“Resolved that the best way to feel independent is to have a bank account. Then you’ll never need to ask anybody for favors, but will be able to help yourself. Let us keep your money safe for you.”
(via Mint.com Blog)
Category: Business
It’s funny because it’s true.
The Budget Problem.gif)
I’ve been trying to figure out how to manage a budget for almost a decade. When I was working through college, I purchased a copy of Microsoft Money 99 to categorize my income and expenses. I used it religiously, keying in receipts and importing downloaded transaction files. It worked pretty well: I knew what I was making, and where I was spending it. Microsoft issued Money upgrades every year and I faithfully bought every other version.
Getting married introduced a new level of complexity, but Sarah was accommodating to my system and stacked ATM slips, grocery receipts, and bills in my inbox so I could key them into Money. Microsoft shipped a feature to categorize my downloaded transactions, but it was often wrong — meaning I’d have to spend time reconciling transactions with my bank statements at the end of the month. This was my least favorite exercise and I often let data entry go a month or two before I would find a spare weekend to download and correct the data.
From time to time, I’d try to print reports from Money to show Sarah where we were financially. I was able to generate things like pie and bar charts, but the information never felt actionable and we would leave conversations about finances little more assured then when we started. Worse, printing reports from Money took reams of paper. Charts were always fit to a whole page, and inefficient tables produced pages of empty whitespace around a few columns.
Later changes in Money got me seriously considering a break-up. Money 2006 had a complete GUI makeover, using the same uglystick Microsoft perfected with Hotmail: what was once a refined user interface suddenly felt like it was designed by Fischer Price. Database corruption was common and, though quickly fixed with the Restore feature, got me wondering about the danger of proprietary lock-in — if that database was hosed, we were screwed. On top of all that, a pet peeve of mine was never solved over my eight years’ experience with Money: there was no real helpful way to categorize credit card payments as an expense AND a transfer.
A New Sense of Urgency
Last year we had our first child, and I had a whole new sense of urgency to solve the household budget problem. My wife left work in January and I didn’t know if our lifestyle was sustainable on a single income. After more than a little prayer, I set out to find the One True Metric of any household budget: income vs. expenses. It’s a number — income minus expenses — that tells you whether you’re breaking even at the end of the month. If it’s positive, you’ve got money in the bank; if it’s negative, then you’re breaking out the credit cards.
So, inspired by a simple graph of donations in my church bulletin, I produced a bar graph to show income, expenses, and the balance on a month-over-month basis. The good news was that we were in the black. Further influenced by a coworker, I set out to create a one page dashboard of our entire financial story. Unlike Money, I took the approach of cramming as many data points into this page as possible while maintaining readability. The end result was a two-page document that describes our finances from both a high-level overview and a detailed expense report for the year. Every month, I update the spreadsheet and post it on the refrigerator so we can refer back to it from time to time.
The Budget Overview
The first page provides an overview of our entire financial situation: the first column contains a month-over-month snapshot of Income vs. Expenses, followed by Key Expenses, and then Investment values. That’s followed by the second column which shows a month-over-month view of Debt, Savings, and Retirement. Trends quickly become visible at a glance.
Another iteration of the spreadsheet added a third column which shows year-over-year forecasts for Debt, Savings and Retirement — all of which are dynamically calculated from values I plug in right on the page. Across the top, I’ve provided our short- and long-term goals to remind us where we’re going.
The Budget Detail
The second page provides a month-over-month breakout of how every dollar flows in and out of our checking account. To the left, I’ve grouped categories by Income (green for good!), fixed expenses (yellow: not likely to change), flexible spending (orange: might change unexpectedly) and out of budget (red for bad!); I can also tell when a bill is coming due by the Day column. In the following columns, I can compare monthly average expenditures against our budget to anticipate where we need to adjust.
Following to the right, I’ve provided a “heat map” for each expense per month: red for over budget, gray for on budget, green for below budget (vice-versa goes for income categories). On the right, a Year to Date running total and percentages that tell me what portion of our income or expenses are made up of each category.
Finally, at the top right is the One True Metric: a percentage of expenses vs. income. If that number is positive, then we’re living within our means. If red, then I know we need to control spending somewhere before it becomes debt.
Sample Report
Link to an example of the two-page printout, populated with fake data, below.
I’ll provide a link to the spreadsheet itself and a technical overview later on how this report is actually generated, but I do have to say that producing this document would have been a lot more difficult — maybe impossible — without Wesabe, my financial management tool of choice. Their simplicity and openness really enabled me to pull this information together into Microsoft Excel in a very straightforward manner. Setting up an account with Wesabe is step 0 in this whole process, because you need to get a handle on cash flow before you can start to analyze your overall budget.
The Catch
I was very hesitant to share this spreadsheet. The more we used and refined it, the more excited I got about it. But, I’ve fallen victim to false hopes in software and process before (as any number of Palm devices I’ve owned could tell you). We’ve now been using the spreadsheet for a year, and I’m assured that it works. We get actionable, meaningful information about our finances that we can plan on and talk constructively about. My wife and I feel more confident in our finances than any other time in our marriage.
The problem is: it’s really wonky to use. You have to really know how to use Excel features like Conditional Formatting and Pivot Tables, and have a firm grasp on formulas. Adding new budget categories is simple, but not trivial; tweaking forecast charts requires fiddling with complicated amortization tables; and God help you if you want to plot new credit cards or savings accounts you don’t know how to use charts. I do this stuff for a living, so it’s straightforward, but still takes me a couple of hours at the end of every month to churn.
My hope is that I can invoke the lazyweb (or, better, the well-funded-capitalist-web or even the clearly-self-motivated-web) to take up making a real system of this idea. I want to be able to hand something to my family and friends and have them derive the same benefit with a tenth the technical learning curve it takes now. If you’re interested, getting in touch is good, but downloading, hacking, and posting your results on the web is better.
Getting this right could really change the lives of lots of people for the better.
We’ve been working aggressively to pay off our cards over the last year or so. Running the numbers on our situation has led to some surprising insights about the potential of a debt-free existence.
Let’s say you’re carrying the American average of $10,000 debt on your credit cards, but, rather than pay the insane 29% interest on most consumer cards, you were smart about it and moved the money to a 0% card. And let’s say you’re paying that money off at $400/month. That leaves you 25 months to pay the sucker off. Should you try to pay it off sooner?
Well, let’s take a look a what life would be like without the $400/mo payment. 400 times 12 months equals $4,800/year — not an insubstantial chunk of money. And, you’re paying taxes on that money for the privledge of sending it to the credit card companies every month. Assuming that’s around 30%, you have to earn $6,854 per year just to give it away to Uncle Sam and the bank.
Let’s say you make $65K per year: paying off the card completely would be like giving yourself a 10.5% raise! But let’s take that a step further: what if you paid off the card and invested half the monthly payment into a retirement account like a 401(k). You get to pocket $200 every month ($2,400 a year), but because a 401(k) is a pre-tax investment, you’re investing $285/mo in your future.
Knowing that many companies match retirement contributions — some match a dollar for every dollar you contribute — that means you could be saving as much as $570 a month, or $6,840 a year!
Now you’ve given yourself a 14% raise ($2,400 pocket money + $6,840 in savings), all by just paying off your credit cards as quickly as possible. And, note, that’s assuming that you’re not paying any interest on that debt — that adds a whole new level of urgency to paying off your cards ASAP.
A “friend of mine”:http://sapridyne.com calls the difference between his expendable income and his credit card debt his “shovel to hole ratio” — in other words, his ability to dig himself out of debt. Paying off your cards and saving the money for the future takes this analogy to a new level. Once you’ve got the hole filled, now you can start stacking bricks on it and really build something.
It’s a wonder more people aren’t doing this.
Dialed 800-528-4800 for American Express and spoke to Ash (ID#: 52899) about our account because I noticed finance charges in the hundreds.
Apparently, missing the payment deadline in January jumped our interest up from a 0% APR to _29.24%_.
Oh noes!
moar humorous pics
Engage indignant fury. Asked Ash to reverse it.
Hold music. Was told that he could submit a request to review the situation. Asked why we didn’t pay the bill on time last month.
Because your friggin’ website doesn’t have automatic bill pay.
Actually, we do offer electronic funds transfer by phone and online.
Yeah, I know: the EFT by phone costs $30, and the website is still not an automatic bill pay, right?
Sorry?
It’s not _scheduled_ bill payment, right?
Oh, yes, you’re right; will note on the account. Should hear back about the resolution and reversal of charges (if approved) in one to two billing cycles.
Can also note that we set up bill payment through our _own_ bank and you’ll receive payment in-full, on-time going forward.
Okay, sure.
Kthxbye.
___
Didn’t ask if it’s the 21st century and maybe have you heard of this thing called the internet?
Didn’t explain that every other bank we’ve had in the last five years has auto billpay, because at the end of the day, all I really want to do is just send you my money, will you please just let me send you my money?
Didn’t imply that an institution founded in 1850 might have the dignity of notifying customers of such a drastic account change and will you maybe consider the impact this might have on your brand?
Nope, saving that material for another round in four to eight weeks.
I couldn’t resist posting these ridiculous products that I just came across in a pet catalog: Crate Bumpers
People who buy this don’t realize they are just giving their puppy something else to chew.
Next, a Puppy Play Gym
Right, and make sure that you play some puppy Mozart for them so they are properly enriched at the same time. Next product slated to be released by this company: Puppy Einstein DVDs.
And my personal favorite: The Doggy Bedroom.
(I love the clothes and shoes in the little doggy wardrobe)
I mean, I know we hopelessly anthropomorphize our pets and make them our “fur babies”, but I think if you are about to spend $500+ on doggy furniture, you need to reconsider your household budget.
It starts with a glance at the crackberry a little after six. Usually my favorite time of the day to spend reading, thinking and soaking in anything I can find that has nothing to do with web 2.0.
It’s always a one-liner, maybe two. They haven’t yet begun with the words “Where’s my … ?” (opting instead for “I need”), for which I’m thankful. But it means getting on the VPN and spending a little time in Excel or Word or Acrobat. And delivering. Soon.
We call them KJs, short for knee-jerk assignments. There’s little time to think and less time to second-guess. Adam calls them “hero or goat” moments, which I think is funny, since I recently learned that “few animals walk taller than the he-goat”:http://www.gnpcb.org/esv/search/?q=proverbs+30%3A29-31. But I think he rather meant “the stupid kind”:http://www.theonion.com/content/node/40091 instead.
A dear friend whom we missed very much during the holidays poked me today: is this thing still on? Are we dead? I told her we were just busy, which is stupid: of course we’re busy — who isn’t busy?
The new year and holidays came and went mercifully well, though we honestly wondered if we were going to make it through this one. 2006, a year I thought couldn’t have come sooner on Dec 31, 2005, left as quietly as it arrived. The year was not without its heartaches, which often brought us to tears of grief and loss. But, it was also a year in which there were no murders on our street, no car accidents, no layoffs, no massive hurricanes cutting a swath through my mom’s backyard.
I took a new job, the city of Newark saw its first glimpse of hope in Cory Booker, and we saw Europe for the first time.
And, of course, we got knocked up.
***
Listening to back-episodes of the Gillmor Gang lately has got me wondering what this site would look like if it was more like an attention stream than a blog. There are a dozen web services that I use on a regular basis — all of which have RSS capability. Aggregating that content on this site, I think, would provide a more useful picture of what I’ve been paying attention to over the past several weeks.
I also wanted a web design that wouldn’t just look like I just cobbled together a bunch of text from disparate sites, and I wanted to use a metaphor that would fit in one screen, so you can literally see the stream of my diggs, pictures, blogs (here and elsewhere), and twittering in the context of time. Hence the timeline up top (a free AJAX widget provided by those bright guys at MIT). Ultimately, the timeline will show different colors for the varying web services, the current design is a start — what do you think?
***
I actually get paid to play with the web in my job. A large portion of my responsibilities lie with the team Intranet site, which our managing director wants to use as our main communication medium and platform for tools inside our organization. There’s a lot of room to breathe with this new gig, and I’ve been able to come up with some interesting and creative ideas, leveraging ajaxy web 2.0 goodness like MIT’s timeline. Did you know that the Yahoo Maps API lets you use their software inside a firewall? At a commercial organization? For FREE?
It also occurred to me the other day that we can use Microsoft Access as a content management system for the site — and not how you would think, either. We’re currently restricted by our web host to HTML, CSS and JavaScript (with some server side include capability), and /that’s it/: no ASP, no Java, and don’t even think about open-source. With daily pressure to get graphs, charts, figures, news, and documents on the intranet daily, what’s an overworked web-monkey to do?
Well, one might surmise that said monkey could build some tables inside of Access to accomodate news items; maybe design some sweet forms to do the data entry for the news “blog”. Writing code to export that content in the form of an SHTML include file in Visual Basic is trivial, and the monkey knows how to write a batch file that will FTP the exported file to the right location on the intranet. Done. Now any member of the team (technical or no), can log into this Access database, type in their stuff and click “Publish”. And the beautiful part is that it works just like Moveable Type. Sure, it’s not very web 2.0, but it’s agile, doesn’t require a bureaucratic change request process, and will be up and running by tomorrow (I started working on it today).
You can also import all sorts of data, analyze it with queries, and output HTML tables which, combined with the PlotKit JavaScript library, can be graphed and charted with ease, which I’ll leave as an exercise for the reader.
***
Sarah got me a few books on fatherhood for Christmas this year, which I’ve just started plodding through (I figure they’re due by March 27th!). Aside from adding a number of to-dos to my list of things to talk about during our “Family Meeting Night”, it’s been a welcome sanity-check on just what we’re getting ourselves into. I told Schmoo tonight: “did you realize that that baby has to come /through/ your pelvis?” To which she replied, “well, how else did you expect it to come out?” And, of course I knew this had to be so. Only, it was only /too/ clear when I saw a drawing of an inverted baby floating through a skeletal pelvis on page 51 of The Birth Partner.
***
I mentioned the Gillmor Gang, which, if you check out my Digg profile, is one of my dugg podcasts (note in passing to the Digg crew: please make it easy to check for the latest podcasts in my digg profile, thanks). It’s actually defunct now as Steve’s funding or time or patience had run out with his podcast provider, the last “Thanksgiving Gang” having been recorded way back in November. Undaunted, I’ve been making my way through his past episodes, whiling away the hours hacking databases and spreadsheets at work, listening to the crew of marketers, journalists, and entrepreneurs talk about their work, their predictions for the industry, and generally b.s. about the personalities behind the press releases.
It’s a brilliant model for a podcast: six or seven industry insiders get on a conference line and talk about whatever they feel about talking about. I’d love to use it one day — it reminds me of the days back at Ironworks when we’d just hang out and talk about the world’s problems until the middle of the night.
“Jason Calacanis”:http://www.calacanis.com, one of the resident entrepreneurs on the show, has been downright inspiring. His narrative of growing up a poor kid in the Burroughs and covering the tech scene in New York during the bubble before he launched his own blog network resonates with me. Between him and web 2.0 wonder-boy Mike Arrington and totally random (emergent?) Christian cartoon ex-Silicon Valley blogger Hugh MacLeod, I sometimes find them grasping towards the intersection of art and business — that place you get to when you find you’re doing great work, what you later will consider your life’s work. These guys love what they do, and I think for many of them, the day-to-day job — of writing, of deal-making, of building, of whatever — has transcended getting a paycheck into a craft. It’s always encouraging to those of us in the trenches to hear that it doesn’t always have to be this way: that there’s more important and interesting work out there waiting to be found.
***
I discovered Wesabe the other day: it’s like Microsoft Money for the web, with half the features. If it hasn’t been said before, let me be the first: CONSUMER BANKS (ESPECIALLY THE BIG ONES) NEED TO PROVIDE THIS KIND OF SERVICE IN THE NEXT 18 MONTHS OR DIE OF IRRELEVANCE. It’s actually offensive to me now that my bank doesn’t automatically provide me with analysis tools to track my spending and investment habits.
I actually did receive a year-end statement from my Credit Union last year that attempted to break out my spending into various categories for the first time ever, which I very much appreciated. But the first thing I did when they asked me to fill out a survey was to tell them: great job with the year-end spending breakout, now please do it every month, and put it online within a year.
Microsoft Money is a tragedy of an accident of a failure of a software product. I’ve been using it since 1998 and, much like the rest of Office, have come to loathe it in the last two or three years. They’ve added features I don’t use, they’ve left reporting bugs that drive me crazy, they’ve attempted every bit of lock-in they could think of to prevent me from getting my own personal financial data, and they’ve screwed with the user interface — which once looked like I was logging into a sophisticated, stately banking application — so that it now looks like a bad imitation of a Fischer-Price toy.
Wesabe is the first salvo of web 2.0 coming to banking apps, and I fully expect this trend to continue as the privacy issues are hashed out. I’ve already switched completely: how could I pass on instant financial analysis available anywhere I have a secure web connection? Now I’m just trying to figure out how to get five years of data out of Money to load into Wesabe.
***
Well, if you made it this far through the brain-dump that is this blog, I wanted to thank you, dear readers, for sticking around through these past nearing-five years of Our Story. That some people with whom I’ve had passing encounters (such as “Nikkiana”:http://everytomorrow.org, “Sean”:http://semanticbible.org and “Dale”:http://wp.theoblogical.org/) continue to read this blog just amazes and humbles me. Thanks for reading.
***
Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don’t settle.
– ??Steve Jobs??
I’ve never resigned from a job before. The experience was a little surreal, even while I was having the conversation with my boss. His look of shock helped, though.
I wasn’t looking forward to it at all. I have a decent working relationship with him, but my manager and I haven’t been close. I hadn’t the slightest idea of whether he was going to laugh, be furious, or get strangely quiet. Getting a new job can be a lot of fun, but I think only the most bitter employees look forward to quitting.
There’s nothing quite like changing jobs to teach you about the sovereignty of God. I had breakfast with Frank that morning and he raised the question: “So, what have you been doubting Him about lately?” I don’t know whether it’s the corporate world or because we constantly struggled with finances when I was growing up, but I’m often pressed with the weight of responsibility of providing for my family.
Beyond the immediate, we also talked about the idea of one’s “Life’s Work” and of having “arrived” in one’s own career. I think artists struggle with this question in a more dynamic way than many business people, but I think everyone working a job they don’t like wonders what they should _really_ be doing with their lives.
In the end, after the initial shock, my manager was ecstatic for me. He said I was one of the best people he’s worked with, that my career growth was limited in my current role, and said I made absolutely the right decision. I was floored — of all the things to come out of his mouth, I expected this the least.
My new job within Citigroup starts at the end of the month, and then we leave for three weeks for Europe. I’m looking forward to stepping back from work for a while and getting some perspective on what it really means to eat and drink and find satisfaction in my work.
Darryl came by the old stomping grounds on his way to the color printer. “Hey Ken, you’re good with databases and web development, right?”
“Sure, why?”
“‘Cause Adam has a job he’s looking to fill. You should ask him about it.”
“Okay, sure, I’ll send him an email.”
***
h3. August 4^th^
“monster interview questions”:http://www.google.com/search?q=monster+interview+questions&hl=en → “Monster: At the Interview”:http://interview.monster.com/archives/attheinterview/ (3:51 PM) → “Six Interview Mistakes”:http://interview.monster.com/articles/sixmistakes/
***
I met Dan for lunch after having bumped into him on Church Street two months before. I know him, but not really well — just some passing conversations in church and during his work in his “former life.”
We met up over pizza and swapped stories about work. Dan is really excited about his job: he’s a product manager for the CRM system at an education and curriculum company, and they’re branching out into other enterprisey information tools like ERP. He’s being stretched, and he’s learning the nuances of project management in a large organization. He asked me how things were with my job.
I told him what I did, and that I was sorta working on making a change. I mentioned in passing that I was concerned that my leaving my group was going to be pretty disruptive with a major project coming up in September, and that I might try to work out helping with that project for a few weeks in my new role. “No,” he stabbed a plastic fork in the air, “two weeks, that’s it.” But I don’t want to burn any bridges, I said. “Fine, then don’t burn any bridges. But just give them two weeks. You’re too talented to be doing things like taking meeting minutes and scheduling video conference calls.”
***
h3. August 13^th^
“transfer internally career advice”:http://www.google.com/search?q=transfer+internally+career+advice&hl=en&lr=&safe=off → “Being Bold Blog: Managing Internal Transfers”:http://www.boldcareer.com/blog/archives/2004/11/15/managing_internal_transfers.html (12:30 AM) → “Transfer Internally the Right Way”:http://change.monster.com/articles/internaltransfer/
***
I ran into Marty as I was walking across campus the other day. We exchanged pleasantries and he asked what I was up to. “Oh, the same old thing,” I told him.
“The _same_ old thing?” he asked, incredulous — and maybe a little disappointed. This same manager shook my hand in his office before he left the group and told me in no uncertain terms that I should be looking for another job. He thought well of the work I’d done for him during the eight months we’d worked together, but that he was unsure of the future of the group and the stability of my role.
After a quick internal calculus, I decided to keep my mouth shut, “Yeah, a few tweaks, but pretty much the same old thing.”
***
h3. August 17^th^
“rands resignation checklist”:http://www.google.com/search?q=rands+resignation+checklist&hl=en&lr → “Rands In Repose: YOUR RESIGNATION/LAYOFF CHECKLIST”:http://www.randsinrepose.com/archives/2002/06/29/your_resignationlayoff_checklist.html (11:18 AM)