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LastDollar, May 2013 Net Worth

This article was written by in Naked With Cash. 4 comments.


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.

Neal Frankle, CFP appears courtesy of Wealth Pilgrim and Wealth Resources Group.

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.

Updated July 23, 2013 and originally published June 21, 2013. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 4 comments… read them below or add one }

avatar qixx ♦1,895 (Half-Dollar)

Congrats on paying off the 2011 Tax Liability. How does your 2011 initial liability compare to your 2012 initial liability? Also do you include the balance you have started setting aside for 2013 taxes somewhere or count it as spent and not listed?

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avatar LastDollar

My 2012 taxes were a little more than double what I owed in 2011. I haven’t included any money I’m setting aside for 2013 taxes on my reports – should I just add another column for 2013 tax liability, you think? I’ve been moving it into a SmartyPig savings account for now, since it’s a little harder to get it out than a traditional savings account, to help discourage me from dipping into it when clients are late to pay!

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avatar qixx ♦1,895 (Half-Dollar)

If you do add it you might also want to add in your expected 2013 quarterly or yearly tax liability. I’d see it as money already spent. Like a bill that you sent a check that has yet to cash. Have you looked into making quarterly tax payments?

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avatar LastDollar

Neal,
Thanks for the comments. I use mostly online banking and make my payments online, but I stopped having them automatically withdrawn with bill pay services. Because my income comes in at various times and is unpredictable, I was running into overdrafts when the payment would come out before the income cleared. When I’m late to pay something, it’s not because I’ve forgotten – it’s just because the money isn’t available yet! Someday I’d like to get past this point, by building up a balance that would cover payments in between client payments, but I’m not there yet.

I’m always thinking about pool safety while working near by. I understand the “getting sucked into work” mode, but since I’ve always had to work from home with kids underfoot, I’ve adapted and can literally focus my attention on both things at the same time. I’m sure I would be more productive if I didn’t have to do that, but it’s a good compromise for my situation :)

As for marketing, we do sometimes reach out for new clients but to be honest, we haven’t had to do much of that in the last five years. We get continuous work from regular clients and then referrals to people they know. I think when we do a round of marketing this next time, our focus will be on companies with more money to spend so we can continue to raise rates.

You’ve mentioned getting a mentor twice now… I guess I’m not really sure how to go about that. I did work closely with a multi-millionaire for a few years, but his strategies and suggestions were all things that worked for him while his wife stayed home to raise their kids and I couldn’t seem to duplicate it in my situation. For me, I can’t just go out and get a babysitter (kids have special emotional/mental health needs and even family members can only handle them for a couple hours at best) so anything I do has to be something I can do 1) when the kids are in school sept-june; or 2) can be done while taking care of the kids at home.

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