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Tracking your Finances – finding the balance

January 28th, 2013

Whether you budget or not, knowing where your money is going is incredibly important and without this information you’re like a rat lost in the rat race. Unfortunately tracking your finances for some people is the same as asking them if they want to be tortured. I know because I used to be one of these people. The fear that grips you when you are forced to go into your own financial details can be palpable.

But if you really want to get yourself on track this is a necessary evil. You simply have to know what you’re spending your money on and more importantly if you’re overspending.

In its basic form the concept of tracking your finances is pretty simple – know where your money is going. You can do this any number of ways:

Pen and Paper
Spreadsheet on your computer
Tracking software
Online tracking software like Mint (my preference)
Even tracking it on your phone.

How you track your spending isn’t really an issue other than you need to do it. The details shouldn’t be scary but too often they are.

The fear behind tracking your spending.

For me it came down to two pieces the first was a fear that came up when i tried to track my spending manually, I kept getting overwhelmed but the sheer volume and then the second item kicked in and that was the realization of where my money was actually going. That fear and frustration is part of what has been holding me back all these years.

Yes tracking your spending will uncover some potentially ugly truths; you might be overspending or not budgeting correctly. But this is a fact and the tracking is what you need to do in order to make sure you’re living within your means. It’s simple information to be used, don’t make yourself feel guilty. I struggled with this because I did have a nagging feeling of guilt – I’ve simply had to remind myself that its information as a result of my actions and I can use this to fix these actions.

Finding the right amount of information to track

Everyone will be a bit different but at the end of the day you need to find what will work for you – if you track too much information then you can easily become overwhelmed and lose momentum. To illustrate this I started off by writing everything down in a little notebook, keeping receipts and then transferring everything into a spreadsheet that had an elaborate system for categorizing each spend. If I fell behind by a few days it became a large task to keep this up to date. For me the solution was pretty simple – I now use Mint to track virtually all of my spending.

While this might not work for you finding a system that will work with just the right amount of information is key. Not too much information that it becomes difficult to track things but enough that you know how you’re spending your money.

Perseverance

At the end of the day you make your financial bed and have to lie in it, taking responsibility for your actions and pushing through the challenges is what will make the difference. Perseverance and small steps.

Posted in Budgeting and Planning, Debt, Financial Situation | No Comments

Budget tracking – Old Approach Revisited

January 10th, 2013

There are times in your life when you really need to count all of your pennies in order to make ends meet, a few dollars in the wrong spot and you might be hard pressed to pay a bill or have food on the table. For those times I think that you really need to buckle down and become very rigid with your budgeting and tracking. Now this doesn’t always mean you have to be bordering on broke, there are times when you really want to achieve a financial goal and being very careful with your money can make a big difference.

This year I believe that I am in one of those situations, we’ve been getting by for a long time making ends meet but the credit cards are still mostly full and the savings are low. Its time for some more drastic measures. In the past I’ve tried half heartedly to stick to a weekly budget and where I find myself today is the need to really stay on top of my money but at the same time find a technique that allows me to stick to it.

How are we approaching this?

Weekly budgeting was something I always liked because a lot of items such as groceries, transportation, entertainment,etc… follow weekly patterns and just allotting funds for these monthly can be prone to error. But at the same time a lot of bills, most I would say, are monthly bills.

So I’m going back to a budget – a monthly budget, broken down weekly and tracked weekly.

The benefits of this are that:

I’ll be able to track spending weekly, adjusting the monthly budget as needed
The weekly spending follows the cycles of most of our consumables costs

Now as with most methods there are a few drawbacks or at least drawbacks as I see them.

You have to keep it up to date or you lose some of the benefits
It can be time consuming if you’re not careful
In our case this approach isn’t fully aligned to our pay cycles

As with any tracking method there are good things about it and bad but its the implementation that will make a difference. I’ve created a template for myself that I’ll be able to create a budget against. This info can be rolled up into a monthly net worth document that we can use to monitor progress. The biggest difference in my approach this time is that I’ll be using Mint.com to help me keep this up to date (with some manual entries from me along with bank tie ins).

Since I’m sure there are a few other Mint.com (or similar) users out there you might wonder why not just use this for everything? I find that it doesn’t give me a clear picture and it doesn’t take into account when things come out – its a little discouraging seeing how much you might still owe in a category for the month while the weekly breakdown takes it into smaller chunks.

I’ve been testing this out for a little over a month now and it seems simple enough but gives me enough of the information to help adjust my spending day to day while keeping me on a budget.

What systems have you used in the past? What has worked for you?

Posted in Budgeting and Planning, Financial Situation, Monthly Planning | 1 Comment

2013 The Year of the Budget

January 5th, 2013

Every year it seems that my finances and overall financial situation remain mostly status quo, improving slightly but never fully under control. This is something I’ve struggled with for years and the worst part about is that there hasn’t been any real pressure to dramatically improve this. I would find that we’re making ends meet even if we’re not saving much but we’re doing alright.

This just getting by is a very insidious and its gotten a bit frustrating. The goal for this year is going to be really force the issue and the new house and new year are a great time for this to happen. There are a few things that we’ve already done in order to get this moving:

Constantly tracking our spending
More comprehensive budgets
A mindset adjustment
Investigating alternate income streams

Each one of these is really more than a post in their own right but I did want to go into a little detail about what we’ve done so far.

Constantly tracking our spending
I think that this is going to be the most challenging and most important item on this list because it is something that will need to happen almost in real time. When I first started this blog this tracking of our spending was something I tried to tackle unsuccessfully over the long term.

I found the biggest challenge was actually staying on top of keeping track of what was spent, some was cash some was debit and in the end there was always some kind of gap. I’ve been using Mint.com for the past year and it has really simplified tracking spending and even setting up goals. This tool is really something that along with budgeting has really let me really understand my spending.

The goal is to fully get our finances tracked and then readjust the spending to ensure we’re spending below our means.

Comprehensive Budgets
Again this is is a lesson learned from the past where I have budgeted somewhat successfully, the budgets this time around are more comprehensive including all of our spending in an effort to track it and know where things are going. Weekly I’ll be checking against actual spending. The first month will be a test then we’ll adjust.

Mindset Adjustment
This is similar to the tracking of our spending – we, well at least I need to adjust my mindset a bit in order to really set this as a priority. Our financial health is a topic that is always important and at the back of the mind but it isn’t something that is always first and I think that this is what needs to happen. Always making sure that we track where the money goes rather than deferring it to later. Weekly going through everything and tracking it. Initially i think this will be almost as hard as the tracking but once the habits are formed it will become easier.

Investigating alternative income streams
Both my wife and I have full time jobs and we’re mostly happy with them but its a very active form of income and really takes up a lot of time. We haven’t really explored alternate income streams be the active or passive and during 2013 we will start to explore this in earnest.

I’m sick and tired of just getting by and seeing the debt just sit there without any real progress forward. Its time to get mad about it and really change something. This year will be the year of the budget.

Posted in Budgeting and Planning, Debt, Financial Situation | No Comments

The Mayan’s got it Wrong! 2012 in Review

January 3rd, 2013

Most of the time when someone gets something wrong its a bad thing but since the Mayan calendar ended this year I’m actually kind of glad that they got it wrong. The world ending would have really put a damper on the year!

I know that its rather pointless to use an arbitrary date for reviewing your life or what has happened recently but the turning of the calendar year does give us an opportunity to reflect and in many cases it also gives us the time to reflect which can be hard with a busy schedule. Like most years I did pause a little to review the year that just passed in an effort to sum up what the hell just happened. This year was probably one of the busiest years in my life and overall it was a good one.

The Good
There are many good things that happen to us each and every day and we mostly just ignore them and I’ll be honest I typically did just that. This year I’m very grateful for all of those things that were good even if I didn’t notice them all the time. I remained healthy even though I insisted on attempting to sabotage this by working too much, smoking and drinking too much. I’m grateful that my daughter remained healthy, grew like a weed and was a very happy child.

I also learned a lot this year both from my mistakes and from good things that happened. I learned through practice that I really enjoy renovations and by that I mean actually doing the renovations myself. We renovated the bathroom at the cottage in the span of a week (just a little facelift), pretty much gutted our house and are in the process of refinishing it. This second renovation was huge and cost more than a luxury car and the best part about it is that I was involved not only in paying for all the work but did a lot of it myself. This is actually something that I am very proud of and happy that I got to learn as much as I did from my contractors. I am going to leverage this into finishing the renovations myself.

We (my wife and I) also bought a new house which was a huge shift for us because of how much of an undertaking it was. It was also a great investment even though it required a lot of work.

Another great thing that happened to me this year was I got promoted at work, it was almost a reward in recognition for all of the work I put int. Unfortunately this did come as a bit of a double edged sword because of all that work. I’ve realized because of this that I don’t need to keep moving my career forward to be happy. I can be happy doing less and making less to have more time because that is something that is very finite.

The Bad
This year was also the year that a few bad things happened (ok that was an understatement there are always bad things that happen). We did have a few encounters with death this year in that a couple people close to us passed away (way before their time). This has really left an impact on me because it really put mortality into perspective and to really let me realize what is important.

The other bad things that happened this year are that we didn’t make much headway when it comes from a personal finance perspective. We’re still as much and actually a bit more in debt that we were before (thought the new house is an asset that balances all of this).

I also learned the power of details this year. Not necessarily in the best of ways because our renovations were well over budget and we weren’t as good at holding onto our money. But part of this is actually a good thing because it is something that has been staring me in the face for years and I kept ignoring it. Hold onto the details because they’re important – they do say the devil is in the details and in my case the path out of debt may be hiding there. Knowing which details to measure and track and when is the key.

In summary
It was a good year because I watched my daughter grow and be happy, my wife and I were happy together and moved forward with our lives. At the same time I didn’t do enough stuff for me this year, I focused too much on my job and not enough time on the things that are important to me but for once I can say that I really saw that.

Tomorrow I’ll post up some goals that I’ve got for this upcoming year one of which is actually re-focusing on tackling the financial aspect of our lives and we’ll take you along for the ride.

Posted in News/Misc | No Comments

Let the renos begin!

October 11th, 2012

We’ve got the new house and now the scary part begins! Why scary you ask? Well the house that we bought was for lack of a better term a frat house for old farts and they didn’t give a shit about the place and that would be putting it mildly. The house had 3 older men and one woman living in it along with 1 pug and a stray cat. The typical activity was smoking inside the house and drinking from what we were able to tell.

When we finally took possession of the house we decided to take a walk thru just to make sure that everything was left the way it should be. Upon opening the door the smell wafted out like a creature from the forgotten bogs, laced with fermented dog pee. Needless to say it was disgusting. But everything was intact and our project was about to start.

We bought the house because it was a good investment at the price, but it would need a lot of work and that work is now starting. We need to clean the place from top to bottom as a start then we have to completely gut the kitchen, bathroom, take out a wall and put in HVAC. That is to start with.

At this point you’re probably wondering if my wife and I have left the world of the sane and I am sure that in the next few weeks I will question that too. The good news is that the house will look awesome when everything is done and the property value should increase quite dramatically. Wish us luck!!

Posted in Commentary, Real-Estate | 1 Comment

We bought a house!!

October 1st, 2012

We bought a house!! Actually to get really technical we bought a house in serious need of renovations, almost a flip, staged and sold our current house and watched two months of time vanish into cleaning, banking, repairing, negotiating and many other things including keeping a 4 year old entertained!.

And that was the simplified version.

So time to give a bit more in the way of details, about two months back on a saturday morning my wife was scrolling through MLS just seeing what was in our neighbourhood. We were not looking to move or really invest in property at the time but we’ve been periodically keeping an eye on the market just in case.Most of the time this is just general curiosity.

But something caught her attention – a house, a little bigger than ours but detached with a much bigger lot very close to ours. Our attention was piqued, lets drive by and take a look we said to each other. The house looked like it had promise and the lot was amazing!

We called the listing agent in order to get a better a look at the house; we were the first people in to view the place and to put it mildly it was a complete shithole. There were 3 older gentleman living there who forgot that at 60-70 years old they weren’t in a frat house anymore.We really had to look beyond what the house looked like.

Underneath the grime, stains and stench was a house with some good bones! We were intrigued. After a bit of investigation we decided that this was a good investment and put in an offer only to discover that we were bidding against builders who were going to tear the place down and build a nice new construction home. The waiting and back and forth with our agent was emotionally exhausting.

At the end of the day we managed to get the house for a price we were comfortable with and in another week or so we take possession of the property with a 2 month overlap between the purchase of the new property and the sale of the old one. During this time the renovations will begin in order to make the place livable.

In retrospect the purchase was the really easy part – the hardest part out of the whole thing was getting our place ready for sale and sold. This isn’t the first house we’ve bought or sold and it won’t be our last but it was definitely a learning experience. I’ll be sharing more about specific items in the coming days/weeks; probably as a break from renovations or packing!

Posted in Investments, Real-Estate | 1 Comment

Saving – the easy way

July 3rd, 2012

When you’re living from paycheck to paycheck something like saving money is the last thing on your mind but it should be one of your biggest priorities. Living from pay to pay means that you either don’t have any spare room for emergencies or you spend way too much money (and you have other problems). I have always struggled with saving money and to be honest I’m still not great at it. But at least now I do it and I have a bit of an emergency cussion.

How I did it
For me the issue wasn’t setting aside money into a separate account, that’s easy to do, the issue was about not spending the money. I needed to be able to set the money aside without immediate access to the funds. Initially I had a savings account set up but with a bank debit card attached to it I was constantly dipping into the money when I ran out.

The key for me was that I needed to set the money aside without being able to access the funds directly. The solution was simple, set up an automated deposit into an account that could accumulate funds and not be easy to withdrawal. In my case i used a mutual fund that I make regular contributions to (standard index fund).

This isn’t the only option so you’ll have to find one that works but essentially the money is there in case I need it but it isn’t something that I can draw on at a moments notice.

Automated Savings
The other thing that i did was that I aligned the withdrawals from my checking account to match up to my pay. Essentially these are funds that are drawn out on the day I get my pay which means its gone before I have a chance to spend it.

Why it works
The solution is pretty simple – it works because the money is drawn out before I can spend it on anything and when a spur of the moment purchase comes up the funds are much harder to get at than say money in a savings account. It doesn’t mean that my money is locked in, I can pull it out and I have when I really needed it but its not a 30 second transaction that can happen in the store.

That’s the beauty of this setup and why I wrote about it in my post about Keeping on top of your finances. It effectively forces you to set aside some money.

How to set it up
The best way to set this up is to go to your bank and set up a special account with them (this will change depending on your bank), ask the banker to draw the funds directly out of your account. Its a very straightforward thing for them to do and they’ll likely do it for free.

Now were you put the money is up to you – I have my savings going into an index fund and I haven’t really benefited with the markets just floating along. A financial advisor will help you put the money into a place where it can serve its purpose and potentially gain some interest.

Will it work for you?
As long as you set it up it will work. You don’t need to start it very high, just get used to the idea that you’ll have less funds available to get by. Essentially you are paying yourself first! By putting the funds into an account that is not quite as accessible you can build a good little emergency fund. Remember even $50 per pay will add up $1,200 in a year (if you get paid twice a month) which is a good start for an emergency fund.

Posted in Investments, Saving Ideas | 1 Comment

How to use Mint.com to track spending

June 29th, 2012

In my last post I mentioned that I use Mint.com in order to track my spending and I have been for about a year or so. I tried out Mint because I heard good things about it. For those of you who don’t know what Mint is its an online service that allows you to aggregate all of your banking accounts in one spot. It’s not a perfect system but it’s definitely very handy.

The Mint app allows you to attach your bank accounts and when you do this it will pull in all of your information includiong credit cards and investments in a secure view. Once Mint has this information it categorizes the transactions into categories, thankfully it’s pretty intelligent about how it does this..

So, what happens when I open the app up it downloads the latest transactions and then puts them intop their categoreies. At this point you can see how all of your spending breaks down which is great because this is exactly what you want to do when you’re trying to assess you’re sending. You get very granular data about your spending as long as you use your bank card to buy things (you need to enter in cash spending yourself). This application reduces the your manual involvement in keeping track of your spending.

You can then use the trending functionality to see how you are doing month over month.

A few things that I found lacking about the application is that it treats money transfers between accounts a income and expenses which ends up throwing monthly tabulations completely off, at least it does for me.

Overall I like the application and it’s convenience but at the same time I also know that there are other apps like this – do you use apps like this? Which ones and have you ever compared them to Mint?

Note: this was not a sponsored post but my experience.

Posted in Budgeting and Planning, Debt | No Comments

Keeping on top of Finances when you’re Busy

June 26th, 2012

We all live in a crazy hectic world where we often don’t have time to stay on top of the things in our lives. I’m a perfect example of this; when life gets busy I have to set aside things that aren’t as important. In the midst of all the turmoil of our lives there are a few things that we simply can’t drop to the wayside and I would have to say that finances are one of those things. Unfortunately hearing that household debt is still rising it seems that this is not the case.

The challenge is to set aside time for the important but often unpleasant things in life because if we don’t the long term consequences can be pretty devastating. For me I can easily stay on top of my paying my bills on time and the good news is that the people we owe money too will remind us if we don’t. But that doesn’t mean that there is any progress forward. I found that this was the situation for me so I started doing a few things to not only keep on top of my bills but at least at a minimal level my finances.

Here is a short list of things that i have done to stay at least partially on top of my finances:

Use Mint.com to track my spending
Automatically deposit money into Savings
Set up direct deposit on most of my bills

I will admit that because things have been very hectic I haven’t been able to dedicate myself to clearing up my finances the way I should. But at the minimum the tactics above allowed me to know what’s going on.

Mint.com
I use Mint.com to track my spending; its an online service attached to my bank accounts that allows me to see all of my banking and spending in one spot. It categorizes spending and lets you set budgets and track your progress against them. While not a perfect system it definitely allows me to see that in June I spent X dollars on gas and lets me trend this over time which is a great way to start gaining some control.

Mint just happens to be the system I use but there are others out there that perform a similar function and your bank might have one. This has kept me from trying to constantly remember where I spend my money.

Automatic Deposit into Savings
One of the things I’ve always struggled with is setting aside money for savings. Inevitably I’ll spend most of my money before the next pay and there’s nothing left for savings. So what I did here was pretty simple – I called the bank up and set up an automated deposit into a savings account that purchases an index fund. This means that the money leaves my account on the day that I get paid. If you’re worried about this start small (even $50 a month adds up)

Direct Deposit on Bills
This one is not 100% complete for me but most of my bills automatically drawmoney out of my account on set days of the month, it’s clean and simple. Where setting an automatic debit wasn’t possible I went onto my banking website and set up an automated bill payment again at set times of the month. Most banking websites allow you to create this memorized list. The benefit here is that I don’t have to remember if I’ve paid the bill or not.

So with a few simple techniques I’ve got a pretty good idea of where my money is going and what the remaining balances on things are. That doesn’t mean that I’m saving enough or that I’m paying my debt down any faster. What it does allow me to do is to not get into debt further or by accident when life gets a bit busy.

Posted in Commentary, Financial Situation | 1 Comment

I’m Alive I promise!

June 11th, 2012

The last post I added through to this site was over 3 months ago and it was a very happy announcement about my promotion and since then there has been silence. Really I promise that the new role has not swallowed me whole but it does seem like it from time to time; I am alive and well and things are still moving forward albeit slowly.

Over the past 4 months I’ve really realized how much time and energy I’ve devoted to the work front and the rewards are not nearly as good as I would have thought they’d be. The experience has been good and its still ongoing but I’m starting to wonder how to find that right work life balance. In this thinking I’ve been thinking about a lot of things in life including the reason why I first started this site which is to get my finances under control. They’re much more under control than they were many years ago but they’re still not great.

In other news, this site was hacked and there are still a bunch of problems with it that I’m working to fix (please be patient if you see some oddities).