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.
JW 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 JW’s progress by reviewing his update from last month.
JW’s own analysis and comments are followed by feedback from Neal Frankle and Jacob Wade of I Heart Budgets.
JW’s comments and analysis
Medical expenses: My wife fell and we ended up going to the doctor to get an x-ray. I was expecting it to be between $1,000 and $1,500 for the x-ray and follow-up appointments. We will be able to cover this out of our Health Savings Account (HSA). It ended up being nothing but a little sprain. The total remaining bills are $769. The payment did not post before the end of the month but will post early next month.
Affordable Care Act: Since the open exchanges went online on October 1 we have completed our application and will have health insurance coverage for everyone beginning on January 1. Like many who tried to use the websites, I did have some errors, it but was successful before the end of the month. I was unable to complete the application before the open enrollment period at work ended. We decided to decline coverage through work and risk the options on the exchange being more affordable. Things worked out, and our coverage through the exchange comes in at an $87 monthly savings over the cost of the policy through work.
Work and 401(k): My annual review came through. This year I received a 4% pay raise. We decided to put the whole amount of the raise into my 401(k). That way, it will seem like there has been no change in pay, but it will increase our retirement funds. My company will match the first 4%. Between pay dates and the gap between filling out the paperwork there is nothing in the account yet, but it will start next month.
Income and expenses: During the month we brought in $2,560 in income. The majority of this was from my job. Expenses were broken up in the following categories: Automotive $406; business and money making efforts $295; education $130; food $938, including food stamps ($287) and restaurants ($43); donations $300; holiday spending $142; health spending $259 (covered by the HSA); hotel for next month’s Family Planning Conference $160; other spending under $200. Total for the month was a net increase of around $300.
Feedback from Neal Frankle, CFP
Congratulations on the pay increase. Was that in line with what you expected? Just curious. I would love to know if the company is expanding or not. If your firm is generally not handing out raises and you just pulled this one down, that says a lot.
I am also pleased that you decided to apply that money towards your 401(k). Many people spend their raises or only contribute up to the employer match. That’s a mistake, and I am glad you recognize it. By socking away as much as possible in your 401(k) first, you get the biggest bang for your buck. Lower income taxes and more tax deferred growth. Nice. The remaining question on this is how that money is invested presently.
Feedback from Jacob Wade of I Heart Budgets
I’m sorry to hear about your wife’s injury, how terrible. I am glad to hear that your HSA was useful in covering the expenses in this scenario. And it’s also great (and seemingly rare) to hear that you were able to obtain health insurance through the new ACA site, and came in at a cost savings. Well done!
Putting your raise into the 401(k) was a great move as well. If you have already hit the company match of 4%, though, I recommend putting additional retirement contributions toward an IRA instead. Most 401(k)s have higher fees than you can find with a good IRA, and you can even opt for a Roth IRA for future tax advantage if you expect your taxable income to rise. Of course, consult a financial planning pro before making any decisions.
Feedback from Luke Landes
The 4% raise is fantastic, and you made a great decision to set that raise aside for retirement without any chance of it getting into your hands.
I’ve been trying to select a new health insurance plan via the federal website, Healthcare.gov, because my state government opted out of a state-run exchange, and I have been having a difficult time of it. I’m glad to hear you were able to sign up for insurance through an exchange and that you experienced savings over the plan offered by your employer.
Great job at keeping your month’s expenses under your income! All in all, this has been an excellent month with good news in every area of your finances. Keep it up!
Published or updated November 19, 2013.