Archive for the 'Budgeting' Category
Wednesday, April 21st, 2010
A couple of folks asked me for an update about my Ooma VoIP Telephone system, which I bought for $158 to replace my POTS landline in early December and provides me with unlimited free local and long distance “forever”.
Well, it’s been working great for the last 4.5 months. The best compliment I can give about it is that I never think about it, just like with my old landline. I’ve never experienced an outage yet; The dial tone is always there. (I hope I didn’t just jinx myself. You can follow Ooma on Twitter for status updates.)
Caller ID and all that jazz works fine. I can send and receive faxes. I check my voicemail online from work or when traveling. I have read complaints about dealing with Ooma customer service, but I wouldn’t know because I’ve never had any problems. I already shared my number porting experience.
I don’t have the new Ooma Telo nor do I pay for $10/month Ooma Premier service, which offers things like a second line, better PureVoice clarity, enhanced Voicemail, and other stuff I don’t need. I’m happy for the 25% of customers that reportedly do pay for Premier, because it helps ensure that my service stays free. 
At $158 spread over the last 4.5 months, I’m now down to $35 a month for Ooma and always dropping. As for current pricing, Amazon has it at $245, back up close to full retail. Right now, Radio Shack has it $180 before a $15 off $125 plus free shipping link and plus another 2.4% back, both available from BigCrumbs, for a total net price of $161.
Update: Sold out at Radio Shack… CompUSA.com has it for $200, and you can get 10% back via Bing Cashback for a net price of $180.
Posted in Budgeting, Frugal Living | 47 Comments »
Thursday, February 25th, 2010
A reader recently asked me about what I thought about the fact that financial aggregation site Mint requires you to give them limited Power of Attorney when using their website. There was also a recent discussion on Bogleheads about it. You can find it in the Terms of Use Agreement page.
For purposes of this Agreement and solely to provide the Account Information to you as part of the Service, you grant Intuit a limited power of attorney, and appoint Intuit as your attorney-in-fact and agent, to access third party sites, retrieve and use your information with the full power and authority to do and perform each thing necessary in connection with such activities, as you could do in person. YOU ACKNOWLEDGE AND AGREE THAT WHEN INTUIT IS ACCESSING AND RETRIEVING ACCOUNT INFORMATION FROM THIRD PARTY SITES, INTUIT IS ACTING AS YOUR AGENT, AND NOT AS THE AGENT OF OR ON BEHALF OF THE THIRD PARTY. You understand and agree that the Service is not sponsored or endorsed by any third parties accessible through the Service.
Sounds serious! My first thought is that without this clause, Mint could not perform their intended service of being a one-stop shop for all of your online financial accounts. They would essentially have to walk up to every single site and ask for permission to be an official portal for them, yet at the same time be released from liability. That would be basically impossible.
In the end, you are giving up some of your rights in exchange for the convenience of having all your accounts checked for you at once. If you are worried about something going wrong with either Mint, a rogue employee, or a malicious hacker getting access to your personal information, then you might consider limiting what accounts you link.
Along that line, I would think that credit cards would be both the most helpful to link since you can then track your expenses, while also having the least exposure to fraud. This is because as long as you report any fishy behavior to your credit card issuers as soon as you find it, you likely won’t be liable for any unauthorized charges. (And if you monitor regularly with Mint, you’ll be that much more likely to notice…)
However, I for example would be more hesitant to link my Vanguard and Fidelity accounts with the bulk of my IRAs and brokerage accounts, as the benefits aren’t as great. Most of my net worth is stored at those brokers, and any screw-up would be highly stressful. Besides, I can usually check my balances at those sites separately with little added effort.
What do you think?
Posted in Budgeting | 28 Comments »
Friday, January 8th, 2010
It’s Friday, so here’s an easy slam dunk resolution involving emergency funds. If you’ve done any sort of financial reading lately, you know that many folks recommend having at least 3-6 months of living expenses put aside. Given the current high unemployment rates, I personally wasn’t comfortable until I had 12 months of expenses. Not only could you lose your job, but there could be unexpected health expenses, car repairs, or whatever. But that’s not the main point here.
The easiest way to build your emergency fund is to put it on auto-pilot. Your task for today is to schedule an automatic, repeating monthly transfer of $100 into a savings account.
Just about every savings account available allows you to set up an automatic monthly transfer from your checking account. Here is how to do it with ING Direct’s Automatic Savings Plan. I just chose $100 as a round number, but change it as you like.
(Perhaps you’ve already got a healthy emergency fund. If so, then you can apply this resolution to another specific savings goal, like a new car fund or in our case a pet healthcare fund to replace costly pet insurance.)
Instead of telling you more reasons to do it, I’m going to try to counter any reasons NOT to do it.
- Don’t wait until tomorrow. It won’t get any easier later on, only harder.
- Don’t open up a new account, if you already have one available. If you don’t, one of the fastest applications I’ve seen online is at ING Direct. Takes less than five minutes.
- Don’t worry about interest rates. It doesn’t matter if your savings account doesn’t earn as much interest as some of the top accounts. This can all be changed later.
- Don’t worry about not being able to keep it up. Start with as much or as little as you feel comfortable. It doesn’t matter if it’s $100 or $1,000. I don’t even care if it’s $10.
The hardest part is starting. You can always change your mind later, it’s still your money. But hopefully, in several months you’ll wake up to a big chunk of money you didn’t even realize you saved.
See the rest of my 2010 Instant New Year’s Resolutions here!
Posted in Budgeting, Goals | 17 Comments »
Tuesday, December 29th, 2009
I was catching up on some blog reading and caught an old post from Plonkee about the different ways that couples can manage their finances. The three different methods were categorized as communist, socialist, or capitalist. Rather controversial, eh? Don’t get too excited folks, just read on:
Communist: One Big Pot
According to Wikipedia, communism is a social structure in which classes are abolished and property is commonly controlled. Thus, no matter what each person earns, all their income is deposited into one central joint account, from which all expenses are paid from as well. All assets including property, investments, and cash are owned together.
Socialist: Earn More, Pay More
Under this structure, common shared expenses such as rent and utilities are paid via a joint account. Let’s say one person makes $75k and the other person makes $25k. Then if the monthly shared expenses are $1,000 per month, they would pay $750 and $250 respectively. The contribution is proportional to income.
Separate expenses such as entertainment, gifts, or clothing are paid for out of personal accounts. This allows each person to retain some individual control of their money.
Capitalist: You Pay Yours, and I’ll Pay Mine
Finally, we have the option where purely shared expenses are simply split straight down the middle. Differing income levels don’t change anything; If you make more then you keep more. Everything else is paid directly by each individual. Theoretically, each person is thus incentivized to keep their own expenses down, as nobody else helps to pay for it. There is “my money” and “your money”. This is often how platonic roommates manage their finances.
Just Call Me Karl
Although I usually don’t align myself as communist, I must admit that that is mostly how we manage our money as a married couple. It’s also helpful that we both work and earn comparable incomes (a least for now). We do add in a small “adult allowance” fund where we can spend money on whatever with no questions asked. Besides that, while we definitely don’t always agree on things, I think the combination of open communication and the passage of time has gotten us relatively comfortable with the “one pot” setup.
Now, I don’t think any one type is necessary better than the other, and know couples of each persuasion. I do have one question for the capitalist-types, though: What about retirement? Do you split that too? What happens if one person doesn’t invest adequately in retirement?
Posted in Budgeting, Family | 30 Comments »
Thursday, December 10th, 2009
I received my Ooma Hub/Scout phone system from Walmart today, and it is already up and running. Thanks for your comments, and here’s was my setup experience. It literally only took 10 minutes before I was both calling out and receiving calls on my new phone number. The best part is that I didn’t have to make any tech support calls to set it up!
- In the box, there is the Ooma Hub, the Ooma Scout, and the usual AC adapters and ethernet/phone cables. Since we only have one telephone base with 3 handsets, I haven’t even opened the Scout yet (eBay?).
- Before connecting anything, you go to Ooma.com/activate and type in an 5-digit ID code from the bottom of the unit. Then you can either go ahead an pick a free phone number (check number availability) or port your existing number. Porting costs $40 or is free with a 1-year subscription to their Premium service ($120). You can just pick another number for now to test call quality, and then port later.
- Next, setting up the hardware is pretty simple. If you are like my household and have a cable/DSL modem connected to a WiFi router, then you simply place the Ooma Hub between the modem and the router like so:
- After turning everything off and then on again, wait for the indicator light on the Ooma to go from red to blue to indicate that it is ready. You then connect your phone and listen for the distinctive dial tone. If you’ve already disconnected your POTS landline, you can plug the Ooma into any wall jack and use your existing home wiring to connect additional phones throughout the house.
That’s it, I was done! (Okay, setting up my free voicemail took another minute.) I like that they didn’t ask for credit card information, as I’m hoping to not pay anything ever again!
Made some long distance calls and so far the quality has been good. I’ll have to use it over the next few weeks to see how reliable it is and if it interferes with my broadband internet speed. If anything, I wish I bought this thing earlier.
Posted in Budgeting, Frugal Living | 13 Comments »
Monday, December 7th, 2009
As I just mentioned in the post below, I bought an Ooma Hub/Scout system which advertises Unlimited Home VoIP Phone Service with no future monthly fees. Features included free domestic long distance, 911 service, caller ID, voicemail, and call waiting. It was a bit of an impulse purchase, as I can still return it later but who knows how long the 20% cashback will last.
One major concern of Ooma is that it seems like just a matter of time before the FCC shuts it down. I have done some reading on the technical background of Ooma, but not enough to really write intelligently about how their business model can last long-term. I’m basically betting it’ll be around long enough so that I’ll at least break even. (Upfront cost/monthly savings = # of months to break even, often less than 10 months for those with landlines or Vonage.)
After reading a few reviews, there seems to be no real voice-quality difference between Ooma “Classic” and Ooma Telo, the primary difference being a sleeker design and some added multi-handset functionality. However, the new Ooma Telo is subject to a “regulatory recovery fee” of $12 per year after the first year. Not huge, but still not “100% free”. Ooma “Classics” are exempt from this fee per the Ooma Blog:
New or Unactivated Ooma Hub/Scout Combinations
a. No changes to your promised feature set, includes voicemail and a 60 day Premier Trial.
b. If you want to purchase an annual Ooma Premier subscription, you can do so until 12/31/09 at $99.99, after that the price will go up by $20 to $119.99
c. No regulatory recovery fee will be charged
I really like the idea of not having any recurring phone bills, and I might even get fax to work on it. I hope to get it soon and provide a more detailed review.
What are your thoughts? What’s keeping you from buying this?
If you have an Ooma already, what do you think of it?
Posted in Budgeting | 30 Comments »
Tuesday, December 1st, 2009
No, I didn’t get an iPhone. But I did get an iPod Touch over Thanksgiving weekend. (Hurray for Amazon matching Apple Store Black Friday prices!) I know, I know, as a financial blogger I’m supposed to shun such trendy toys, but it was a gift! My parents got one for my sister as well as themselves, and I am assigned to teach them how to use it when I visit in December.
(I’m excited because my HTC TouchPro2 with my $30 Sprint SERO can be hacked to share it’s 3G connection as a WiFi Router, so I can get my iTouch online anywhere I have cell coverage. Nearly an iPhone!)
Another perk is that now I can review all those personal finance apps out there. I know there are a lot of budgeting apps, the Mint.com app, and various ones for banks and brokerage companies.
What are your favorite apps? Which ones were worth the money, and which ones weren’t? Which free and non-free apps would you like me to review? Share in the comments below.
Posted in Budgeting, Tools & Calculators | 37 Comments »
Tuesday, September 15th, 2009
Yesterday, Mint.com announced that they were acquired by Intuit for $170 million. Not too shabby. Intuit is best known for personal finance products such as Quickbooks, Quicken, and TurboTax. They also released Quicken Online last year, which was basically a direct competitor to Mint.com. Both aggregate your spending and income by automatically accessing the data your financial websites, and analyze your habits for you. However, according to their press release, Intuit intends to keep both of the them separate:
Intuit intends to keep both the Mint.com and Quicken Online offerings, with each serving separate and equally important purposes. Mint.com will become the primary online personal finance management service that is offered directly to consumers by Intuit. Quicken Online will connect Quicken customers across desktop, online and mobile to deliver easy, anytime-anywhere access. This will help accelerate Intuit’s ability to create products and services that make managing money easier for all Intuit customers.
One of the benefits of this deal seems to be that concerns about data safety might be alleviated. Millions of people trust Intuit with their tax returns, which are probably some of the most sensitive data out there, so they might be more comfortable with sharing their financial website passwords with Intuit.
On the other hand, the competition between Quicken Online and Mint.com probably inspired some extra features and also made sure that both services remained free. According to WalletPop, there are “no plans” to charge for either of these services for now. Both sites have improved a lot recently, I just hope that continues.
Posted in Budgeting | 13 Comments »
Thursday, August 13th, 2009
Here’s an interesting graphic of the spending breakdown for the average U.S. consumer. It’s based a theoretical household “unit” consisting of 2.5 people, not individuals. Looks like such a household unit spends approximately $50,000 per year. Click on image for larger version.
I guess taxes are not considered an expense by the government. 
I’m not sure where leisure travel or vacation spending falls under, perhaps split as transportation and housing?
The image was created by Visual Economics, using information taken from the Consumer Expenditure Survey by the U.S. Department of Labor.
Posted in Budgeting, Frugal Living | 24 Comments »
Friday, July 24th, 2009
I was reading an article in Wired Magazine about improving one’s health with new personal metrics devices such as the Nike+iPod kit, which is a neat device that helps you easily track and records details about your running. Did you know that all it measures is the amount of time your foot is on the ground? (That time is inversely proportional to your speed.)
The Hawthorne Effect
In the 1920s, the management at the Hawthorne Works factory decided to try some things to improve productivity. When they improved the lighting, workers assembled parts faster. When they were given more breaks, workers assembled faster. But then, the reduced the lighting back to normal, and productivity was still increased. After months of tinkering, when all the work conditions were set back to the original state, productivity remained higher. The fact that they were being watched was the primary reason things changed.
The idea that the act of observing itself will change the phenomenon being observed became known as the Hawthorne Effect (also known as the “observer effect”), and has since been confirmed by many other follow-up studies.
Application to Personal Finances
While this seems like common sense, it is actually quite powerful to know that simply noting down what you spend every day or month in itself may improve your finances. You could set a budget or analyze trends later, but don’t worry about that for now. Don’t judge your expenses. Don’t try to change them. Just track them.
On that front, online aggregation sites like Quicken Online, Yodlee, Mint, and Geezeo make the data collection easier, just like the Nike gadget takes away the stopwatch and logbook. They all pull up your transactions automatically (if you trust them with your passwords and data). Otherwise, I still see nothing wrong with using simple pen and paper and/or a spreadsheet.
Making a Habit
Nike also found that once a Nike+iPod user uploads five runs to the software, the user is much, much more likely to keep running and uploading data. Maybe it would be good to set a goal of tracking expenses for… 5 weeks? 5 months? We need time to get addicted to the stats!
Posted in Budgeting, Frugal Living | 18 Comments »
Wednesday, June 17th, 2009
If you use Microsoft Money to manage your finances, you should know that Microsoft will no longer be selling MS Money after June 30th, 2009. From the Microsoft product page:
With banks, brokerage firms and Web sites now providing a range of options for managing personal finances, the consumer need for Microsoft Money Plus has changed. After suspending annual updates of Money Plus in 2008, Microsoft is announcing today that we will no longer offer Microsoft Money Plus for purchase after June 30, 2009.
But more importantly, your online services will also be discontinued soon. This means stock and mutual fund quotes, tax rate updates, and banking services like their billpay.
For Money Plus Deluxe, Premium and Home & Business customers, online services expire two years after initial activation or Jan. 31, 2011, whichever is earlier; for Money Plus Essentials it is one year after activation or Jan. 31, 2011, whichever is earlier. You can verify your expiration date in Money Plus by selecting Help / About Microsoft Money; it appears to the right of the serial number.
Ditched by Money, but Quicken Wants You
I suppose that this means Intuit wins the desktop personal finance software war. Indeed, it looks like Microsoft has really given up, as their last step is to make it easy for users to move to Quicken.
We’re working closely with Microsoft to develop an easy way for Money users to transfer data into Quicken desktop products. We’re assessing how we can make this capability a reality in conjunction with the release of Quicken 2010 in the fall.
An Intuit representative e-mailed me saying that they are working quickly on making a conversion file that would seamlessly move data from Money to Quicken.
In the meantime, Quicken is directly targeting the Money orphans by offering up to a $50 discount on Quicken products until the end of June: $20 off Quicken Deluxe, $30 off Quicken Premier and Home & Business, and $50 off Quicken Rental Property Manager.
Free Quicken Online & Others
But wait, MS Money says the primary reason they shut down is that many banks and brokerages are offering free aggregation services which provide a similar service. Indeed, there are also standalone aggregation sites like Yodlee, Mint, and Geezeo. And if you want a free desktop finance software with double-entry accounting, there is the open-source GnuCash, though it certainly lacks some polish.
But wait, why didn’t they just do their own online version? Intuit introduced Quicken Online, which is now free and tries to add a little Quicken flavor to the usual aggregation model. More competition would have been good. I guess they spent all their energy on Bing.
Posted in Budgeting, Tools & Calculators | 95 Comments »
Monday, January 26th, 2009
For the past several months, we’ve been using a crude but effective way of tracking our overall spending each month. The basic idea is that we only put the amount of money we actually want to spend into our primary checking account, and then pay all our bills out of that account. Everything else goes directly into either a high-yield savings account, an IRA/401k/403b, or a brokerage account.
Add in an appropriate buffer balance to avoid overdraft fees, and ideally our bank balances should look something like the sinusoidal line below:
So what is a proper spending goal? I would recommend looking at your current spending levels first, and then deciding on a numerical goal of say $X,XXX per month.
Or, for us, we decided that we wanted to live on only one of our incomes (the lesser one). So only that paycheck is direct deposited into our “spending” account, minus retirement account contributions. We pretend this account is all we have, carefully watching that the balance does not go below the buffer level. (We are signed up for e-mail alerts if we do hit that barrier.)
In addition, we note the high and lowest balances for the last 30 days. This helps keep a rough trend that we are headed in the right direction. Here is an graph made from the actual daily balances of our checking account from the last few months:
Benefits
The biggest benefit is that because it is so simple, we actually do it! By keeping all our other transactions separate, it really helps us pretend that we only have a certain income. It’s a reflex that when I see the balance get low, I get nervous and start changing my spending behavior. If we eat into the buffer one month, then the next month we have to dig our way back.
Also, looking at the big picture in this way prevents the cheating that sometimes happens when we have a large unexpected expense like a plane ticket to visit sick family or a surprise car repair. It’s so easy to ignore that chunk and say that we still did okay our regular categories like “Gas” and “Groceries”. And we all have unexpected expenses, right?
Drawbacks
This system really works best for those that already have a basic idea of what they spend each month, and aren’t looking for drastic changes. It does not provide any deep analysis, such as identifying areas to cut back. We’ll have to do that separately, or use another budgeting system.
Posted in Budgeting | 32 Comments »
