In the series Naked With Cash, seven Consumerism Commentary readers share their financial progress on a monthly basis. They are joined by Certified Financial Planners who provide feedback on their journey. Read this introduction to learn more about the series.
Anne and Matt are twenty-seven years old, living in the Midwest, with two children. Read their bio here for background about their financial situation. Anne and Matt are on Team Neal, with Certified Financial Planner Neal Frankle. Review their March update for last month’s progress.
Their goals are to strike a balance between putting aside money for the future and enjoying the present and to save enough for retirement. Keep reading to see their net worth report, comments about the report and their progress, and thoughts from Neal Frankle. Following Neal’s thoughts, budgeting expert Jacob Wade from iHeartBudgets offers commentary.
Anne’s comments and analysis
This month on paper looks worse than it is. Our net worth has declined a little bit from last month — our cash is down and retirement is down a little bit.
I still consider June a great month for us. We took a family vacation (spent $1,041, and had set aside $1,000 for this purpose) and paid for some expensive house projects that we’d also been saving for. Not done with the house stuff yet, as we have about $8,000 more to spend before we’re done.
The cash is still short by about $700 (I thought it was a lesser amount, but Matt will be reimbursed on a per diem rate instead of actuals). He has reminded his boss about the reimbursement, but it’s just not a high priority for the boss apparently. To be fair, things have been really busy at work, but still. How long does it take to process a reimbursement check? Seems like it shouldn’t be that hard.
Overall, I’m happy with where we’re at. Coming up in July — spending on those house projects and that may bleed over into August.
After that, we’d like to open a taxable investment account for additional retirement savings, or maybe the Simple IRA will be available by then. We’d also like to increase our savings account to get that vehicle fund loaded up.
The work-life balance has absolutely improved, thanks to some deadlines now passed and better communication between Matt’s boss and Matt, and Matt and myself.
Feedback from Neal Frankle, CFP
There is so much good news in this month’s report I don’t know where to start.
- You have a nice cash balance.
- You had a great vacation and came in right on budget.
- You know how much you need to spend on the house.
- You are planning on opening up an investment account.
- The work/life balance has vastly improved.
This sounds like tremendous progress. Great to hear it.
I would not worry about the net worth fluctuations from month to month. First of all, the market was down in June and that is something you have no control over. Also, spending varies from month to month. That’s only natural. And that’s why I like looking at spending over a longer period of time.
On the new account you are going to open, there is a huge difference between opening your own retirement account and using the Simple IRA and I’m sure you known that already. If you decide to open your own retirement account, I strongly recommend you avoid buying an annuity.
Other than this, I think you are doing really well and it’s a pleasure to see it.
Feedback from Jacob Wade
Nice work on having a savings bucket for your vacation and planning one for your replacement vehicle. I think it’s the most important part of the budget, and can help you enjoy spending money instead of freaking out when large, irregular expenses come up. And glad to hear about the improvement in work-life balance. At the end of the day, money is numbers on paper, but having a life while working hard for that income is much more important.
As for retirement, definitely push for the SIMPLE IRA if you have any influence over it. The tax advantages make some major differences in the long run (you probably already knew that, but just re-stating it). Obviously, any investing now is good, but I’d toss as much as you can in tax advantaged accounts when you’re young to get that compounding interest rolling! And remind me again why you haven’t had a chance to setup a Roth IRA? I may be forgetting the explanation earlier.
Published or updated July 24, 2013.