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.
LastDollar is on Team Neal, with Certified Financial Planner Neal Frankle. Get up-to-date on LastDollars’s progress by reviewing her update from last month.
LastDollar’s own analysis and comments are followed by feedback from Neal Frankle.
Comments and analysis from LastDollar
Anyone else feel like the months go by faster the closer we get to the holiday season? For October, I did not have any major financial gains other than making the final payment on my car loan, but the increased marketing efforts for my business in late August, September and into October are starting to pay off as new projects are starting with new and existing clients. As these assignments begin and the income starts coming in as a result, my financial picture will begin to improve again.
Some comments on my September update indicated that it doesn’t seem like I’m learning anything from this experience or making the necessary changes to see improvement in my financial situation. But I also feel the comments are coming from people who aren’t struggling financially –- and maybe never experienced true financial hardship. It is so easy to say, “All you need to do is XYZ and your financial worries will be over!” I do understand the basics of personal finance. I understand what has to be done to dig myself out of this hole I’m in -– and about six short years ago I did just that upon becoming a single mom.
When the kids and I found ourselves moving into a new apartment and starting a new life, my financial situation was much, much worse than it is at this very moment. I even had to get help from a local food pantry for a few weeks, as every last dime I had went to the first and last month rent and security deposit to get into our new place. At the time, I was only working part time from home, since I was just supplementing the family income. I went almost three years without any child support at all and had to quickly grow the business so that it could support us.
But, just after three years of this new single parent lifestyle, I had very little (if any) credit card debt because I focused on paying it off. I had repaired my credit score drastically and saved and lived frugally and was able to purchase a house that costs me about the same each month as I was paying to rent in the location I need to live in. I don’t feel like three years is a long time to turn that very dire situation around, and I’m pretty proud of my accomplishments.
Unfortunately, there were a number of life events that happened back-to-back in the last two years or so that put me back into debt, combined with an unexpected (and unwelcome) drop in my consistent income. My credit card debt isn’t a result of buying things we don’t need or taking vacations or buying expensive clothes (we get most of our clothes at yard sales). It was used to pay for electric, heat, medical expenses, etc., when I didn’t have the cash flow to do so.
So, while my financial situation looks really bad on paper right now (and feels really difficult in real life), I know without a doubt I will turn it around again. It just takes me more time than it might take someone who is in a two-parent household, because I’m the full-time parent AND the primary income-earner.
It takes me more time than it might someone without special needs kids, because I spend a great deal of time making sure their needs are met in school and at various doctor and counseling appointments, which definitely makes my work schedule challenging at times. Despite the challenges, it will happen.
This time of year does increase financial stress for me, though; I can’t pretend it doesn’t. I had managed to save about $400 for holiday shopping, and have started getting some gifts for my children. There are other family members I try to buy for (nieces and nephews and the kids’ grandparents, primarily) but I will simply have to be more frugal this season. I know the season is not supposed to be about the gifts, but there is always that pressure to make sure we have a gift for everyone we love.
In December the new work arrangement I have been talking about for the last several months will finally become reality. A client I have been writing for on a part-time basis just got the investor he has needed to fully expand and grow his business. In turn, this means a consistent monthly paycheck for me as his full-time writer. It’s part of the business plan and use of the funds the investor approved, and all contracts have been signed and we’re just waiting on the transfer of money from the investor to my client’s account. This arrangement for me will be in addition to the work I’m doing through my own business and my other clients. There will be a period of adjustment as I learn how to balance the two successfully, but I do have a strategy for it and I think it will work out without excessive growing pains.
My first month’s salary for this arrangement will pay off all of my credit card debt with money to spare, which will start funding an emergency account. Paying off the credit card debt will make an immediate difference in the amount of debt I’m carrying and start relieving the struggle to keep up with the ongoing living expenses and home maintenance, since I won’t have all of the credit card payments to make each month.
Feedback from Neal Frankle, CFP
Thanks for your update. I actually think you did have some important financial gains this month. You made your final car payment and you are starting to see results from your marketing efforts. I think that’s awesome. I’m very impressed by how you are growing your business.
I am glad you shared your feelings. There is no doubt that being a single parent is much more stressful (on all fronts I imagine) than being in a two-income family. And it’s important to acknowledge how far you’ve come over the last several years.
In addition, when you are operating at close to (or sometimes below) break-even, the slightest bump in the road can really throw everything off kilter. That’s stressful.
The question I struggle with is how to help. The unfair reality is that the more extreme the financial difficulty, the more extreme the action required to change things. Nobody has the right to tell you what you should do. They are not in your shoes and they don’t know the hardships you must endure. That resonates with me. When I was 17 I was this close to being homeless after my parents died. It upset me when other people seemed critical of the decisions I made.
Having said that, the people who participate in this program presumably want to change and want input on how to make that change happen. I think that may be behind some of the comments you mentioned.
As I planner, the first thing I ask a new client is what they want help on. That’s what I’d like you to clarify for me.
Feedback from Luke Landes
You’ve certainly made some significant progress from your “rock bottom” point. No one is denying that, and you should certainly be proud of what you’ve been able to accomplish despite your setbacks. Congratulations on paying off your car loan!
Even if my rock bottom was as bad as yours, and it’s wasn’t, I still wouldn’t be able to fully empathize because my rock bottom would still be mine, and yours, yours. But I can sympathize.
All of us here — the CFPs who participate, myself, and the Consumerism Commentary readers — want to see you succeed, and they want to see you want to succeed. Neal said extreme circumstances call for extreme measures, and I think I’ve said that at times as well. What we’re seeing here, I think, is that because of your history, you might not view your situation as that extreme anymore. And that’s fine — you have a different perspective.
And with your new, salaried job so close you can taste it, I think you’ll feel vindicated in the coming months. If not, you’ll at least be able to eliminate that tax debt. My worry is that as your income grows, you’ll find that necessary expenses and unplanned emergencies will continue to grow, particularly if you are relatively accepting of your current, improved state.
There are several ways to look at your situation. One is to say you’ve come a long way since your “rock bottom.” Another is to say that, yeah, some people may be in a better financial situation than I am, but it could be worse. Another is to look at your long-term goals and consider whether you are where you want — or need — to be. Because so much of your circumstance is due to things beyond your control — being a single parent, having a child with special needs, etc. — focus on the things you can control.
It might be worthwhile to take some time and identify what you believe is beyond your control and what you can control in terms of your money management.