Naked With Cash is the year-long series on Consumerism Commentary where seven readers’ households share their financial progress on a monthly basis, and February is “insurance month.” I’ve partnered with financial planners who will offer some guidance along the way. Read this introduction to learn more about the series.
Kathleen is thirty-one years old, single, and living in Portland, Oregon. She loves her job, even if it isn’t very lucrative. With her $33,000 income last year, she’s looking to make more money from “side hustles” this year, such as her blog, Frugal Portland. To learn more about Kathleen, read her bio here. Kathleen is on Team Sara, with Certified Financial Planner Sara Stanich.
Banking Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays.
For Kathleen’s progress over the past year, see last month’s report. This month’s report, below, includes Kathleen’s progress over the three months leading up to the end of January 2013. Following Kathleen’s own self-analysis, Sara Stanich will offer thoughts from her perspective, and budgeting expert Jacob Wade from iHeartBudgets will also provide insight.
Comments and analysis from Kathleen
Last month was one of my highest earning months. I am in sales, and some of my wages come from commission. We bill at the beginning of the year, so my earnings are front-loaded. This presented me with kind of a dilemma, actually. I knew I wanted to beef up my savings, but I also wanted to get rid of that student loan. I hemmed and hawed, and ultimately decided to increase my savings to $3,000 and pay off the loan in February. When in doubt, save, right?
I’m working on my taxes, and I stand to get a hefty return. The first thing I did was ask my employer to increase my deductions because I would have rather had that money all along than a big check in a couple weeks.
Sara mentioned that I need to start trying to make money, and I have taken her advice to heart. I negotiated a 12.5% raise (plus a bump in commission) which makes me feel good. I’m also working on my resume and starting to be more available to other opportunities.
Health insurance. My job is with a start-up company, so it is extremely lean on benefits. I pay my own catastrophic health insurance (plus Aflac) and I eat healthy and hope I don’t need to use the insurance. I realize that’s not a long term solution, but it’s what I have now. In the future, I will look into increasing it.
Car insurance. I just switched to a new company called Metromile, which rewards you for driving less. They install a thing in your car, and I suppose, they can track you everywhere. It stands to save me about $30 a month. Best part about this insurance? I filled out a survey online, and in a couple days, they mailed me a box of chocolates out of the blue! So, if you’re a light driver, check them out.
Renter’s insurance. I don’t have any right now, and that’s only because of my living situation. You see, I live in the basement of a very nice house, and the people that live there work from home. Also, unless you’ve been invited over, you would have a hard time figuring out how to get inside. When I move, I will definitely spend the about $20 a month to insure my belongings.
Feedback from Sara
Kathleen, I am so pleased to hear about your 12.5% raise! My grandmother used to say, “If you don’t ask, you don’t get,” and it is totally true. This increase in income will help a lot when it comes time to apply for a mortgage. I still think there is plenty of room to grow for you, but this is a great step.
Your debt is getting close to zero -– exciting! Be sure to reward yourself to mark the occasion when you do. You’ll soon be able to redeploy the money you’ve been sending to debt to build your savings.
Your car insurance sounds like a good deal. It’s not available in my area yet, but I will be watching for that in the future. I can even agree with waiting on renter’s insurance in your situation, which is a little unusual.
Your health insurance is the weak spot. Even with a catastrophic policy, your out of pocket costs could be considerable (and easily wipe out your emergency fund) if you have a few minor issues this year.
My suggested “homework” for you would be to investigate your options for upgrading your health insurance. Since you may be looking around on the job front, be sure that you consider the benefits packages of any potential new companies as well.
Feedback from Jacob
Kathleen, way to go! You came, you asked, you got a fatty raise! You go girl! 12.5% is a sweet raise for just asking, not to mention more earning power with a bump in commission rates. You are showing your value to the company, and I bet this won’t be the only time you get rewarded for asking!
And nice work on the car insurance. A quick search didn’t yield any bad results for the company, so it seems like a great deal for someone who doesn’t drive too often. Pretty cool idea.
I would say to continue to shop for health insurance, as the “catastrophic” plan most likely has a high deductible and might not be the best option if something should happen. We had a high deductible plan for a few months, but quickly changed as soon as other coverage became available. You could also look into an HAS plan, which would allow you tax free savings for medical expenses throughout the year. Something to consider.
I’m particularly excited to see the school loan gone! Quite the accomplishment, congrats! Next up, the pesky car payment!
Very cool to see the numbers in real-time. Thanks for sharing with us, Kathleen.
This communication is intended only for the person or entity to which it is addressed. Any taking of any action in reliance upon, this information by persons or entities other than the intended recipient is not recommended. Any information provided is for informational purposes only and does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision. Raymond James and Sara Stanich, CFP, are not affiliated with and do not endorse, authorize or sponsor any third party websites, their respective sponsors, or user comments found on this or other sites.
Updated June 22, 2016 and originally published February 25, 2013.