In Naked With Cash, seven anonymous Consumerism Commentary readers publicly track and analyze their finances on a monthly basis. For almost a decade, I tracked my own finances on Consumerism Commentary; now I’m sharing the benefits of public accountability with the participants. I’ve partnered with financial planners who will offer some guidance along the way. Read this introduction to learn more about the series.
Calvin is in his early 40s, earning an annual salary of $120,000 plus bonus as an IT project manager in New Jersey. He recently finalized a divorce and has a teenage child. Read his bio here. Calvin is on Team Sara, with Certified Financial Planner Sara Stanich.
The net worth report below and following commentary refer to the last full month, July 2013. Last month’s report analyzed Calvin’s progress during the month of June. Continue reading this article to see Calvin’s latest net worth report including his own analysis, and his response to July’s theme of education and college planning.
Calvin’s thoughts are followed by Sara’s feedback and advice as well as thoughts from budgeting expert Jacob Wade from iHeartBudgets.
Last month my net worth fluctuated quite a bit. I am not completely sure why, but I think it was a combination of the timing of when I captured my numbers as well as some fluctuation in my long-term investment assets as a result of a withdrawal I made. Overall I think that I am still making good progress, and I am now working on adjusting to my new lowered monthly spending. I want to take the next few weeks to really plan out a budget that I will be able to stick with going forward.
This month’s topic is college education spending and planning. My own experience growing up was that we had a large family with lots of kids, and my parents were in no way going to be able to help out with college expenses. My parents were strong believers in civil service and construction trades as good employment choices.
I made the best of the situation and became an electrician working for a major city borough in New York City. The agency that I worked for paid my college tuition — this was one of their employee benefits. I was able to get a bachelor’s degree from an excellent school without incurring any debt. When I graduated, the agency I worked for didn’t have any opportunities in the field that I went to school for, information systems, so I left and took a job at a large Fortune 500 company, where I am still employed today.
I went back to school under my new employer’s education program and received my MBA — also without incurring any debt. For me, my education worked out really well; I work in a field that I enjoy and managed to not have to take on any debt in the process.
My son enters high school this September, and my ex-wife and I have saved very little for his college education. I think that we may have enough for one year of tuition at a decent university saved in 529 and Coverdale IRA accounts. I am not sure how I will pay my share of the education bills which will start in about five years. Once I am clear of my current debt load I will have significant free cash flow each month as long as I don’t allow my lifestyle to increase. I think I can put away enough to potentially stay just in front of the curve. I think that education is very important, and it has made a huge difference in my life. I am willing to go into debt if necessary to pay for my child’s undergraduate education.
Feedback from Sara Stanich, CFP
Your story of using company tuition benefits to pay for college (not once, but twice!) is really impressive. Many of us wish we would have done the same!
It sounds like paying for your child’s education is very important to you. You are off to a good start with one year’s tuition saved and five years to go, but you need to save more. I realize you are in a cash crunch, but could you restart contributions to the 529 plan at the minimum level? If not now, when? Set a date and do it.
You can increase the amount of contribution later, after you are caught up on some of your other debts. I think you will feel really good about this, and a small addition to your son’s college savings will not affect your lifestyle.
Looking at your net worth numbers, I see that you withdrew from your stock assets, but a corresponding reduction in debt hasn’t happened yet. I expect we will see that in next month’s report.
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Feedback from Jacob Wade
I’m glad to hear the new budget is working out, and hoping that this new lifestyle will become the norm soon enough. Remember that if you ever blow the budget, don’t worry about it too much. It’s no reason to give up; just keep on chuggin’, because budgets are flexible. You have some great stepping stones for your goals as well, as you can attack one debt at a time until it’s completely gone, then move on to the next. Whether you attack the highest interest rate or lowest balance first, you can focus on that goal and throw money at it until it’s gone.
The way you tackled education was awesome, and I just know that your kid is going to be able to glean from that experience and tackle it as well. Even if you don’t have a ton saved up, you can help out as you feel called to. One thing I would not advise is going into more debt to pay for their education. Part of going to college is taking on adult responsibilities, and I am a firm believer that the college student should take on that liability, as it will help motivate them, knowing that it’s their debt to pay. But I foresee your child working his way through college as you did. I believe that to be the best form of education and experience you can get. Yes, it’s difficult, but I haven’t met one person who worked their way through college who regrets it, or who is not successful.
Feedback from Luke Landes
The experts have it covered.
As you mentioned, you made a significant withdrawal from your company stock, so I would expect to see an increase somewhere else on your balance sheet, either a cash increase or a reduction in debt. Unless you had a major expense, the funds shouldn’t just disappear. If it’s just a matter of timing, I expect August’s balance sheet should have this correction.
Back in May, your net worth crossed into positive territory. That’s an important milestone, but with bills to pay, I can understand how maintaining that could be difficult. Just to think bigger for a second, what does the rest of your year look like? Will you be able to cross the barrier with a net worth above zero for “good” by December 31?
Updated June 22, 2016 and originally published August 29, 2013. 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.