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. This month, the focus is on estate planning.
JW’s own analysis and comments are followed by feedback from Neal Frankle.
JW’s comments and analysis
Student loan: I made a decent-sized student loan payment near the middle of the month. I paid $2,200 to cut the wife’s remaining balance nearly in half. There is still $2,292 left. I can see the end of this payment, so I am trying to put everything I can into it. My wife would prefer to put that extra money elsewhere, however. This raises the question of resolving differences in financial priorities between couples.
Car troubles: The car decided to have some problems near the end of the month. We did not have enough to cover the cost of the repair set aside. To make up the difference we reassigned the $200 that would have gone into savings toward our next car. Total cost of repairs: $442. Including insurance, gas, and time to renew the license, the total spent on all automotive categories this month was $729, with another $200 added to our next car fund.
Credit cards: The credit card balance appears to have grown a bit. This is because I usually make a payment right before the end of the month. This time around these will be paid on the 4th, my next payday.
Piano: Piano is back for the school year. For this year my wife moved to paying by the month instead of by the week. This will simplify tracking payments. She did not raise the price; she just figured out the monthly average based on the former payment rates. This should help us budget more consistently for her teaching income. She has 15 students for this year.
Job hunt: Working with a couple of people to improve my interviewing. Nothing to report yet.
Resolving differences in financial priorities: My wife leaves most of the financial planning to me. That means I make the majority of the financial decisions. Most are small and have little effect on the big picture. In the case of the car loan, a little over a year ago my wife wanted to put the extra payments into other things. After discussing what to do we still did not agree.
In these situations, being left in charge of family finances, I make a decision with both perspectives in mind. For the car loan, I continued making the additional loan payments. Upon revisiting the situation at a later point in time we usually come to some agreement about what to do.
We are facing a similar situation with the student loan. We can get the wife’s student loans paid off completely before the end of the year. I want to get rid of it. My wife wants to use the funds for other things. The next payment is not due until some time in 2015. Since we have been unable to come to agreement on what the funds would go toward, I will continue making the additional payments but might not be as aggressive.
Estate planning: We have not looked at this in much detail. I have a will set up. My wife does not. Mine was set up four years ago — just after our son was born. I used one of the personal lawyer will prep software programs. The only big change since then is our daughter joining us earlier this year.
One benefit I have through work is free will preparation services. We have not looked at any other estate planning details. I am just looking to see what estate planning advice might be had for me.
Feedback from Neal Frankle, CFP
Thanks for the update. I agree that it’s really important to pay off the student loans and all debts as soon as possible. I’m wondering why your wife disagrees. It’s super important that you both get on the same page financially. And I agree that having a process to determine financial priorities is, well, a priority.
What is her side of the story?
I understand about needing to make a decision. But my experience tells me that even if I make a decision, it works out better if I present it as something I’ve come to think about rather than “decided” it. This opens the subject for discussion and my wife often makes points that help me come around to her side of the issue. Does your wife feel safe to contribute to the conversation? I am not suggesting that she doesn’t. I don’t have all the information. I just want to understand better.
On the estate planning, I am not an attorney but I think that a will has a lot of potential problems. Have you considered a living trust? I know it costs money to do it but we are talking about your entire financial lives here.
An additional question: do you keep your assets separate from your wife? Do you have joint assets? If so, your wills should be coordinated by a professional in my opinion.
I am sure this is not the kind of feedback you wanted to hear, but this stuff is super important.
Feedback from Luke Landes
it’s hard to add my two cents when Neal covers the topics so expertly. I don’t want to just echo his sentiments, but he’s spot on. Having a will for just yourself could potentially be a problem. It’s great that this is a free service through your (current) employer, but your wife must be included. I would have to imagine this service would allow for that. As you say, now that you have a second child, the will is out of date. A living trust will be have more flexibility so you don’t have to write a new will each time your family situation changes.
You and your wife are not on the same page in terms of financial priorities. That’s fine — in some relationships, finances work better when one is in charge and the other goes with the flow. But I sense that there is some tension, and if that’s the case, it really needs to be explored. Why does your wife not want to prioritize paying off the student loans? What is her priority? Is it something that could make sense, like paying off a different debt or saving for your children’s education, or is it spending? Sometimes, for the sake of the relationship, compromise is necessary, even if it means not having the most efficient plan for getting out of debt.