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Naked With Cash: Betsey S, January 2014

This article was written by in Naked With Cash. 7 comments.

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).

For more information, read this introduction.

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.

Betsey is a 27-year-old government analyst. She is single, and lives with two roommates, with whom she can split rent and utilities. Betsey plans to save up for a down payment on a home and wants to reform her spending. Some day, she’d like to “retire” and open a brewery so that she can further enjoy her passion for craft beer. (Read her update from last month.)

After reading Betsey’s comments, you can see video commentary from Sara Stanich, CFP. Sara Stanich appears courtesy of Stanich Group and Cultivating Wealth.

Betsey’s Net Worth Statement

Betsey’s Income Statement

Betsey’s comments and analysis

My income is up in January because I got three paychecks this month. I used two for paying bills/living expenses and put all of the third check straight into savings. I’ve never been paid biweekly before so that was a cool feeling!

I also received a 1% pay increase, which was negotiated as part of the bipartisan budget deal passed in December. I decided to bump my 401(k) contribution to 10%.

Overall, I did a much better job cutting my spending this month, especially on restaurants and dining out. Most of my “shopping” was an expensive $65 repair job to resole a pair of work shoes.

I paid quarterly taxes in 2013 (because my job did not withhold any taxes), so things should be relatively straightforward for filing in April. I use an email filter to tag charitable donations and other tax-related paperwork so it’s easy to find it all at once. My state and federal withholding has been adjusted for 2014. I don’t do much to reduce my tax liability other than contribute to a 401(k).

Feedback from Sara Stanich, CFP

Sara Stanich provides a look at Betsey’s tax planning goals, with a focus on upping her retirement account contribution. She also considers the idea of setting a concrete goal when saving for a down payment.

Feedback from Luke Landes

I could probably take some lessons in organization from you. Filing my taxes this year is going to be a chore, to say the least.

Congratulations on the pay increase and the great decision to use that to increase your 401(k) contribution. This is a good illustration of a frugal mentality, whether you consider yourself frugal or not.

It’s the same principle — making pay raises invisible — that leads some recent college graduates to continue living like they were in college (and on hardly any income). You’re obviously in a better position and have no need to resort to frequent dinners of Ramen noodles, but the more you can see pay increases as an opportunity to increase savings and long-term planning rather than satisfying urges, the better you’ll be financially prepared for whatever the future might bring.

Those few occasions where you get three bi-weekly paychecks a month instead of two makes you feel good when you look at your net income for the month. How would the month have looked if this had been a regular two-paycheck month?

On a percentage basis, this has been a great month. Keep up this progress, and you’ll find that you’re in a sweet spot right now where increases of $2,000 to $4,000 a month can really affect your net worth as a percentage. As your net worth increases, a $2,000 to $4,000 monthly change will have less of an effect on the numbers. This may not be a really insightful commentary on your situation; I just like seeing these high percentage numbers.

Updated June 22, 2016 and originally published February 18, 2014.

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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 .

{ 7 comments… read them below or add one }

avatar 1 qixx

I’m just curious about the change in insurance coverage costs. Did you have a policy change for the new year that raised your premium? It seemed odd to me to go from $71 to $118 to $169 and was wanting to know the cause.

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avatar 2 Anonymous

Good catch – I probably should have explained this category more. My premiums have actually gone down.

HR mixed up my paperwork and ended up retroactively enrolling me in a health insurance plan, so I paid a pro-rated amount for November. In December, my premium was $59 per paycheck ($118). I switched to an HDHP during open season, so in January, $59 was deducted twice and $51 was deducted once the new plan was effective. Going forward, this should be $102 per month–until the next 3 paycheck month.

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avatar 3 Anonymous

She is clearly frugal. And I must say that she knows how to make the right decisions. I am also trying my share to ignore pay raises so that I can live with what I have. This pushes me to save more money.

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avatar 4 Anonymous

At over 50 with my own business after decades in banking and accounting – I am going to go with not so frugal – the reason I had the capital to start my own business is that after inflation adjustment – there is not one single month in my 14 years as a single after the age of 21 that I spent $700 on restaurants and alcohol. Also never spent that way in the two decades of marriage either. If you want to get a sense of true frugality along with its natural byproduct of small material footprint – go get the old book “The Tightwad Gazette”. This naturally led to wealth accumulation and for my husband that was a blessing when he got laid off at 57 and didn’t have to try and find a job competing with young engineers just coming out of school. He just came to work for my business and does that part time.

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avatar 5 Anonymous

Bank of America over drafted me 995.43 and I have not seen a penny paid back to me. The reason they employees did this, is this B of A was changing to Washington Mutual. When I went in to correct the problem, the lady that works there said that there was nothing they could do. This was the answer I got.
As of yet, I have not gotten any settlements.
If you can help me then you can get ahold of me at the e-mail address above.

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avatar 6 Anonymous

Hi Sara,

In response to your question, I think I could save $1000/month, so my goal for 2014 is $12,000. Thank you for the encouragement to set an actual goal!

I am researching some of Washington, DC’s first time homebuyer assistance programs and beginning to think about the house I’d like to buy eventually. DC is very expensive and whether I stay in the area likely depends on professional opportunities in the future. For now, I am content to start saving for this goal, even if I don’t know exactly where I will settle down permanently.

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avatar 7 Anonymous

I have to say, I’m a bit disappointed on the tax liability discussion. There is no framework for the discussion, other than she wants to reduce her tax liability now. That in of itself would be fine, but doesn’t necessarily make sense in the long term.

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