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.
Kathleen is thirty-one years old, single, and living in Portland, Oregon. She loves her job, even if it isn’t very lucrative. Since her income was $33,000 last year, she’s looking to make more money from “side hustles” (like her blog, Frugal Portland) this year. To learn more about Kathleen, read her bio. Kathleen is on Team Sara, with Certified Financial Planner Sara Stanich.
Kathleen’s report this month, below, includes Kathleen’s progress during October 2013. You can read her September report here. Following Kathleen’s own self-analysis, Sara Stanich will offer thoughts from her perspective and Jacob Wade from I Heart Budgets will share his thoughts.
Comments and analysis from Kathleen
You’ll see a huge decrease in my mortgage this month. This is due to the generosity of my dad, who has decided to help his daughters by giving us the lion’s share of a small life insurance policy. “It’s what your mom would have wanted,” he said. That may be true, but holy cow, do these gifts have a huge impact on my bottom line!
This year was the first year I found out about property taxes. As a renter, I just assumed my homeowner friends were overreacting, but they were right! My bill came, and it’s $3,600! For a 930 square foot condo in a residential (no coffee shops within walking distance) semi-urban setting. Even better, it just got added to my mortgage, so before the generous gift, my mortgage went up significantly, not down.
Onward, upward. I like the way my numbers are starting to look.
Feedback from Sara Stanich, CFP
Onward and upward is right, Kathleen. Your numbers are looking good.
Have you set any financial goals for next year? In the new year, I’d like to see you grow your income and save more for retirement.
I know you have lots of business ideas and I can imagine your income really taking off. Increasing income from your own business would in turn allow you to save more for retirement.
Right now you are saving in an IRA, and the maximum contribution to an IRA is $5,500 per year. I know your employer does not offer a 401(k). As your side business grows, you can consider a retirement plan (like a SEP IRA or solo 401(k)) that is associated with your business. This will enable you to save much more for retirement.
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Feedback from Jacob Wade
It is great to see how your net worth is progressing, and what an amazingly generous gift from your dad (and mom) to help take quite a chunk out of the mortgage. Your net worth has increased over 200% since a year ago, you have killed all your consumer debt, and you are on your way down the road to being completely debt free. Nice work!
Here are my thoughts going forward: beware of lifestyle inflation. I know it’s a ridiculous buzzword that everyone uses, but here’s what I mean. On the big ticket items, I suggest you keep driving a cheap, paid-for car. I know a lot of people who get a little more money and all of the sudden their car is the biggest pile of junk ever. They seem to start nitpicking every issue and then they need to find a new car before “this one explodes.” Here’s the truth: You Don’t Need a New Car. Ever.
I know that’s not you, but it’s something to just be aware of so you can keep moving in the right direction. With the small stuff, I know you don’t have a budget, but don’t let the variable spending categories get out of hand. You know, food, entertainment, wine, etc. Keeping a soft budgeted amount for each of those will help keep money from leaking out each month, and keep that money working hard for you.
All in all, nice work once again, and keep ballin’!
Feedback from Luke Landes
I like the way your numbers are looking, too. That generous gift, which seemed to be more than half of September’s net worth, really propelled you forward. You reduced your mortgage by about $15,000 in one month — and that is normally unthinkable. And I get the impression that you like the way this looks on paper. Don’t lose this motivation — and don’t feel upset if you can’t replicate that 50% increase in net worth each month.
It would be good to see pieces taken out of the mortgage every month. So keep that momentum going.
Updated June 22, 2016 and originally published November 22, 2013.