Wednesday, June 18, 2014

Two Of The Finance Tools I Use

Whether you are trying to stick to a budget or create one from scratch, you'll have a hard time if you can't account for where all of your money is going. Here are a couple of apps that I have found invaluable.

Easy Money Android App - This is a money manager app that I use several times a day. I long ago gave up my paper checkbook and switched to using this app for tracking my checking account. Not only that, but I also use it to track my savings accounts and credit cards. And since it's on my phone, which I always have with me, I can enter expenses as soon as I make them. For instance, when I put gas in my car and pay with my debit or credit card, I enter the amount into the app right there at the pump. No need to get a receipt (so yay for the environment). You can easily track payments from your checking account to a credit card by using a Transfer Funds option to move money between accounts. The app tracks cleared and reconciled entries and balances, so balancing the app against your bank statement is as easy as putting a check mark next to each entry.

You can categorize expenses and create reports or budgets. You can set up recurring bills. You can even take a photo and attach it to an entry, which can be handy if you need documentation for business expenses. There are several canned reports that are readily available and you can run them for a set timeframe, such as current month, last month, etc., or a custom time frame that you define.

A nice feature is that once you have assigned a category to a vendor, subsequent entries for that vendor will default to that category, which speeds up data entry. For example, when you first create an entry for McDonald's and assign it a category of "Eating Out", then subsequent entries for McDonald's will default to that category. You can override that with a different category if you want too, however.

Once you've used the app for a while and categorized the majority of your expenses, you can create budgets. The app will track how much you spend in each category and you can view a report showing how much of your budget remains.
The app does give you the option to set a 4 digit security code that must be entered before it launches, which can help prevent strangers from seeing your finances in the event you lose your phone. - I started using about 6 months ago and have found it to be a great tool for getting a consolidated view of your finances that might be spread out over several different accounts and at several different institutions. The scary thing about Mint is that it needs your login credentials for each account you want it to track. Basically, Mint gathers data by logging into the websites of your financial institutions and gathering account data. Mint goes to great lengths to emphasize their security, often by pointing out that their system cannot initiate any transactions - it basically is a read only tool. But that is somewhat disingenuous because, although their tool is ready only, if someone hacks their system and gets your login info, there is nothing to stop someone from going to the financial institution's website directly and logging in as you and wrecking havoc. They list the security precautions they take here. Mint is owned by Intuit, makers of Quicken, so they have a vested interest in maintaining top notch security to protect the reputation of their company.

After some research, I decided to go ahead and start using Mint and I gave it the keys to my financial kingdom. I do however, utilize unique, randomly generated passwords for each site and use a secure password manager to keep track of them. That won't help me if Mint is hacked and all my logins are stolen, but if only some are stolen, the damage would be limited.

Anyway, once you give Mint access to your bank accounts, every single transaction is automatically loaded. You don't have to worry about forgetting to enter transactions. Mint can also track your brokerage accounts and company 401(k) accounts. They can't do everything however. For example, the 401(k) provider my company uses is not supported by Mint, so they can't automatically download the info from their website. I've submitted a request for them to support that company and once enough people make the same request, they will add support for it.

Like the EasyMoney app, Mint works by assigning categories to each vendor. The nice thing is that Mint already knows how many vendors should be categorized. And again, if you select a different category, it will continue to use that categorization for subsequent entries.

A function called Trends lets you see exactly how much you are spending  on each category. You can even break it down to individual stores, if you want. This is a great way to see where your money is going and is immensely useful if you have not yet set up a budget.
It's also easy to create comparisons between two time periods, so you can see how your spending has changed.

Mint can also be configured to send out email alerts when something happens in your accounts - when you drop below a certain balance, get hit with a finance charge, etc. It can also send out a weekly summary email.

One of the features I like is the Goals feature. You can define certain goals and a deadline for meeting those goals. Mint will then determine how much you need to save weekly to reach that goal. If you are saving for that goal in a dedicated account, you can link that account (or accounts) to a goal and Mint will automatically track your progress.
I'm a bit behind on my Tesla goal.

There are some limitations to this. For one, an account can only be assigned to one goal. Another limitation, and one that really affects me, has to do with how Mint handles accounts it can't get info on.

For example, I have several hard money loans. They obviously don't have a website that Mint can access to obtain transaction info, so to enter this data into Mint, I need to enter it as an asset type of "Other." When you do this, you basically give Mint a lump sum value for the account and you have to update it manually. But these types of accounts are not allowed to be assigned to Goals. This can create some discrepancies. For instance, I have a retirement goal set up, but because my company's 401(k) provider is not recognized by Mint, I had to set it up as an "Other" asset type and I can't include it in my retirement goal. This causes my goal progress to be understated. There are similar issues with vehicles. You can tell Mint the year, make, and mileage of your car, and it will figure out the Kelly Blue Book value and include that in your net worth calculations. I'd like to include this amount in my Tesla goal, because when I sell the car, the money will be put towards the Tesla. Mint won't let me do that.

Mint does have a a community message board and you can request features and changes. From what I have seen however, they are not very responsive. I've seen requests to make the above changes from many people over a couple years and they have still not been implemented.

Mint is free to use and they make their money by offering you ads and suggestions for financial services. For example, if Mint detects you got charged a yearly fee on a credit card, it will pop up a suggestion that you apply for one without a yearly fee from one of their partners. These are fairly unobtrusive ads and you can disable most of them.


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