This month is Retirement Month in the series Naked With Cash. Each month, seven Consumerism Commentary readers anonymously share their financial reports to gain insight about their progress towards their goals. Read this introduction to learn more about the series.
LastDollar is thirty-three years old, an entrepreneur and single mom with two children with learning differences in private school. To learn more about LastDollar, read her bio. LastDollar is on Team Neal, with Certified Financial Planner Neal Frankle.
LastDollar’s update this month includes LastDollar’s net worth as of the end of May, followed by her own commentary and analysis. Neal Frankle, CFP joins us to share his thoughts. Catch up with LastDollar by reading her report from last month.
This month, the Naked With Cash participants are discussing their thoughts about retirement within their monthly financial status updates.
Comments and analysis from LastDollar
Don’t be misled by the unusually high (for me) bank balance. That is just because client payments came in during the last minute of the month and I’m writing this update before I send out bill payments.
In May, I paid off my 2011 tax liability, which was pretty exciting. I added my 2012 tax liability to the spreadsheet. The IRS website wouldn’t let me set up a payment plan online for some reason, so I need to find some time to call and see if we can straighten that out.
This is the month I’m going to be putting in the pool for the kids that I talked about last month. It’s hopefully a good solution to my summer work-life balance. I work from home, I don’t have babysitters, day camp is $300 to $400 a week for two school-age kids, and I can’t afford to take the full 13 weeks of summer vacation off to hang out with the kids. But I can work from the patio near the pool while they play, so this should work out better than trying to entertain them in doors or in the yard while trying to accomplish my work as in past years.
It’s also something that will be here for future summers. My parents are helping front the cost of a better pool than the one I intended to get. It will have a warranty and will hold up for at least 20 years. The less expensive pool would probably not last more than two or three summers. Anyway, because of this purchase, I probably will not make a dent in any of my debts this month as money above the minimum payments will be used for the pool.
I talked about raising rates last month in my update, and I just sent a letter yesterday to my biggest client about a small rate change. We hadn’t raised rates for this client in three years and I can’t imagine it will cause them to look for a new service provider. We’ve proven ourselves over the years and have kept up with their consistent growth, and they’re at a stage where if we did not handle the work they’d be stuck. They would perhaps even lose some of their own clients as a result. I would be extremely surprised if they went out to search for a lower=priced provider. This single client rate increase will replace the income lost for a client who just decided to hire in-house rather than contracting out to us.
Retirement planning. Retirement? Ha! Actually, I have thought about retirement many times over the years. I started a small retirement account right out of college when I worked for a local government office, but I ended up cashing it in when I left that job to be a stay-at-home mom and home business owner. I know it is important, and I know I need to somehow move retirement planning up on my list of financial priorities, but I don’t know where to find the money to do that right now.
I’m trying to transition my business from a “get paid for time” model to one that will offer more passive income opportunities, an alternative retirement plan. I am pretty sure I know what I need to do to make that a reality, but my challenge is finding the time necessary to work on things that won’t earn money right away. Most passive income opportunities I have in mind would require an initial time investment, which is time away from current paying work, and with no guarantee that it will eventually translate as income.
I’m open to some suggestions for retirement planning and finding time to work on possible passive income projects without losing time on things that pay right now.
Feedback from Neal Frankle, CFP
Thanks for the explanation of the bank balance being so healthy. One question: do you use online banking and bill pay or do you write your checks and send them? I switched to bill pay and just love it. It saves me a ton of time and I never have to worry about missing a payment.
It is exciting that you paid off your 2011 tax liability. That’s really an accomplishment and true progress.
I like the idea of putting the pool in and working from the patio. I think it’s smart to choose the better pool, too. I don’t need to say it, of course, but safety is number one. Make sure your job doesn’t distract you when the kids are swimming! I know when I work I get sucked in, and sometimes I become oblivious to what’s happening around me.
That’s also very exiting that you started raising rates. I like that you are viewing this from a position of strength. Besides that, are you taking any measures to market your business to find new clients? Sounds like you have an amazing value proposition. Are you letting others know about it? How?
I also like that you acknowledge your priorities. Retirement is important. But creating more passive income might be more important right now. I’m happy that you are open to suggestions about new business ideas. My best suggestion is to seek out a mentor who knows you and is successful. Ask for honest feedback and ideas. I believe that is your best bet in that department.
Feedback from Jacob Wade
It’s awesome to see you tackle the challenges in front of you, though they may seem endless. You are still keeping afloat, and are being proactive with summer planning and are increasing income at the same time. The rate increase is definitely a step in the right direction, and something that should be practiced regularly with ALL clients. During tax season, our rates rise every 3 years to compensate for increasing overhead costs, but we also increase rates when more work is performed, as well as when we are providing more value to the client. It’s great you did it with once client, but I would look at expanding that to others who value your services as well.
Congrats on paying off the tax liability. I would call the IRS as soon as possible to get the new payment plan installed, because they will start assessing penalties/interest to the outstanding balance. As far as retirement goes, I think building income is more of a short-term priority, but the fact that you are thinking about retirement is a good thing. Don’t panic, but just know that you WILL start putting cash away some day. Currently, it feels like there is not enough money at the end of the month, but soon the money will be there, and you can start chunking that away into retirement accounts.