As featured in The Wall Street Journal, Money Magazine, and more!
     

Naked With Cash: Jake and Allie, December 2013

This article was written by in Naked With Cash. 4 comments.


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 47 and 42, respectively. They have no children, but they do have pets. Jake and Allie are employed by the same company, and they earn a combined income of $140,000 a year. They love to travel, and they arrange matters so that they can take two week-long vacations each year and smaller getaways in between.

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.

Jake and Allie’s Net Worth Statement

Jake and Allie’s Income Statement

Comments and analysis from Jake and Allie

With the start of a new year we are hoping this year to advance our goals towards are early retirement. We are also both looking at starting businesses, so Allie will be concentrating on getting her photography business going. She already has two planned weddings to shoot in the coming months. I’m continuing to look for a kennel or animal day care facility for sale. This is a long term goal.

In January we know of a few expenses we have to make, such as plane tickets to Miami for a cruise we are have already paid for and property taxes. One of the cars is going to need some work done. We are expecting these expenses to be around $2,300.

We will be having $337 taken each week out of our pay to fully fund both of our 401(k) accounts. I’m going to use $100 each week to fund my Roth IRA, while Allie is going to wait until later to fund hers. We visited with a financial advisor in November and we made some adjustments to what we are doing. Allie devoted almost all of her paychecks in December to her 401(k) to try and max it out; this year that will be done over the entire year.

Hangout with Neal Frankle, CFP

In the video, Neal, Jake and Allie discuss their goals. Neal offers some suggestions for moving forward to achieve those goals.

Feedback from Luke Landes

I’ll be following your progress this year. I’m interested in photography as well, so I’m especially excited to see Allie move towards starting a a photography business. And international travel is something I’d like to do, as well, so I think this is going to be an exciting year.

You have a lot of things going well for you. Your household has a healthy income, and without children, you’re able to save more money and reach your personal goals faster. The only debt you’re showing on your balance sheet, a loan for your SUV, seems insignificant considering your net worth.

You have a large cash balance. Are you saving for an upcoming expense? Could this possibly be for start-up expenses for your own businesses — the photography business or the kennel — or for the purchase of another house? You mention the possibility of buying an existing kennel for half a million to a million dollars, so I can understand if that’s what the cash is there for. Otherwise, it’s a pretty large emergency fund, if that’s what it is — at least two years’ worth of expenses.

I’d recommend using some of the cash, if it’s not earmarked for something else, for long-term purposes. Invest it, pay off the pesky SUV loan unless the rate is higher than what you’re earning in your cash account, or move forward with your businesses, quitting your day jobs. You’re in a great position to do that this year without suffering financially and without feeling any financial pressure to succeed immediately to pay your bills. And with your buyout offer, Jake, you have little to lose.

Updated January 30, 2014 and originally published January 29, 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.

Email Email Print Print
avatar
Points: ♦127,550
Rank: Platinum
About the author

Luke Landes 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 Luke Landes and follow him on Twitter. View all articles by .

{ 4 comments… read them below or add one }

avatar MM

Agree. Unless your auto loan is at 0% APR, go ahead to pay that off.

Reply to this comment

avatar Jake and Allie

Addressing Luke’s comments: The only debt we have is the SUV, it hasn’t been paid off for a couple reasons. We are actually making more money on the money sitting in the bank than we are paying in interest.

The cash is not currently marked to be used for anything. Some of it is tied up in CDs that are not being renewed when they renew. We haven’t felt comfortable putting even more of the cash in the stock market at this point. Between the current brokerage accounts, the bonds, fulling funding our 401k and the Roth IRAs we just opened it’s just kind of an uneasy feeling to stick even more in.

This is one thing we are hoping to get some advice on from Neil. We have talked to someone that handles our IRA/401k/brokerage accounts, and of course they want us to put all of the spare cash into the brokerage account and then let them handle it. They want to set it up as a managed account where they harvest loss and gains and control it with just a little input from me.

Reply to this comment

avatar Lance @ Money Life and More

I really like the videos on this year’s series Luke! Seems like Jake and Allie are doing well.

I personally wouldn’t let someone put your money in a brokerage account and manage it unless you really trust them. They could churn and burn that money (raking up fees for the advisor’s wallet) unless they’re a great advisor and truly care more about their clients than their pocket book. Not all advisors are bad, but make sure you know how they are compensated in advance.

Reply to this comment

avatar Ivan Widjaya

Wow this is inspiring. Good things can happen with a good financial plan. But this seems too safe. It can be invested so that the money can grow instead.

Reply to this comment

Leave a Comment

Connect with Facebook

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.

Notify me of followup comments via e-mail. You can also subscribe without commenting.

Previous post:

Next post: