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Naked With Cash: Jake and Allie, April 2014

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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).

For more information, read this introduction.

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.

Jake and Allie are animal lovers who recently added a new furry friend to the family. They don’t want children, and are committed to retiring early, when Allie is 50. Both hope to own side businesses during retirement; Allie with photography and Jake with a kennel. They enjoy travel and make it a priority to take trips throughout the year, using part of their combined $140,000 income to enjoy life now. (Read their update from last month.)

After reading Jake and Allie’s comments, you can see a Google Hangout they participated in with Neal Frankle. Neal Frankle appears courtesy of Wealth Pilgrim and MCMHA.org. This month’s Naked With Cash focus is on planning for income disruptions.

Jake and Allie’s Net Worth Statement

Jake and Allie’s Income Statement

Comments and analysis from Jake and Allie

Month number four of keeping track of everything is over. This was the best month we’ve had so far in terms of spending, spending only approximately 34% of our take home pay. The only expenses a bit above average this month are Auto Fuel cost (there was a trip out of state for a death in the family) and taxes for a vehicle due this month.

This month we are supposed to talk about changes in income. The first question that comes to mind is regarding job security. I would say we think about this often. We work for a company that is most likely going to be sold soon, as the owner is retiring, and it’s a “luxury” company, so profit follows the state of the world economy. If the economy turns bad again, I’m not sure the company would continue, so that is one worry about income reduction, especially since we both work for the same company. Another possible route to income reduction is based on the fact that neither of us are happy here. We love our jobs and what we do, but it has not been managed well over the last few years, making it unenjoyable to go to work most days. Allie actually quit at the end of last year but was talked into staying with the promise that things would improve, but there has not been a lot of change.

We are lucky that we have savings to fall back on if something should happen, but we hope that it doesn’t come to that because we’ve worked really hard at saving instead of living up to our income level like we witness from a lot of those around us. We have also both have been doing some freelancing to make some extra money (and potential clients should we need to go out on our own).

One of the topics mentioned was income increases. While it may not be the norm, we’ve always taken most our income increases and put them in savings or increased our percentage of contributions to our 401k accounts. After all, it’s extra, so you really don’t miss it anyway. We’ve increased our vacation budget a little over the years, but not by a lot and not to the point of catching up to any income increases. Our goal is early retirement so that we can travel and enjoy life (with some work on the side in an area that we enjoy) with the peace of mind of knowing that we’ve already saved for the future.

Hangout with Neal Frankle, CFP

Neal offers the first part of a two-part analysis of Jake and Allie’s financial plan. He emphasizes planning as a couple, and starts with a questionnaire he asked them to fill out so that he better understands their goals and motivations.

Feedback from Luke Landes

Thanks as always, Jake and Allie, for being so forthcoming with your finances. It’s great that you’re willing to share the intimate details of your finances.

I like that you brought up the fact that your job isn’t enjoyable most days, despite your loving what you do. Many employees can relate to that situation. They my be truly passionate about their field of work, but conditions in their job prevent that passion from being fulfilled. There are two philosophies that address this situation, and both have very strong proponents.

First, there’s the idea that work is not supposed to be enjoyable. That one can pursue an area of passion and make a living in an enjoyable field is an anomaly in the history of 99.99% of the planet’s population throughout history.

The existence of an upper middle class has changed the game in terms of earning a living, bringing some of the benefits of the historical ultra-elite to more people. Today, the upper middle class can quit their jobs when they are unhappy, following the advice of motivational speakers who encourage everyone listening to do just that. Hate your job? Find a new one. This advice would seem ridiculous to most people just a century ago — maybe even half a century ago — but now it’s advice that sells millions of books, thanks to middle class wealth.

And while the idea of quitting a job in search of better pastures is still just a dream for most people in this country, you happen to be in a position where you can make it work. You have an amazing financial cushion. So if anyone is ready to take the advice of motivational speakers who suggest never settling for a job or career that doesn’t fulfill you, it’s you.

As you note, the same savings you have may be necessary to handle the loss of income in an economic downturn, but from reading your updates for several months and starting to know a little more about you, I think you will find a way to make it work regardless of the status of the broader economy.

Published or updated May 19, 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.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 2 comments… read them below or add one }

avatar tim

This was so confusing. Where is the extra $1600/mo coming from for common stocks, since take home pay minus expenses don’t add up. Where is it listed in the expenses sheet? I’m also confused asking whether or not to put $1600/mo after retirement (retirement when allie is 50, which means jake would be 56, not the calculation to when jake is 65), where is the money coming from after retirement to contribute when jake is 56 to 65? I’m also confused about their stated risk since 1/4th of their current networth is in cash, but they are fine with putting 25% into common stock? Also, how can you contribute $400/mo into Roth after retirement? The premise being you aren’t working at retirement, isn’t it? where’s allies $400/mo into IRA coming from between 50-60 age years? What about catch up contributions when jake turns 50 in 2 years?

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avatar tim

my eyes might be failing me, but reading through all the updates, I haven’t found anything about why you two people have four vehicles? Why also do the values continue to remain flat without depreciating (presumably the $28k SUV was purchase price, which immediately depreciated off the lot), since that is what cars do, depreciate (for the vast plurality of the time)? What’s the “cash back” category as income? Is this the credit card cash back? I don’t see that as income, it’s a discount from the purchase price. Getting fixated on cash back from credit cards and putting it as an income generation line tends to make people spend more on stuff they don’t need, etc., that’s why credit card companies market it as cash back. anyway, my 2cents that doesn’t count as income.

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