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).
This year, we have four participants who will share their financial reports, exposing the results of their financial choices. 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.
Betsey is single and works as a government analyst in a job that she is still relatively new at, in a city she recently moved to. She lives with two roommates in order to keep her living costs down, but Betsey is saving up for a down payment on a home. In the long-term, Betsey hopes to retire comfortably and start a business brewing craft beers. (Read her update from last month.) This month, the topic deals with changes to income.
After reading Betsey’s comments, you can see video commentary from Sara Stanich, CFP. Sara Stanich appears courtesy of Stanich Group and Cultivating Wealth. This month, Betsey will share information about her short-term financial goals.
Betsey’s Net Worth Statement
Betsey’s Income Statement
Comments and analysis from Betsey S
I went through a big income change last year and adapted by putting most of the increase in salary towards a concrete goal: a house down payment. I realized the other day that even though I am making about $20,000 more this year, after retirement savings and the money I am putting away for a house, I am actually spending and living on less money than I did last year. The change in paying more attention to how I’m spending money feels great.
Last year, I saw firsthand how government furloughs or shutdowns can lead to unexpected income reductions. Even though I consider my job to be very stable, this has helped me to understand why it is important to keep some money on hand for emergencies.
I recently had a performance review confirming I am on track for an expected salary increase of about 20% in six months, and I am planning to increase my 401(k) contribution so that it is maxed out at that point.
Feedback from Sara Stanich, CFP
What can I say? Betsy, you are doing great. Your net worth is steadily increasing every month, you have a nice cushion in savings, and you have a monthly cash flow surplus of nearly half your income.
You are saving for a down payment, but it’s not like you are neglecting your long-term goals: you are contributing to your 401(k), and planning to start maxing it out later this year.
At the same time, you appear to have a pretty good sense of balance. I can see that you spend money on restaurants and going out. That’s a good thing, in my opinion!
You are building a great foundation for long term financial success. Keep up the good work!
I look forward to your next update.
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Feedback from Luke Landes
Your numbers continue to look great, Betsey!
I like to hear that you feel great about seeing the improvements in your financial condition due to paying attention to your expenses.
Now that you’ve seen the benefits of emergency funds, have you determined what your emergency plan would be in the unlikely case of an extended government shutdown? I know you have money set aside for a house down payment and for travel, but do you have anything set aside for income replacement?
A 20 percent salary increase is fantastic. I like your plan for the increase; investing in your 401(k) to the maximum can be a great idea. What are your investment options? There are certain circumstances in which you may want to look to other investment vehicles before maxing out your 401(k), but if you have an employer match and you have good, low-cost investment options, you can’t really go wrong.
I’m looking forward to reading more. Thanks for participating in Naked With Cash this year!
Updated June 22, 2016 and originally published May 28, 2014. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.