Wednesday, November 28, 2012

How I Keep Up With The "Family Financials"

This was on my mind this week, as I have spent alot of time in the last couple of days getting prepared for the upcoming Christmas season of gift giving, activities and decorations. We also have a few bills do that have popped up that are due in December that are random (i.e. dentist bill, last bill for cable, etc.). At least one of these bills tends to pop up around the holidays, doesn't it?
 
I thought I would share how I keep up with the "Whitehead Family Financials." I do all of the budgets, checkbook balancing, and bill paying in our family. It's just how it's worked out for us over the years. When we both tried to do it, it was just a disaster. When I tried to let Jason do it, I found that he just didn't think ahead enough into the future to plan financially. I actually like to do it, most of the time. Sometimes, I get overwhelmed and make Jason take the reigns, but mostly, I really enjoy toiling over it.
 
I have used the same method of keeping track of my finances for years. It's basically a way I can plan ahead while also keeping track of how much money we currently have. I have always had a system on excel that looks similiar to this:
 
Date Item/Creditor Monthly recurring Debit Savings Monthly Incidental Debit Credit     Balance
          $3,000.00 $3,000.00
            $3,000.00
  Daycare $150.00       $2,850.00
  Electricity $150.00       $2,700.00
  Gas $45.00       $2,655.00
 
This is purely an example, but basically I have a simple formula that keeps track of the running balance. It adds credits, substracts debits, and tells me how much money we have/should have at all times.
 
I have liked this system for a couple of reasons. One, I have seperate tabs in a worksheet for the current month and usually two upcoming months. I could really do it as many months in advance as I'd like, but I find that things change and with Jason partly on commission, we usually know an estimate of what his commission check will be two months from now. This system lets me know what my balance will be (should be) on any day of the upcoming month, like January 15th. I've liked this system, up until a couple of days ago. When we were running SO close to the wire financially for a couple of years, this system saved our life. We felt like things didn't sneak up on us as often and we were able to tell creditors when we could pay them, with certainty. I wasn't promising all of our money away to too many people and overextending what we could do. I mean, there is only so much stuff you can pay when you only have so much money, so at times, we couldn't pay the random bills, as I listed above, so things like that would often go unpaid, but we kept both our cars from being repossessed and food on the table using this system.
 
What I've never been able to figure out is how to incorporate spending budgets and good financial planning on this system. This system is often not too disciplined, either, as I can change the numbers or payments dates at any time, and with someone like me who is not incredibly disciplined with money, this has led to not being where we would like to be financially (savings-wise, etc.). This system also doesn't keep track of our spending habits over the months. For example, how much have I really spent on fast food this month? If I don't keep track of those things myself on the spreadsheet, you end up spending more than you'd like on one thing because you aren't accounting for it on your monthly budgets. Like, for example, you really don't know what you'd like to spend on fast food in a month, I never accounted for it in the upcoming budget, and ended up spending $100 on it during the month because "$10 isn't that much!" but it is when you do it ten times!
 
I felt like I needed some assistance in this area because I feel like while I have kept on tops of things, I would like to get to the next level financially in our family. So, I searched around and found a website that had a coordinated app, where Jason and I could both log in and be reminded of things that were going on within the month. I found mint.com. I am getting no money from them to recommend their system, but I have found that I really like it.
 
For starters, you can actually link all of your accounts to your home account. As long as your creditor is on their database, it can actually log in to your account, pull up your monthly payment and due date, and tell you how much you owe. I haven't found a major company not listed yet, but I have all of our student loans, car payments, and credit cards. It will also send reminders that a bill is due. There are times that I have forgotten to put a bill on my spreadsheet (all of my payments are automatic) and it comes out, and I was like, uh-oh, didn't plan for that one! This makes sure I always remember. It also adds together all of your accounts and tells you your total amount of debt, which I think is amazing!! Part of the reason I think people don't pay down debt is because they don't know what that number is (or don't want to know.) It's easy to spend $5 a day on coffee when you don't ever think about how much debt you are in, but just in the last few days, I have really thought about that number I see when I log in, when purchasing things I don't really need or choosing not to eat out for lunch when I have stuff I could bring.
 
They have a "goals" section that allow you to set up goals for yourself. You can set up many different kinds. Right now, the goals I have include savings and paying down debt. It will pull up how much money your goal is so save and when you'd like to have that goal completed. For example, if you say you'd like to have your Dave Ramsey emergency fund of $1,000 by April, it will tell you that you need to save $250 a month. Then, it will track if you do that, based on the transactions on your checking account. I love looking at the goal when I log in. It makes the goal real instead of "just something I intend to do someday."
 
The other thing I really like is that it tracks every transaction of your account and will tell you how much you've spend in a given category in a month. You can also give that category a budget. It has a constant running tally of "budget" vs "spent." I love this feature. It really makes me think before spending money on stuff. Like I said, $15 here and there adds up, but you don't think about that. This also allows me to adjust by budgets based on real numbers, not just estimates. For example, if I am budgeting $45 a week for gas, but it is really costing me $50 a week because a gallon of gas costs more, I can adjust by budget accordingly.
 
I will probably always keep my spreadsheet, just because I don't have a checkbook registry and I like the way it just adds and subtracts numbers for me instead of me having to do it myself. However, I feel like going forward, I will actually get us where we need to be sooner than what I think it will take!
 

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