve found for spotting good deals is CamelCamelCamel. This only applies if you have a specific item in mind, if that product is sold on Amazon.com, if Amazon.com generally offers the best price for that item among retailers, if you’re not on a tight time frame for making the purchase, and if you are willing to be a customer of Amazon.com. CamelCamelCamel is a website that tracks Amazon.com’s prices and can alert you whenever the price reaches a certain point. That price point could be one that you specify as your trigger, or it could be a price suggested by the CamelCamelCamel service using an algorithm that takes into the previous lowest price for the item.

The best thing about CamelCamelCamel is that it makes me wait. I’ve had items registered — it can work directly with your Amazon.com wish list if you want — for over a year, and suddenly, I’m alerted that an item, say a movie Blu Ray set, has reached my price point. The delay ensures I’m no longer under the influence of an impulse desire to purchase. Because if there’s something I want and need right away, and the cost is reasonable, I’m going to buy it right away rather than wait for a deal.

But if I know that, for example, the remastered Star Trek: The Next Generation season Blu Rays are eventually sold for more than a 60% discount off their initial sales price, usually within a year, I just set my price point trigger and wait.

And maybe more and more consumers are like me, bypassing the heavily advertised deals for more researched best prices. That could be one contributing factor to this year’s sharp decline in consumer activity over the traditionally biggest sales weekend of the year.

What role does the larger economy have? If people feel they are worse off financially, they might not plan on shopping as much this year as they did last year. If, however, people feel they are in a better financial position than they were last year, they could be less likely to pay attention to the holiday sales. In other words, you could use just about any state of the economy to justify both a strong and a weak holiday shopping season.

There might be some legitimacy to the idea that people feel better about the economy, which takes away from the desire to seek bargains at every opportunity. It’s clear that the recession in 2008 had long-lasting effects, not just in terms of employment, but in approach to life and money. Ideas like frugality, extreme saving, and supercharged planning for retirement became much more popular and legitimate than during times of stronger consumer confidence.

Throughout this period following the recession, I considered whether this was a permanent shift in approach along the lines of how the Great Depression affected an entire generation’s approach to money. The question was whether Millennials or Generation Y would be defined by the recession. My thought has always been that this is temporary, and I still think that is the case.

Perhaps this past weekend is the first indication that once Millennials feel more confident about their financial situation — and the lower gas prices may go a long way to reinforce that feeling today. Holiday sales are still driven by shoppers aged 18 to 34, so if this group is feeling better about the economy, this could be start of the generation’s shift away from conscious spending. It was fun (and successful) while it lasted.

The increase in confidence, whether it’s starting now or not, is going to have some profound effects. The value of assets — the stock market, real estate, etc. — will increase. Even if retailers continue to see problems throughout this year’s holiday season, the long-term prospect for sales are good. Confidence overflows into all areas of commerce, at least for some time. And during that time, shareholders benefit.

Workers feel confident about their employment prospects, so executives work harder to retain the best talent. Salaries increase. Disposable income increases. Prices also increase, but consumers handle it.

Another potential drawback that resulted in this year’s decrease in spending is the backlash surrounding the idea that retailers want to remain open on Thanksgiving Day. Retailers claim they are responding to customers’ demand to allow in-store shopping during the holiday, and there’s no doubt there are more than enough shoppers lined up during the holiday to give stores a reason to open. But employees are generally not happy. No one wants to be forced to work when the rest of the country is celebrating a holiday that supposedly focuses on time with family and friends.

And there are movements that encourage people to change their shopping behaviors during the holidays, whether’s it refusing to patronize stores that remain open on Thanksgiving, refusing to buy anything on Black Friday (also known as “Buy Nothing Day”), or encouraging shopping at family-owned local stores rather than large national and online retailers. These trends permeate Generation Y as much as or more than the desire to spend frugally. There’s no question that this disdain for large corporations, consumerist culture, and mass materialism has an effect on shopping attitudes for a good proportion of Millennial shoppers.

Did do any holiday shopping between Thursday and today? Was your approach different than last year’s? Are you spending more money for the holidays this year?

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Naked With Cash: Jake and Allie, October 2014

by Luke Landes
Jake - October 2014 Naked With Cash

Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs). For more information, read this introduction. This year, we have four ... Continue reading this article…

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Why Socrates and Plato Are the Only Financial Gurus You Need

by Luke Landes
Socrates

Forget today’s best-selling financial gurus and authors. Socrates and Plato covered all that you need to know about wealth and life.

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Is Acorns the Next Best App for Investing?

by Luke Landes
Acorn App

Acorns allows investors to divert small amounts of money to the stock market, $5 at a time. And all you need is your mobile phone. Have you seen the fees?

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The Best Cash Back Credit Cards, March 2015

by Luke Landes

Cash back credit cards can help consumers practice responsible spending while earning a little extra for their efforts when used properly. The days of earning 5 percent cash back for credit card purchases may be nothing but a memory, but the smart use of credit cards can still be profitable for diligent spenders. You may be ... Continue reading this article…

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Naked With Cash: Laura and Leon, September 2014

by Luke Landes
Laura and Leon - Naked With Cash

Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs). For more information, read this introduction. This year, we have four ... Continue reading this article…

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Naked With Cash: Brian, September 2014

by Luke Landes
Brian - September Naked With Cash

Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs). For more information, read this introduction. This year, we have four ... Continue reading this article…

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Naked With Cash: Jake and Allie, September 2014

by Luke Landes
Jake and Allie - September Net Worth

Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs). For more information, read this introduction. This year, we have four ... Continue reading this article…

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The One Action You Need to Take in Any Market Correction

by Luke Landes
Bear Market

As of today, the Dow Jones Industrial Average has erased all of its gains this year. We’re not quite in “market correction” territory, though. The S&P 500 is still up year-to-date, but it isn’t presenting as fantastic a return as was evident earlier in the year. We could be getting to the point where the ... Continue reading this article…

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Mark Cuban Wants to Cap Student Loans at $10,000

by Luke Landes
Mark Cuban Student Lans

We expect much from people we see on television. And it’s worse when we perceive someone to be smart and talented, even if they’re speaking beyond their area of expertise. We think someone who is a great community leader or someone who is a great business leader will make a great President of the United ... Continue reading this article…

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Hard Work and Practice Can’t Guarantee Success

by Luke Landes
Children Playing Chess

I’ve written extensively about taking control of one’s own finances. My life changed for me when I realized I had more control over my personal situation than I previously believed. Every human has the power to make every decision based on a future benefit. One can choose to use a pay raise to pay off ... Continue reading this article…

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How Do You Determine Your House’s Value?

by Luke Landes
House

Yesterday, I pointed out that the house you live in is an essential part of your net worth calculation. But determining the value of your house, especially if it’s the house you live in and not something you track as an investment, can be tricky. It’s easy to determine the value of your mortgage to ... Continue reading this article…

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Naked With Cash: Betsey S, August 2014

by Luke Landes
Betsey - Naked With Cash

Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs). For more information, read this introduction. This year, we have four ... Continue reading this article…

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Naked With Cash: Laura and Leon, August 2014

by Luke Landes
Laura and Leon - Naked With Cash

Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs). For more information, read this introduction. This year, we have four ... Continue reading this article…

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You Need to Include Your House in Your Net Worth

by Luke Landes
House

Naked With Cash participants include their houses in their net worth, if they own houses. Is that really necessary?

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Naked With Cash: Brian, August 2014

by Luke Landes
Brian - Naked With Cash

Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs). For more information, read this introduction. This year, we have four ... Continue reading this article…

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Naked With Cash: Jake and Allie, August 2014

by Luke Landes
Jake and Allie - Naked With Cash

Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs). For more information, read this introduction. This year, we have four ... Continue reading this article…

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