In the series Naked With Cash, seven Consumerism Commentary readers share their financial progress on a monthly basis. They are joined by Certified Financial Planners who provide feedback on their journey. Read this introduction to learn more about the series.
Anne and Matt are twenty-seven years old, living in the Midwest, with two children. Read their bio here for background about their financial situation. Anne and Matt are on Team Neal, with Certified Financial Planner Neal Frankle. Review their January update for last month’s progress.
Their goals are to strike a balance between putting aside money for the future and enjoying the present and to save enough for retirement. Keep reading to see their net worth report, comments about the report and their progress, and thoughts from Neal Frankle.
Anne’s comments and analysis
This was a solid month for our family. No unexpected expenses or surprises. Matt got a cost-of-living raise this month: an extra $2 per hour hour for his billable hourly bonus. This will translate to an extra $4,000 to $5,000 gross per year, depending on the number of hours he bills.
He also got a $500 per month benefit stipend. He’ll get it in his paycheck until the 401(k) begins, and then the money can go toward a match. Or, if they finally add a group health insurance policy, the money could go toward that. Once benefits roll out, the $500 will go away and be replaced with those benefits.
For now, we’re putting that $500 aside to fund Matt’s health savings account. I thought the 401(k) was going to start on March 1, but that didn’t happen. Hopefully soon.
March ought to be a good month. Hopefully, we’ll get our tax refund, which should be around $3,800 combined for federal and state. Also, this is a three-paycheck month so the incoming cash will be more than usual.
We’ll fund the IRAs and 529s on schedule (one-twelfth of our yearly goal), and put the rest of the extra cash toward our current savings goals:
- Contribute to the HSA.
- Save a chunk of cash for our next vehicle in five to ten years, or to pay for a major repair.
- Savings for home improvements.
Neal and Jacob have encouraged me to use some kind of program to track our spending. I’ve used Mint in the past, but I didn’t stick with it. I know that budgeting is the “right thing to do” or something, but oh man. I just am dragging my feet on this.
But ya know what? Jacob you just heart budgets so much, that it makes me smile a little. Your enthusiasm is fun. So, while writing this update, I downloaded You Need a Budget for their free one-month trial and I’m going to give it an honest go. I was also considering Quicken, but I like the idea of a free trial first. I suspect I’d like Quicken better for automatically pulling in my data and having expanded capabilities, but we’ll see how this goes.
I hope I’m pleasantly surprised, and that it actually is a benefit to track spending like this.
Jacob mentioned budgeting a month ahead of time. We did that back when Matt was paid once per month, and that worked well. I think we can try doing it again. Matt’s base salary comes in regularly every two weeks, and his bonus is usually every two weeks as well, but sometimes there’s a delay. It depends on when his boss processes it. I was considering perhaps keeping all of our expenses, discretionary spending and some savings to the salaried checks, and devoting the bonus solely for investing and special savings. Same for the extra TWO checks per year — all of that can go toward savings goals.
Thanks for the encouragement and accountability to improve.
Feedback from Neal Frankle, CFP
Congratulations on another solid month. The $2 hourly increase and the benefit stipend are really going to go a long way. And it sounds like you’ve done a great job thinking through the best way to use that extra cash. I like your approach.
Also, I like your plans for the tax refund and three-paycheck month. Nice work. Also, you are smart and to be congratulated to be thinking of pre-funding your next car purchase. I wish more people would think about it this way.
Since budgeting is really so important, I’m really pleased that you are going to try You Need a Budget. I think you’ll love it if you stick with it – and I hope you do. The latest version has a very cool reconciliation function which has been a game changer for me.
All in all, I think you are going in the right direction! Keep it up!