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.
J.W. is thirty-one years old and a father of two. He works in retail and is underemployed, and his wife and kids are on state medical plans. Their household income is supplemented by SNAP (food stamps). Read his bio for more information about his family’s situation.
His goal is to be able to provide for his family while still tithing 10% of his income to his church. JW is on Team Neal, with Certified Financial Planner Neal Frankle. Get up-to-date on J.W.’s progress by reviewing his update from last month. This is J.W.’s last report, and he shares his final thoughts on participating with Naked With Cash in 2013.
JW’s own analysis and comments are followed by feedback from Neal Frankle.
J.W.’s comments and analysis
Income and expenses for December: Income this month was $3,114. Expenses were $2,903. We were on target for most of our budget. We overspent on Christmas by about $200.
Year-end tax planning: With the year coming to a close, I prepared a rough estimate of taxes at the beginning of December. I fill out all the data I can using tax software. I then enter numbers from my last paystub and calculate my interest from statements. This way when W2 and 1099 forms arrive, all I need to do is confirm the information entered and submit my taxes. This lets me see how close we are to making itemization worth it, and gives me time to make additional contributions if needed. This year the standard deduction wins out.
Income and expenses for 2013: Total income from Jan 1 through Dec 31 was $33,958. This includes my job ($21,906), my wife teaching piano ($7,342), selling things on eBay and Craigslist ($618), and our tax return ($4,092). Total expenses were Auto ($4,512); Business Costs ($3,441); Education — Student Loan Payments and Preschool Tuition ($7,010); Food ($3,848); Charitable Giving ($3,564); Health ($3,912); Vacations ($737); Holiday & Birthday ($2,456); All other spending ($953). Total spending for the year: $29,696. This leaves an increase of $4,262.
Progress: There were two areas that saw real change in my finances over this last year. The first was the near-elimination of my wife’s student loans. We managed to pay around $6,000 towards those.
The second change was me opening a 401(k). While we only have a couple hundred dollars in it, at this point it is a major milestone. Planning for 2013, we decided paying down debt was more important than opening the 401(k). With our planning for 2014 we decided it was time. This year we only increased our savings by around $1,000. Any addition beyond that we got was used to pay down debt.
I feel this Naked with Cash series has been a success. At least for those of us involved. More that once, not wanting to have to report some decision to the readers changed how I managed my money. Given the opportunity, I would do it again.
Looking forward: Over 2014 will see the elimination of my wife’s remaining $2,000 in student loans. My student loans sit at just over $15,000, and the goal is to get those down under $9,000. We saved $1,000 in 2013 towards our next car purchase. This year the goal is to increase that by another $2,000. This year should also see a job change for me.
The biggest change 2014 will see is my first positive net worth since I took out the first of my student loans on in January 2002.
Feedback from Neal Frankle, CFP
Congratulations on another great month. What was most impressive to me is that you, unlike many people, consistently budget and track. That’s huge. Also, I’m really pleased to see that you are so on top of your taxes. That’s going to save you a great deal of time. Bravo!
Also, nice job on increasing your annual income by more than $4,000 and wiping out (almost) your wife’s student debt. That’s a great direction! I agree with your decision to pay down the debt.
I wish all the best to you and your family.
Feedback from Luke Landes
J.W., you and your family have made good progress this past year. There may have been some challenges along the way, but you’ve shown that you can handle things very well. A positive net worth is so close you can taste it; that is my wish for you in the coming year. I know you will hit that milestone.
Keep tracking your finances and looking for ways to increase your income. I love the fact that the idea of being truthful about your spending decisions in public influenced those decisions for the better. Consider continuing that type of attitude, and if you need the actual exposure to keep yourself accountable, think about starting your own blog to write about your decisions. Your story has been very interesting to follow, and your honesty has been refreshing.
Thanks for participating this year, and best of luck in 2014!