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Naked With Cash: Jake and Allie, February 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 47 and 42, respectively. They have no children, but they pets that they care for devotedly. The two make a combined $140,000 a year and hope to retire early, when Allie is 50. They love to travel, and make it a point to take trips throughout the year. Allie is interested in starting a photography business, and is working toward that goal. Jake wants to start his own business as well. (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.

Jake and Allie’s Net Worth Statement

Jake and Allie’s Income Statement

Comments and analysis from Jake and Allie

February was a pretty crazy month for us. It started out pretty normal, but as our anniversary cruise came closer, the weather in the South went wild (the ice storm), and we had to struggle to get ourselves to our destination. Our flights were canceled and no rental car companies were open, so we ended up driving ourselves. That resulted in a refund of our flights that we booked. In exchange, we had fuel expenses, a hotel expense, extra food expense, and an extra night at the kennel for our animals. Turns out that saved us a little money, but it was pretty stressful at the time.

We added some travel subcategories to our spreadsheet to show the spending during the trip. As a reminder, ­this trip was paid for in 2013, so all of the expenses were just a few extra things we did. And, of course, the cost of getting there.

Since our trip, we lost a pet that had been in our family for almost 12 years, and we added a new pet (already planned, but it arrived a little sooner than we expected). The addition of the new puppy, getting one of the existing doggies fixed, kennel expense for vacation, and some additional food expenses added up to a pretty large pet expense for February.

While that might freak out a lot of people, especially those that aren’t pet lovers, these little furry friends are still a lot cheaper than if we had children (absolutely no offense intended to anyone who has children). For us, the pets are our children, so we plan for them in our budget.

The above kind of took up most of our month, so not a lot else to report. Our assets increased a good bit due to our investments doing well. Our income is less than last month because of Jake’s quarterly bonus in January. Our expenses are up this month because of the extra pet expense, but they’re only up an extra $500 since we had property taxes in January and managed to keep a few of our expenses a little lower this month.

Miscellaneous income for this month was made up with the help of a gift, a phone that Jake won and sold on eBay, and a check for a work trip that Allie took in January, since she used her personal vehicle for the trip.

Something we had planned to do at the end of last year, and that was suggested by our advisor, was to use some of our cash for investing. I’ve been moving my cash to investments along the way, but Allie has always been very shy about that. Taking a step out of her comfort zone this month, she moved $10,000 over into her investment account, and we are going to look at a few options for splitting it and investing it.

No trips or anything are planned for this month, and we will be spending a lot of time working with the new puppy and one of the existing doggies to get them used to each other, so we shouldn’t have a lot of entertainment, gambling, or eating expenses for this month.

One thing we are looking at is a little remodel work to the house, but we’re putting that off for a month or two until we can take advantage of the 5% cash back for home improvement and furniture purposes. While it won’t add up to a lot of money, we figure there’s no reason to give up the extra cash if it just means waiting an extra month. Besides, every little bit counts.

Tax season is coming up, so I’ll be starting to enter our tax data and see how we did for tax planning in 2013.

That’s it for February! It’s kind of strange that such a crazy month for us left very little to report for our finances. We are still finding it very interesting to keep track of our expenses on a daily basis. If you’ve stayed with the article this long and you’re looking at working on your own finances, we strongly suggest giving the tracking a try. Jake’s tracking system is simply setting up categories in a spreadsheet and adding to the numbers each day.

NOTE: instead of just increasing the number, it’s better to input your formulas as such: 324+56+127. When you see one big number, you wonder where all of your money went; when you see the individual expenses added up, you remember some of the costs and it quickly becomes obvious where all of your money went. It’s a great way to show yourself where you’re spending your money. You think you know, but when you start looking at the numbers at the end of the month, you realize that you are spending more than you thought.

One thing that I encouraged Allie to do when we first met (she was just graduating college and had no savings) was to use Quicken to track her spending. The most important part of that was having her set up categories for everything (car payment, dining, insurance, health, Christmas, savings, and other expenses). Each week Quicken automatically added preset amounts to these categories and saved money for them. The balance shown in her Quicken account was what was left over after money had been moved to those accounts.

She wasn’t allowed to touch the money unless the bill came around or an emergency expense required moving it. When her car payment was due, the money was already saved, and she moved it into her main account to pay the bill. The balance that was left after moving money into the categories was her spending money until her next paycheck.

It was this simple task that allowed her to start saving money for the first time ever because it made her realize what her extra income really was. It didn’t take a lot of time before she started building up savings. After she paid off her car, she kept allowing Quicken to keep adding the money and built up a fund that she could later use as a down payment on a new car. She was eventually able to abandon this practice because she had saved up enough money and realized in her mind what her real expenses were, but it was a great learning experience that helped get us to where we are today.

Hangout with Neal Frankle, CFP

Neal Frankle talks with Jake and Allie about insurance, and tackles issues related to asset protection. If you want to protect your wealth for the future, insurance is a must.

Feedback from Luke Landes

I agree. Tracking one’s finances is great advice and is one of the first steps to taking control of one’s financial situation. I appreciate your sharing your system. And I like your idea of continuing a car loan payment after the car is paid off to build up savings for the next car. That’s a technique straight out of a personal finance self-help book. Many books, I’m sure, because it works nicely.

You’ve added “cash back” balance sheet categories for both Jake and Allie. It looks like you’ve done a good job of taking advantage of credit card cash back offers. If you’re going to spend money, you might as well get some back. That’s the theory, anyway, and it’s worked well for people who are conscious about spending as you seem to be. I’ve been recommending cash back credit cards for years, but they aren’t right for everyone. In fact, credit cards of any kind should be avoided by people who are inclined to spend more than they would with cash — or by people who don’t have their spending under control regardless of form of payment.

You guys seem to be in a good position and have little to worry about when it comes to spending.

Great move on investing more of your cash. In the short-term, you’re gambling a little with the stock market, but it should pay off down the road.

Published or updated March 21, 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 .

{ 10 comments… read them below or add one }

avatar Financial Samurai

That’s a nice chunk of cash! Is there a psychological reason behind holding so much?

I’ve got to other way and literally just invested my last $4K in cash today. I think I get a thrill of having no cash, or as little as possible b/c it motivates me to work hard.

Reply to this comment

avatar Jake and Allie

Financial Samurai, I’d have to say fear. We’ve worked hard saving. We are however moving more of it in the stock market.

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avatar Financial Samurai

Fear makes sense. I’ve got about 25% of my net worth in risk-free assets like CDs.

How did you guys do during the 2008-2009 meltdown? Did you have a similar net worth weighting, or were you more heavily skewed towards stocks to create this new weighting?

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avatar Jake and Allie

@Financial Samurai

Most of the ‘cash’ is actually in CDs that are starting to mature.

As far as 2008-2009 we didn’t have much in the market at that time. When everything was down was when we started putting more money in.

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avatar Donna Freedman ♦75 (Newbie)

Tracking rules! You need to know where your money is — and isn’t — going right now if you want to direct it toward specific future goals.

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avatar Lance Cothern

Life insurance is something we need to tackle in the next year or two before we have kids. You definitely aren’t alone about forgetting that life insurance ends when your job does. Before a financial planner mentioned it to me, I never gave it a thought either!

Reply to this comment

avatar Laura

Jake and Allie,

I’m sorry for your loss of your furry family member. We just (as in this morning) had to let go of a pet we’ve had for about as long. Twelve years is a long time to love and care for a creature and then suddenly not have them there. Even when you know it’s the right thing to do, and even when you understand that they’re not people, it’s still a sad thing to go through. I’m sending you virtual hugs even now.

To tie it back to finances, I think we can all agree that it’s a really great feeling to know that no matter what happens to your pets there is enough money budgeted or in emergency funds that you don’t even have to think twice about doing whatever is best. When you’ve planned, there is so much less stress when handling all aspects of pet ownership. I hope other reader can see your numbers and understand the finances involved may look scary on the surface, but with a bit of planning it can be done.

Thanks for the read,
-Laura

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avatar Jake and Allie

Thanks Laura. We actually were surprised our little buddy lasted that long. She out lived all of her other housemates. Our animals (there are currently 5 with no more planned) are like our children. Fortunately for us we don’t have to put them through college :)

Actually our finances for Jan and Feb are a little out of whack from normal. I’m pretty sure our March numbers will be significantly lower in expenses.

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avatar Edward

While it’s amazing that between you on paper, you’re millionaires (keep in mind that’s $570K each), what the heck is up with the gambling line item? $400, $213, $339… What’s up with that? Has someone lost their mind? Not cool. At. All. I don’t see any sort of gambling windfall in the income category, so it’s certainly not paying off.

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avatar Jake and Allie

@edwards our little trips to the casinos are entertainment for us. We don’t do a lot of gambling and it just so happened we were traveling with friends and we stopped by a casino. It’s something we actually budget for, no different than someone taking their family to an amusement park. It’s just entertainment. :)

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