frugal living: tracking all the dollar bills

In the interests of frugal living, I decided that we needed to get a better handle on our money.  The Mister and I are not profligate wastrels, but nor are we all that concerned with balancing our books down to the penny. I balance my books to within a hundred dollars. Ish.  Mostly. An accountant I am not.

I have my own little system of accounting.  It is an Excel spreadsheet.  It has a list of bills to be paid, date paid on, confirmation or check number.  It served me fine for years.

The problem with the Excel spreadsheet is that it looks mostly backward.  The rent, the electric bill, the gas bill, the car payments....these are fixed bills that I can usually predict either exactly or near to how much money they are.

Then there is the credit card bill.  We use the credit card for 99% of our expenses.  We pay it off every month.  Using the credit card allows us to rack up travel points and track all our expenses.  This bill is a backwards-looking bill--on September 1st I will pay off the entire August balance.  I can see as August goes on that the balance is going higher and higher, and maybe that we are getting close to going over budget, but it doesn't tell me, unless I download all the transactions and sort and categorize them, what I am spending too much on. What I wanted was a forward-looking budget.

About a year ago, I started with my sister the engineer's monthly Excel spreadsheet, which was mildly more complicated than mine.  Too complicated. I used it for a few months but kept up with my own simple worksheet.  And it didn't help me track my approaching budgets.

I slacked off on that for a few months.  When we moved to this house I decided I had to get back on the horse and figure out how to budget.  I am 41 and hold an advanced degree, so you would think this would be simple at this point in my life, but I went to law school because my math skills weren't up to being an engineer like everyone else in family.

I am familiar with the cult of Dave Ramsey.  I read the book. Eh, its fine.  We don't have credit card debt, we live mostly within our means on a monthly basis, and I am lukewarm to the concept of buying everything with cash, especially in light of our using credit for travel points.  I didn't do much with Dave's favorite concepts.

There are plenty of websites that have already done the comparison shopping for you on different financial websites (see here and here).  I won't give a full breakdown, but I will tell you what worked for us.

A few years ago I tried out Mint.com but I wasn't that serious about it, and while it was a nice way to look at all of our accounts in one place, I wasn't all that into budgeting, and eventually it fell by the wayside.

When we moved a few months ago, I reactivated my account.  I also started using the budgeting function, which I like.  In fact, the budgeting function is pretty much the entire reason I use Mint.

When you log in, the budgeting page looks something like this:

Like I said earlier, I am not so much into tracking All The Pennies.  I also don't like being told what to do, even when I am the one telling myself what to do.  (Nobody puts Baby in a corner.) My "budget" needs to be structured, yet flexible. If I want to go out and have a $600 lobster dinner or Jimmy Choo shoes, I need a budget that will allow me to do so. (I haven't, and I won't, but you can't tell me that I can't, see?)  The budgeting system in Mint allows me to do so.

I set up my budget with our total monthly income.  Then I made up smaller budgets within the budget--rent gets a budget line, tuition gets a budget line, and all the other fixed costs get a budget line.  Then I set up categories that I know I use on a monthly basis but aren't a fixed cost, like restaurants and medical bills and haircuts, and give them an amount that I think is reasonable.  I can adjust them if I find myself spending much more or much less than what is budgeted.

Lastly, every dollar not already accounted for goes into the "Everything Else" budget.  If I go way over budget on a different budget, this is the category the extra gets pulled from.  For example, because our water company changed billing rates and billing cycles this month, we got two water bills in one month.  I took $50 out of the Everything Else category and allocated it to the Utilities budget.

Want to hear something interesting?  Our monthly discretionary spending has remained nearly the same for our entire marriage.  Ten years ago when we made a quarter of what we do now, we spent nearly the same amount on the "everything else" category.  (What do we spend the increased 75% on? Rent, tuition and medical bills.  Tuition tuition tuition.)

Things I really like about Mint:

• It logs into your banks/student loans/car loans/financial institutions automatically and gives you a picture of your entire financial picture.
• You can run reports with charts and graphs.
• It tracks every transaction you make (assuming you have linked all your accounts that you spend out of), so you can see exactly what you are spending on.  It was an unpleasant surprise to discover I spent $100 in a month on Sees Chocolates. (April was a difficult month. Don't judge.)

Things I don't like:

• Despite multiple attempts, I cannot get two of our loans that are handled through third parties to sync with the program. (It connects easily to most financial providers, but we have a car loan that is handled by a third party vendor and I cannot get it to sync.)
• Because it is a free service, there is a lot of advertising on the site. 
• The modeling projections for investments are kind of simple.

While trying Mint, I also decided to give a trial run to the You Need A Budget program.  Five years ago, I bought the YNAB program and just couldn't figure it out/get it set up correctly.  (Math again!) (Yes, I started both Mint and YNAB years ago and abandoned both of them.)

YNAB also has a crazy cult following.  I haven't run into crazy Mint followers, for some reason, but YNABers are a vociferous bunch.  They love that program and run all over the internet yapping about it.

I don't like it.  Luckily this time I just downloaded a trial version.

YNAB is not automatic.  You can download transactions and then import them into YNAB, but the program essentially works on "you buy something, you whip out your phone and record it in the app yourself."  Because it makes you more aware of you spending your money.  Or something.

I am all about lazy management.  I buy something, I whip out my phone and look at Mint, and hey, there it already is, done for me, and hey girl, best stop buying so much chocolate cuz the chocolate budget is approaching the limit.

Also, I admit defeat; I just couldn't get down with the math.  I had trouble again setting the damn thing up correctly, and in the end simply removed all the credit card accounts out of the budget.  There are many how-to videos on how to use it, but it was just difficult for me.  YNAB is set up on a zero-sum budget, which means you are living on last month's money.  My current system is half of last month's money, and half of this month's money.  It just gave me a headache.  I stopped using it before the trial was up.

If you like to plan your life down to the last penny, and enjoy doing all the work yourself, then YNAB may be right for you.  People who love YNAB REALLY love it. I am not a fan.

Lastly, I tried Personal Capital.  It is sort of Mint-y--it is automatic and tracks all your spending, but the budgeting function is meh.  However, it is REALLY GOOD at investment modeling.  How much will you pay in fees over the course of your investments? How much do you need if you have a drawdown rate of X or Y? What if you want to pay for college?  It is really good at modeling different scenarios.

Cons: Although it is free and doesn't have advertising, they make a concerted effort to sell you on their investment and financial services.

I am currently using Personal Capital to track our investments, and Mint for everything else.

Do you budget? Do you use a program, or just your own method?