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 a 27-year-old government analyst. She is single, and lives with two roommates, with whom she can split rent and utilities. Betsey plans to save up for a down payment on a home and wants to reform her spending. Some day, she’d like to “retire” and open a brewery so that she can further enjoy her passion for craft beer. (Read her update from last month.)
Betsey’s Net Worth Statement
Betsey’s Income Statement
Betsey’s comments and analysis
My income is up in January because I got three paychecks this month. I used two for paying bills/living expenses and put all of the third check straight into savings. I’ve never been paid biweekly before so that was a cool feeling!
I also received a 1% pay increase, which was negotiated as part of the bipartisan budget deal passed in December. I decided to bump my 401(k) contribution to 10%.
Overall, I did a much better job cutting my spending this month, especially on restaurants and dining out. Most of my “shopping” was an expensive $65 repair job to resole a pair of work shoes.
I paid quarterly taxes in 2013 (because my job did not withhold any taxes), so things should be relatively straightforward for filing in April. I use an email filter to tag charitable donations and other tax-related paperwork so it’s easy to find it all at once. My state and federal withholding has been adjusted for 2014. I don’t do much to reduce my tax liability other than contribute to a 401(k).
Feedback from Sara Stanich, CFP
Sara Stanich provides a look at Betsey’s tax planning goals, with a focus on upping her retirement account contribution. She also considers the idea of setting a concrete goal when saving for a down payment.
Feedback from Luke Landes
I could probably take some lessons in organization from you. Filing my taxes this year is going to be a chore, to say the least.
Congratulations on the pay increase and the great decision to use that to increase your 401(k) contribution. This is a good illustration of a frugal mentality, whether you consider yourself frugal or not.
It’s the same principle — making pay raises invisible — that leads some recent college graduates to continue living like they were in college (and on hardly any income). You’re obviously in a better position and have no need to resort to frequent dinners of Ramen noodles, but the more you can see pay increases as an opportunity to increase savings and long-term planning rather than satisfying urges, the better you’ll be financially prepared for whatever the future might bring.
Those few occasions where you get three bi-weekly paychecks a month instead of two makes you feel good when you look at your net income for the month. How would the month have looked if this had been a regular two-paycheck month?
On a percentage basis, this has been a great month. Keep up this progress, and you’ll find that you’re in a sweet spot right now where increases of $2,000 to $4,000 a month can really affect your net worth as a percentage. As your net worth increases, a $2,000 to $4,000 monthly change will have less of an effect on the numbers. This may not be a really insightful commentary on your situation; I just like seeing these high percentage numbers.
Updated June 22, 2016 and originally published February 18, 2014.