Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs).
This year, we have four participants who will share their financial reports, exposing the results of their financial choices. Each participant is paired with one of our Certified Financial Planners. The experts will provide insight and guidance that will help our participants take their finances to the next level by the end of 2014. Learn about this year’s participants and experts.
Laura and Leon, together, earn more than $125,000 a year. Their main focus right now is paying off student loans, and they want to have that done in order to be better ready to start a family. Laura and Leon hope that they can focus better on their finances, and learn to manage their money more effectively. (Read last month’s update.)
After reading Laura and Leon’s comments, you can read commentary from Roger Wohlner, CFP. Roger Wohlner appears courtesy of The Chicago Financial Planner. This month, there is a focus on estate planning.
Laura and Leon’s Net Worth Statement
Laura and Leon’s Income Statement
Comments and analysis from Laura
Well my September report has come rather late as a consequence of my starting a new job. We didn’t actually leave our existing jobs until October 3rd, so September ended up looking like a mostly typical month. Because we stayed a few days into October, our health coverage continued all the way through the rest of the month. Come November though, we’ll have to make a decision whether to go on COBRA during my probation period between.
We ultimately went with the more conservative decision to keep renting when we moved, thanks to Roger’s advice that we should stay flexible until we know that the job is going to work out. I suspect we wouldn’t qualify for a worthwhile mortgage rate anyway until Leon also gets a job and we pay down more of the student loan debt.
We have also mentally given ourselves permission to draw down from our taxable investments (aka house down payment savings) if Leon is unable to find a job quickly. Job searching is stressful enough and we have agreed that it’s okay to tap into our savings in the short term if it means going into interviews with ease and confidence. This is be a short-term measure, however, and I’ll be watching our new spending levels to make sure they don’t get out of hand.
This month’s topic is about estate planning. A year ago I would have looked at our finances and said, “Why bother with estate planning? We don’t own enough to make it worth the hassle and we’d simply leave everything to our parents anyway.” Now we have more assets, less debt, and individuals we’d like to help, but still no will.
Leon thinks that as an attorney, he could draw up a fairly basic trust that could allocate our estate to our beneficiary for education in the unlikely event we both die. It’s always been one of those things where we just haven’t had the time to get it done. Once we get settled in at our new home, I think I’ll have him add that to his to-do list.
Feedback from Roger Wohlner, CFP
Roger will provide his feedback shortly.
Feedback from Luke Landes
I think Roger’s advice on staying flexible is a good plan. I was in a similar situation once: I delayed moving to a more convenient location for a job. For a while my employer wanted me to move to be closer to the office. The time I spent commuting every day could otherwise be spent in the office. But the cost to move was prohibitive.
Finally, I gave in, and within a few months of moving, I was gone from that job. Having shifted everything in my life for that job made everything much worse — and I was just renting, so it wasn’t even as big of a life change. Nevertheless, having to make major life decisions based on a job makes it important to make careful changes — like renting in the location of a new job rather than buying a house right away.
Like everyone else with stock market investments, the market’s poor performance in September beat down Laura and Leon’s net worth.
As (or if) Laura and Leon find it necessary to pull funds from savings or investments in the short-term, they should continue looking at the big picture. With one income and a strained budget, suddenly the expenses you’re used to handling become urgent bills. Urgency can be a threat to your important goals.
Thanks for participating in Naked With Cash! I’m looking forward to reading about Laura’s new job now that she is one month in, and learning more about Leon’s job search.
Published or updated November 4, 2014.