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).
Over the course of 2014, four Consumerism Commentary readers have shared their financial reports, exposing the results of their financial choices on a day-to-day basis. Each participant is paired with one of our Certified Financial Planners. Throughout the year, the experts have provided insight and guidance to help our participants take their finances to the next level, and as the series is now ending, we are able to look back on the year. Learn about this year’s participants and experts.
Jake and Allie are animal lovers who enjoy their pets and have no plans for children. Both are committed to early retirement. Jake and Allie are both interested in owning side businesses, even though they plan to use their nest egg for living expenses. The couple enjoys travel and make it a priority to take trips throughout the year. They believe that it makes sense to use part of their combined $140,000 income to enjoy life now. (Read their update from last month.)
After reading Jake and Allie’s comments, you can watch a Google Hangout they participated in with Financial Planner Neal Frankle. Neal Frankle appears courtesy of Wealth Pilgrim and MCMHA.org. This month’s Naked With Cash is the last of the year, and includes information on debt reduction and a wrap-up of the year.
Jake and Allie’s Net Worth Statement
Jake and Allie’s Income Statement
Comments and analysis from Jake and Allie
The end of the year is almost upon us, yet it seems like we just started with Naked With Cash. I hope all the other participants found it to be as helpful as we did. We feel so lucky to have had Neal as our advisor this past year. We’ve been planning and saving all along, thinking that we were doing a pretty good job, but knowing that there probably were some things we could do better. Neal has helped us realize those things by making suggestions for us along the way and pointing out things that we may not have otherwise thought of on our own.
What makes working with Neal great though is that he is just so nice. He never made us feel like we had made any bad choices. He talked us through a lot and helped us realize and make changes to benefit us, some of which we’re still putting into place. It’s just really nice to work with someone who helps you and does it in such a nice way. Neal is just great to work with. As I’m writing this, it occurred to me (Allie) that I actually enjoyed this whole process, which is a surprising realization given that I’m normally bored (so bored) by a lot of the financial stuff Jake gets so excited about.
Here’s a little summary of our November:
We received a refund for a show that was cancelled and we opted not to go at a later date.
We took a 20th anniversary trip to Biloxi with some friends that were celebrating their anniversary the same weekend. We saw some sights, ate some good food, and did a little gambling while we were there. After some fun, we got stranded beside the Interstate for 2.5 hours when our rental car broke down, causing us to miss our flight. Moral of this story: airline credit cards are awesome! Our US Airways card got us all four rebooked on a different flight later that day for FREE (before they knew we had the card, it was going to be $200 per person and the next day). Not really a financial tip per se, but it saved us some money, so I threw it in anyway.
Jake bought a new iPhone when it came out, so the phone bill was a little higher this month.
Jake sold his old dirt bike for almost what he paid for it, leaving the newer, nicer, less expensive one as the bike that he will ride now. That was kind of a lucky find that earned him a little extra money. The cash balance went down because Allie deposited $5,500 to fund her Roth IRA this year. Gifts and donations went up when we started doing Christmas shopping a little early.
The topic for the month is debt reduction. Jake and I both remember what it was like graduating from college with debt and even having it accumulate as you grow up and start making purchases to start your life. We have good jobs now, but it hasn’t always been that way. Some would say that it’s easier because we don’t have kids. That’s true also, but that’s not what has enabled us to become debt free. The most important thing you can do is be aware of what you make, what you spend, and what you actually need. We have seen and still see so many people that get their paycheck each week and think they have to spend it.
Granted, there are some that have lots of bills and kids, but even those people spend money on things that they could do without that would allow them to save a little each week and reduce their debt, even if it’s slowly. If you eat lunch out every day, buy alcohol and cigarettes every week, that’s money you’re not using to pay down your debt. People will argue that it’s not that simple, but it really is. I grew up in a family that had very little, and I lost my Mom when I was 11 years old. It was hard for my Dad to take care of my sister and me, but I watched him work hard, not spend his money on things we didn’t need, and he was able to pay our house years before he would have just making the payments. His philosophy was if he didn’t have the money, he didn’t buy it. Now, I haven’t always employed that, but I definitely live by that idea most of the time. Before I write a novel, I’ll leave it at that.
Maybe this doesn’t fit here, but the biggest way to help with debt reduction is not to allow yourself to get so deep in debt in the first place. People tend to change their lifestyle as they make more money. My advice: DON’T. If you get a raise, use that extra money to pay off things or put it in savings or your 401(k) instead of just spending it. After a while, you won’t miss it, but you’ll be pleasantly surprised at how your other numbers start looking. And when you do something like pay off a car and don’t have a car payment for a couple years, you’ll think REALLY hard about going out to buy a new car because not having the payment is a nice thing. If you trade every few years and always have a payment, you never get to experience that feeling to enable you to save some money in the long run.
The most important thing we did this year was keep track of our spending and categorize all of our purchases, even simple things like vending machine purchases. It made us truly aware of what we were spending in each category. In some cases, it made me think a little more about buying something, but we really didn’t change our buying habits because we wanted to truly see what we were spending. A few things like purchasing another purebred dog and doing a little remodel work to the house were out of the ordinary, but everything else was pretty realistic for us. We found it so helpful that we plan to continue it and will add some additional categories to give us a little more insight.
Lastly, thank you to Luke Landes for putting together the Naked With Cash experiment. It has been such a huge learning experience for us. The feedback from both Luke and Neal has been a huge help to us. We are so very appreciative for the opportunity. We sincerely thank you for including us.
Hangout with Neal Frankle, CFP
Neal reviews the year with Jake and Allie, reiterates parts of their long-term financial plan, and wraps up Naked With Cash 2014.
Feedback from Luke Landes
Congratulations to Jake and Allie for making it through the entire year! From December 31, 2013 to November 30, 2014, eleven months, their household increased its net worth almost ten percent — and that’s on top of a net worth that was already above seven figures. And before readers look at that bottom line and think that Jake and Allie live in a bubble of wealth that’s unrelatable to the general public, go through and read their updates throughout the year. They face decisions on a daily basis that are no different than everyone else’s.
I’m glad to read that the pair will continue tracking their finances. This is an indispensable approach to managing money. And I know, because I’ve dispensed it at times because my income was sufficiently higher than my expenses, but my net worth would certainly be significantly higher — not just marginally higher — if I continued tracking consistently. And that would be the case without losing out on any of the fun I’ve had.
Thanks to Allie for her words of wisdom in the couple’s last financial update for Naked With Cash. Thanks also to Neal Frankle for being a great advisor and coach throughout this year and last. Best of luck!
Updated April 13, 2016 and originally published December 16, 2014.