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Financial

Why I closed my Mint and Personal Capital accounts

In this past week, I closed both my Mint and Personal Capital accounts. I had thought of keeping those accounts, but a few annoyances pushed me over the edge.

Personal Capital

  • You can’t hide an account that is now “closed”. If you delete that account, you lose all of its history. This meant I had a bunch of accounts still showing up on my account list, with red exclamation marks, with nothing I can do about it.
  • Every time I synced my main bank account, I was forced to enter in my two-factor authentication code. Frustrating when I wanted to quickly look at the “state of the world.”
  • I’m not too impressed with their investment tools, which is supposed to be their defining feature. I actually found it difficult to track how my investment accounts were doing over time and what balance increases were contributions vs. actual gains.

Mint

  • Mint has an incredibly annoying bug where Fidelity 401k accounts essentially double their account balance, with this additional amount showing up in the investment reports as “cash.” Mint acknowledged this bug but says they cannot provide any timeframe for an fix. You would think one of if not the largest 401k providers would be high on their priority list.
  • Investment tracking is incredibly poor. I can’t find a YTD status.
  • Their interface always feels slow and heavy.

As replacements, I continue to use YNAB for all things budgeting and I have built several spreadsheets for tracking Net Worth, Retirement Contributions, and other related stuff. In sort, I replaced Mint and Personal Capital with slightly manual but 100% in my control processes.

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Financial

When Personal Finances Gets Boring

A funny thing has happened since we paid off our last car and a credit card with some medical bills on it: personal finances has gotten a bit boring. Actually, this has been a trend for awhile, but it’s gotten much more evident in these past couple of weeks.

With YNAB, I’m always budgeted a month a head of time, relying on last month’s paycheck to pay this month’s bills. I wake up every morning, shower, get ready, sit down at the kitchen table with my laptop and an OJ in hand. Quickly visiting the various accounts I have, I scan for anything unexpected and download the latest set of transactions to import into YNAB. Since every receipt I have is already entered into YNAB, it’s usually as quick as approving matches for the transactions. Double-check budget categories to ensure we’re on track for the month. Close laptop.

Less than 10 minutes to complete my daily financial check. When a new month arrives, I spend maybe 30 minutes updating some tracking spreadsheets. Done.

The past 8 months I have spent building up YNAB, various spreadsheets I use to track things like retirement contributions and Net Worth. Now, that groundwork has done. Our non-mortgage debt is almost gone outside of a few remaining student loans with small monthly payments.

It’s now about patience.

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Financial

Car Debt Free

My wife and I are now car debt free for the first time in 5.5 years, with the final payment for her car happening a couple of days ago. If all goes to plan, this will be the last time we ever have car loan.

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Financial

The Personal Finance Renaissance of 2014

Looking back, I’m certain that I will view as 2014 the banner year for my personal finances, after years of half hearted attempts at paying off debt and trying to figure out how to save for retirement properly. What did I do differently this year from years past?

The Early Years

The education system here in the United States does an unbelievable poor job teaching personal finances. I never once took a class that explained how to balance a checkbook, how retirement investing works, and how bad debt can be.

I remember taking my first job out of college, in 2004, and the 401k advisor for the company I worked for commenting about how great it was for me to be starting a 401k at the age of 22. Yet I felt so incredibly inadequate at preparing for my retirement. All I knew is that I should start a 401k. No one taught me how to actually manage it.

When I received my first student loan bills six months after graduating from college, I nearly collapsed. How could I afford this? Yet, I continued to go about personal finances blind.

Looking back, it is no wonder that college debt is so crippling in society today and that I see so many people barely getting by. None of us were taught how to do personal finance right.

The First Awakening

As early as 2008 I had decided that I was sick of barely getting by with our massive student loan debt. I had just married my wife and we had just bought a condo. I began listening to a Dave Ramsey audiobook during my commute to/from work every day. Dave Ramsey was the first person to explain to me how crippling debt really was. I was hooked.

I built a $1,000 emergency fund and immediately made a commitment to pay off our credit cards and stop carrying a balance from month to month. That success then translated to me paying off my smallest college loan that totaled up a $1,000. While there was no win from an interest perspective (the loan had a 0% interest rate), it as a huge psychological boost for me. One less monthly payment, one less sword hanging above me.

But there were aspects of Dave Ramsey’s philosophy that didn’t seem to match reality. $1,000 emergency fund seemed very light in hindsight. Also his investment advice seemed like garbage, not explaining how you get the mythical 12% return on a mutual fund.

Building breathing room & stupid mistakes

The easy debt was quickly paid off, but the larger debts were still a problem. And old habits returned: after paying off our cars in early 2009, those cars immediately had major problems within the next year and had to be replaced. Suddenly two more loans, for brand new cars, were on the books. Then in late 2011, we bought a house (with a larger mortgage!) that in hind sight we were much too early buying.

I made another stupid mistake during this time: whole life insurance. And just as worse, I transferred my rollover IRA from Vanguard (!) to this life insurance company as well, under the promise their financial advisor would ensure my investments grew. Stupid, stupid mistake in hindsight.

But we kept at the debt payoff march, thanks to some very timely improvements in our income. The college loan I absolutely hated, a private loan at Sallie Mae, was finally paid off in 2013 alongside one of our cars. Our monthly cash flow kept improving thanks to our careers progressing and these debts slowly going away, but I knew we could do far better and I still had zero clue about how to manage my retirement investments properly.

2014: The Year of YNAB and Index funds

In early 2014, I began diving into research on how to improve our financial situation more. This lead to two major changes about how we handled our finances.

The first was the discovery of software called You Need A Budget (YNAB). YNAB transformed how I did our family budget. Instead of throwing guesses into a budget spreadsheet, I now tracked every penny. Instead of using credit card float and juggling payment dates on bills to ensure I paid the bills (barely) on time, I now use last month’s income when paying this month’s bills, removing all worry. Some major lifestyle issues were found (such as going out to eat way too much) that we now could fix.

Spending plummeted, savings rates improved, and suddenly we were making much faster progress on our debt and retirement savings. All because of a $60 program that finally made budgeting easy to understand and follow. It’s already paid for itself several times over.

The second was the discovery of the Boglehead philosophy for investing. The idea of using simple index funds with low expenses captivated me. After years of uncertainty about how to invest my retirement savings properly without any guidance, I now had a template for how and why. Most importantly, I knew I could put together the plan myself. Investing is possible for us normal people. There is no need for a financial advisor. There is no need to change funds every couple of months. Set and forget.

So I revamped our retirement investments. Luckily my wife and I’s 401ks both had low expense index funds available. I moved my IRA back to Vanguard and killed the whole life insurance debacle. I more than doubled our retirement contributions. Combined with a solid market in 2014 and I gained a ton of confidence as the year progressed.

Stress Free Finances?

So the big question is, has all of this made our finances stress free? Have we made progress?

Knowledge is a double-edge sword. Before, I was ignorant and did not know what I didn’t know. Now, I’m sometimes scared at the large numbers needed to accomplish my family’s goals. I’m in some ways surprised and some ways not about how little the experts know about investing. Anyone who claims they can predict the future is almost certainty wrong. Stuff like that makes me a lot more stressed about certain things.

But, now I know a lot more and certainly more aware of what I don’t know. 2014 was basically learning about how to manage risk. This has made many aspects of my finances a lot less worrisome, especially since I learned at a still young age. Now that my finances are more or less set, I am focusing on many small but important things, such as documenting all of our important information and preparing for worst case scenarios, instead of trying to survive each day.

What’s next?

Yesterday, I upped my 401k contribution by another 1%, edging us very close to maxing my 401k in 2015.

Tomorrow, on New Year’s Day 2015, we are going to send a large payment to a 0% interest credit card to pay off the card and a medical bill from 2014. Why tomorrow? So I don’t throw the YNAB books off, since this money comes from our January budget.

On February 1st, my wife and I are likely to submit the last payment for her car, which will hopefully be the last car we ever have to finance via a loan. Between the credit card being paid off and the car, a massive increase in cash flow will happen.

By May, we hope to have six months of living expenses saved in an Emergency Fund.

We will then turn our attention to our last two student loans, hoping to have both paid off by late 2015, further improving our cash flow. By then, we also expect to be maxing out at least my 401k.

I hope on December 31, 2015, I will have lots of good news to share.

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Financial

YNAB: Cleaning up downloaded OFX and QFX files with Hazel

With You Need A Budget (YNAB), you can import a QFX or OFX file from your bank to help reconcile your transactions. However if you are like me, you probably now have a bunch of stray QFX or OFX files hanging around in your download folder. After this list reached 50 files recently, it made me wonder…could I use Hazel to automate cleanup of this folder so I don’t have to worry about it myself?

The answer is yes. A simple rule with two conditions are all that’s needed.

Hazel with OFX rule

This Hazel rule is simply matching whether the extension is a OFX file and whether the date added to my computer is not today. If both match, the file is moved to the trash. I have a similar rule for QFX files. Since I never use the QFX or OFX files after the day I download them, there is incredibly low risk with this rule. And one more bit of my computer life automated.

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Financial

Canceling the newspaper

A couple of days ago I canceled our local newspaper that we had delivered every Sunday, saving $9.30 a month ($111.60 a year). I won’t rehash the well documented decline of the newspaper industry, but these were the reasons why I canceled:

  • We never read the physical version of the newspaper. We always read online. The three articles a day limit online is usually enough for the articles we read.
  • The coupons were often for unhealthy, processed food, so we weren’t saving much if anything using them. Add in the time to cut out and organize coupons and it just wasn’t worth it for us.
  • The newspaper supports a viewpoint that I just don’t agree with.
  • Their web interface looks like 2001.

As if I needed another reason, when I emailed them to request cancelation. I didn’t get any reply. No retention offer, no sorry to hear you are leaving, nada. How did I know the cancellation took effect? The paper didn’t arrive today on my door step, which prompted me to check my online account and confirm that it was canceled. Great customer service…

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Financial

A simple phone call to save $30/month on Verizon Wireless

The other day I read a post on Katie Floyd’s blog about Verizon Wireless offering a new single line $60/month plan who’s features (unlimited talk and text plus 2 GB of data) were the exact same as my wife’s $90 cell phone plan. Today I did a brief phone call to Verizon and within 5 minutes switched over the new plan. Instant $30/month savings and no pain doing it. Well worth the time I think!

Disclaimer: this new plan does omit tethering according to Katie Floyd’s writeup. In my wife’s case, she doesn’t use tethering, so it wasn’t a loss for us.

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Financial

YNAB: Automate all the bills!

One of the major benefits of  You Need A Budget (YNAB) is that it removed the worry from me of automating all of my bill payments. Now every bill is either automatically scheduled via my Credit Union’s bill pay, automatically billed to a credit card, or an Electronic Funds Transfer (EFT) via ACH out of my checking account. How do I do that and ensure my peace of mind that I won’t overdraft our bank account?

It starts with the YNAB principle of giving every dollar a job. By doing that, you ensure you don’t spend what you don’t have. This is probably the toughest thing to get used to in YNAB. When I first started, I was living on credit card float, playing games with when paychecks arrived and when I actually sent out payments. Through lots of careful budgeting that first month, I was able to keep my available balance to budget at $0.00, never crossing into negative territory without a corresponding adjustment to bring it back to $0.00.

Once I was able to successfully get through a first month using YNAB and paid off my pre-YNAB credit card debt, suddenly everything clicked. Every time I used my credit card, I made sure my budget allowed for that without crossing into negative territory. All this time I was also growing a buffer so that I could budget for next month’s expenses. Practically every day, I would reconcile my transactions with YNAB, so at any moment I knew exactly what had cleared and what hadn’t.

My checking balances were growing, but that is because I was giving every dollar  job and not spending money I actually didn’t have. At the end of month two, when my next credit card payment was due (or really, any payment), I could simply send that payment in the day after. Because every dollar I needed for that payment was already in my checking account and already pre-assigned to every transaction on this bill, it was a simple administrative task of sending that payment in. How liberating!

Now, in month three of YNAB, I have decided to automate all of this. Our two main credit cards are set on AutoPay. 15 days after the billing statement is generated, a payment is automatically withdrawn from my checking account for that balance. This gives me plenty of time to review the bill just in case any oddities show up that missed my reconcile procedure. This allows me to shift my focus to building our full buffer and seeing what dollars I can spare for more retirement savings.

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Financial

YNAB Tip – Tracking costs of quarterly/yearly bills

I’ve developed a method of tracking those quarterly/yearly bills that don’t neatly fit into You Need A Budget’s focus on monthly scheduling. It’s really simple.

Showing some of my quarterly/yearly bill setup in YNAB
Showing some of my quarterly/yearly bill setup in YNAB

As you can see in the above screenshot, I list each of these quarterly/yearly bills in YNAB. In their title, I put when they come do (Yr for Year, Q for Quarterly) and then how much per month I need to set aside.

This makes it incredibly simple to budget every month. Glance at the Car Registration line, know it is $13 a month, and budget that amount. Done.

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Financial

YNAB Moment: First Credit Card payment

I just performed my first Credit Card payment with 100% of the transactions entered into You Need A Budget and accounted for in the budget. It was another “a ha” moment for me. No longer am I playing around with credit card float to ensure I have money in the checking account to pay it off. For the first time, I have confidence that the money I need for the bill is already accounted for and in my checking account. Win!

The only bit of awkwardness left for me with YNAB is that I’m also in the process of switching banks, so I have money in two places at the moment. Hopefully will have that cleared up in the next week or so as the direct deposits are moved to our new local credit union.