Naked With Cash is the year-long series on Consumerism Commentary where seven readers’ households share their financial progress on a monthly basis. I’ve partnered with financial planners who will offer some guidance along the way. Read this introduction to learn more about the series.
Anonymous S is a 24-year-old engineer earning $67,000 a year plus bonus. He also builds websites on the side for an hourly fee of $20 to $35. Read his bio here. Anonymous S is on Team Roger, with Certified Financial Planner Roger Wohlner.
Keep reading to see how Anonymous S progressed throughout the month of June. Following his net worth report own analysis, Anonymous S will be able to read feedback from Roger and from budgeting expert Jacob Wade from iHeartBudgets.
Roger Wohlner, CFP appears courtesy of The Chicago Financial Planner.
Anonymous S’s comments and analysis
June was the first month that saw my net worth decrease. While my assets went up, I ended up spending a ton on credit cards. This came from many sources, but was primarily a result of moving apartments.
While my girlfriend and I were able to save a lot on big items like furniture, we still ended up spending $800 total at Ikea and Bed Bath & Beyond. Additionally, we paid $230 for a moving service off Yelp to move a bed, futon, bookshelf, table, and “stuff,” and we spent $400 at Costco.
However, I see all of these expenses as investments, which will decrease the amount I need to spend in the future. I did splurge on a birthday gift for my girlfriend, but I also see that as an investment. Of course, this balance will be paid in full automatically, as it is every month.
We have already started cooking, and it’s just as great as I remember. We made an eight pound pork shoulder the other day, and we plan to put leftovers into a curry this weekend. We also almost never drink out, a direct side effect of picking a great apartment. Most weekends involve at least night of inviting friends over to drink on the roof. Even if we provided all the alcohol for these occasions, it would still cost less that one night out at a bar or club. Additionally, since I now live 0.6 miles from work, I get to walk to work every day. I can eliminate most of my transit and commuting costs, and it’s healthier too. I cut down on gym fees as well, since the new place has a free gym in the building.
Overall, I think I’m in a great place moving forward. In place of my absent 401(k), I set up weekly automatic investments in my taxable investment portfolio at Vanguard. Right now it’s set up to transfer $600 a month, but I’ll see if any adjustments need to be made in the future. The primary targets are low cost index funds.
Feedback from Roger Wohlner, CFP
Referring to the expenditures made to get the apartment up and running as well as the birthday gift as an “investment” is a poor choice of words in my opinion. I’m not knocking the fact that you spent this money, but calling it an investment is my opinion just wrong and misguided. It also feels like a step down the path of rationalization.
As far as your monthly investment in low cost index funds this is a good thing. Annualizing this plus a $5,500 IRA contribution puts you at $12,700 per year which appears to be a good percentage of your annual income.
Feedback from Jacob Wade
Sounds like the trailing expenses from the move are what put you down for the month, but I agree, these are upfront costs to keep long term spending to a minimum. And very well done on eliminating your commuting costs. Cars and other commuting methods suck the life out of any budget, so you’re miles ahead (pardon the pun) of most people in that respect.
I like the automatic investment strategy, as I just read Millionaire Teacher and am pretty sold in index funds as well. And automating your investments not only keeps the money out of your hands, but it maximizes dollar-cost averaging as well. No advice on this front, except keep it up!