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Anne and Matt, May 2013 Net Worth

This article was written by in Naked With Cash. 9 comments.

Have you been following the Naked With Cash series this year? Seven Consumerism Commentary readers are making their finances public, sharing the intimate details of their financial decisions and net worth. They’re putting it all out there, leaving nothing to the imagination. Aided by professional financial advisers who guide them and supported by readers cheering for their success, the participants have been seeing financial improvements. Read this introduction for more information about the goals of Naked With Cash.

Anne and Matt live in the Midwest with their two children. Read their bio or read their progress report from last month. Anne and Matt are on Team Neal, with Certified Financial Planner Neal Frankle. This month, the Naked With Cash participants, or “the Nudists” as Anne cleverly calls them, are discussing retirement in addition to their monthly financial analyses.

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. This will be followed by feedback from Jacob Wade, budgeting expert from iHeartBudgets.

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

Anne’s comments and analysis

We are still short by about $400 for my husband’s business reimbursement. Thankfully, the rest of the pay shortage got sorted out in May and we are up-to-date on that.

The credit card looks crazy this month. It has a few purchases for house projects. I asked one company if they could lower the cost by 3% (the typical credit card fee) if I wrote them a check, but they said no, so I put it on my card and will earn 1.75% cash back instead.

We will pay the balance in full when the statement comes out in a few days, as usual.

We have a number of house to-dos that we want to check off our list this summer. Projects range from aesthetic improvements to preventive maintenance. I hope that these improvements will increase our house’s value somewhat, or at least make it faster to sell if we wanted to at some point. Mostly, we’re doing it because we live here and want to be in a safe and pleasant environment. Any recouped value would be a bonus.

We’ve been saving for these things for a while, and for now the extra money from Matt’s paychecks will go to funding those projects. When we were short by about $4,000 last month, that’s what we had intended the money for, and now that the money is in our account it’s earmarked for those expenses.

As such, I wouldn’t be surprised to see our net worth either stagnate or drop a little over the next few months while we spend that money. No problem. Our investment accounts are still being funded and overall we are moving closer to our personal and financial goals.

Last month, I shared how Matt’s work-life balance frustrated me in a major way. After writing that post, we had a big conversation. It was civil, and straight to the heart. He had no idea things were bothering me to that level. He thought he was handling it well, so he was at first surprised and caught off-guard.

I think Matt just is a hard worker and wants to be a reliable, solid employee. He has worked tremendously hard to get to where he’s at in his career, and I know he takes pride in what he does. It’s also tricky when working with clients who sometimes have unreasonable expectations, and he’s made a few changes to try and improve the work-life balance.

He talked with his boss about his workload. His boss brought on someone else part-time, and he is looking to hire another full-time position. There’s simply more work than there are workers, and that’s the only solution.

Matt’s boss asked if he’d be open to some travel for getting some face-time in with their biggest client. Matt told his boss no. When Matt was hired, the boss stressed this was a local-only position, and he wanted to stick to that arrangement. He did make one trip recently, and in my opinion and also Matt’s, that was acceptable. But more? Sorry, can’t.

I was so proud of him for that! The boss values Matt tremendously, and had no hard feelings about his decision. What a relief.

We’re going on a little vacation in June and have big plans to spend some time with extended family. We’re looking forward to a busy, fun month. It’ll be an expensive one, but again — what’s the point of earning a solid income if you never enjoy it?

This month, the Nudists are talking about retirement. We have some money in a traditional IRA (rolled over from Matt’s old traditional 401(k) a few jobs ago), and the other half is in Roth IRAs for each of us. We’re doing Vanguard’s target date funds. Low fees, well-diversified. I know Neal has cautioned against those type of funds, and we will evaluate as time goes on. Right now, I’m happy with it.

There’s a small amount in a 401(k) right now at Fidelity, and we’re waiting to see if Matt’s current employer is going to start a Simple IRA at Fidelity (and we can roll it in there easily) or if we should just move it over to Vanguard with our IRAs.

Supposedly, the Simple IRA is coming this year. It’ll either be at Fidelity or another firm. There should be some sort of match, but right now Matt is getting a $500 monthly “benefit” on his paycheck, and that will change over to the retirement match, I guess. Details are still getting worked out. For now, we’re putting that $500 toward our health insurance (private policies). That expense should go down after I have this baby later in the year.

We’ve looked at how we want to live in our retirement (nothing too crazy — just living near family, maybe some volunteer work, a trip here and there). We calculated what that lifestyle would cost in today’s dollars, and popped that into several retirement calculators. We made varying assumptions on inflation (assumed bad things here) and we made assumptions on our investment gains (went conservative here).

Using those ideas, we believe we’re on track for a satisfying retirement, for now. We’re assuming no money received from Social Security.

Right now, we’re each contributing the full $5,500 a year to our Roth IRAs. This is roughly 8% of Matt’s gross annual income, so that really doesn’t sound like much in terms of typical rules of thumb.

For that reason, if in a few months the Simple IRA still doesn’t exist, I think we’ll start putting that $500 a month into a regular taxable investment account. Or, our HSA and use that as a secondary tax-sheltered retirement vehicle. Ideally, we’d like to contribute more toward our retirement now while we’re young — and yes that means more than $11,000 a year.

Feedback from Neal Frankle, CFP

Here’s what’s cool about what’s going on this month. I really like that you were proactive with the vendors and asked for a discount. The worst case was “no” and you were no worse off for asking. Great job.

Paying off your credit card debt in full every month is good. With over $36,000 in cash there’s no need for you to carry credit card debt month-to-month, as you know.

I like that Matt is thinking about the balance between work and home. Not only that, he took action and it sounds like there was a good outcome. The boss hired another person and is planning on doing more hiring. That will unburden Matt for sure. Great.

It sounds to me that Matt’s boss really values his work. Otherwise he wouldn’t have complied with his request or asked Matt about travel. Sounds like they really depend on him at work. But I like that Matt is sticking to his guns and standing up for his needs. Other people would cave in. I am becoming a Matt fan big time. Is it time for Matt to ask for a promotion?

I’m happy that you’re going on vacation. And I agree that money is there to be enjoyed. Good for you.

On to the retirement accounts. It’s true that I’m no fan of target date funds. I’m glad you are happy with the performance of the fund –- but, up until now, just about everything has done well. I would look at the year-by-year results (especially for 2008) and then make a decision. Enough said.

Regarding Matt’s 401(k), I think your strategy is wise. Rolling over an IRA isn’t always the smart move. Let’s wait and see. There also may be some added tax flexibility by not rolling to an IRA. Best to check with your tax pro.

I like that you are looking at your retirement down the road and determining what you want it to look like. And that’s awesome that you’ve run a plan and determined that you are on track.

I hate to be a stick in the mud but the only caution I’d send your way is to make sure you ran the retirement calculators correctly. Since you did this on a variety of sites, I’m not too worried about it. But just the same, I always like to be on the safe side. For that reason, I suggest you run your financial plan by someone you trust and respect and who understands this sort of thing. It doesn’t have to be a financial planner, but if you pick the right person you’ll have more peace of mind, or you’ll uncover a challenge that you hadn’t already considered.

Keep it up!

Feedback from Jacob Wade

Wow, what an awesome response from his work. I’m glad you had the face-to-face and were able to sort it out, as that burden is now off your shoulders, and you are both working toward the goal of a better work-life balance. Things just seem to click once you’re both on the same page, don’t they? I would say continue to have conversations about your goals and make sure you don’t lose sight of why he’s working in the first place.

As for retirement, nice job on maxing out the Roth IRA’s. My approach is to keep it simple. Max out the Roth, put some away in an IRA (hopefully the simple IRA pan outs), and then put the rest in taxable investments. That way you have tax-free income now AND in retirement. If the simple doesn’t work out, I like your idea of still investing it and not just absorbing that money into monthly spending.

I love vacations, and take most of mine on credit card points. If you work hard, you need to enjoy the fruits of your labor! You’re heading toward your goals, building your net worth, kicking butt at work and enjoying life. Sounds like a good month to me!

Updated July 3, 2013 and originally published June 18, 2013.

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About the author

Luke Landes 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 Luke Landes and follow him on Twitter. View all articles by .

{ 9 comments… read them below or add one }

avatar 1 Anonymous

Good job managing, good news on the balance sheet, and great planning. Your “Family Board Meeting” seems to have opened up an opportunity to improve that work/family balance which is wise. As far as your retirement planning I don’t understand why you would discount Social Security 100%. I don’t recall a single government program like SocSec ever being ended completely. Unless you’re not paying into it you will have benefits. There may be reductions and further means-testing but unless you just want to see a worst-case scenario I’d put some discounted dollars from SocSec into your plan.

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avatar 2 Anonymous

Yeah we will probably have *some* social security. But it’s still 30 years away for us, so a lot can happen. Maybe we’ll get 50% worth? I dunno. I can see us getting screwed over on it :/

@Neal — I’m proud of Matt, too! He’s a keeper :). We’re coming up on his one-year anniversary with this employer, so maybe a raise is in the future. I dunno about a promotion necessarily — I don’t want him to have even more responsibilities! But more money? Yeah ok that would be fine.

Having a solid retirement account is really important to Matt, so we’ll look into various sources to make sure we’re on track.

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avatar 3 Anonymous

Hey Flexo —

Not sure what happened here, but this is my correct mortgage balance for May: $125,381

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avatar 4 Anonymous

Ok, brain fart. I was looking at “total liabilities” and brain thought “mortgage balance.” You are right in the original post!

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avatar 5 Anonymous

Look to the future … when those thirty years go by and you’re as old as me you get to call those “senior moments” ;-)

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avatar 6 qixx

If you complete the year by year comparison that Neal suggests before the next month let us know how it turns out.

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avatar 7 Anonymous

I guess I’m not sure what else to compare my fund to. Specifically, I popped in the Janus Contrarian fund that Neal mentioned on his blog.

From June 2006 – June 2013 it has enjoyed a 13.44% gain, according to that Yahoo comparison tool. I’m assuming it is taking fees into consideration?

My Vanguard Target Date fund saw a 27.66% gain during the same time frame.

So…that’s good, but I don’t know a thing about that other fund or if it would even be appropriate for me to hold. I do know that the expense ratio is much higher as well.

Which other funds should I compare mine to?

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avatar 8 qixx

I’d suggest running the comparison against some Index Funds. That 27.66% looks like it might beat most over that time period. Did you do the comparison year by year or just over the entire time frame.

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avatar 9 Anonymous

I just did the entire time frame. My target fund is comprised of index funds. There’s a portion of it that’s an index fund of the market, and then there’s a portion of bond index funds

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