Okay, okay, that was a lot of questions, but here is one final question: Are you ready to take control of your finances and answer positively to each one of those questions above? If you said yes, read on. There are two steps to getting your money in order, and thus your life in order: 1) Read Dave Ramsey’s book The Total Money Makeover
I want to talk about the best website I’ve found in a long time, and that is Mint.com. My sister and brother in-law told me about it, and since then, Laura and I have not looked back. Even if your finances are in perfect order, even if you are Bill Gates (thanks for reading my blog, Bill) and certainly if you haven’t attained your financial goals, you owe it to yourself to sign up for a free account at Mint.com.
Let’s face it, budgeting stinks. We feel like all it does is limit us, it’s hard to keep track of what you’ve spent and what you haven’t, and it’s cumbersome to type in all our receipts into some software or notebook and do all the math involved in knowing how much we have left to spend on each category. For about a year, Laura and I have had an excel file that lists our budgeted items like car insurance, toiletries, eating out, and the like and how much we can spend on any one category. That was fine and dandy, except we had to keep each receipt and bring it home to enter those spent dollars into our excel file. It worked for a while, but over time, we would forget to keep a receipt, or lose one, or not want to take the time to enter the money we spent into our excel file. After a while, our budget was old, out of date, inaccurate, and a mess. All that did was keep us from wanting to continue with the budget.
Plus, like many of you, we make enough to get by without budgeting (or at least so we thought) so that if we wanted something, if we had it in savings, we’d just buy it. Very poor families, who don’t make much money, probably do the best with their budgets because if they overspend, they can get in real trouble. It’s the middle class that can afford to be lazy and not budget too much. However, the middle class that fails to budget is really falling into a trap. Unbudgeted spending and a carefree attitude with finances will, over time, lull individuals and families into a false sense of security, and one day, when retirement comes, or a big expenditure comes, there isn’t enough in the piggy bank to cover the costs. Don’t be that family!
If you have online banking, then you can use Mint.com. To get started, simply sign up for an account and log in. Then, you can tell Mint all about your finances. Do you own a home? Enter it’s value into the simple and easy set up page. Own a car or two? Tell Mint what they are and what they are worth. Have a checking and savings account? Tell Mint which bank you use and it will ask you for your online login and password. This part is very secure. It will then log into your online accounts and show you your balances and transaction history. The great thing about Mint is that there are no transfer commands, so even if someone where to hack into your account, they couldn’t actually steal anything from you. Add any retirement accounts, savings accounts, mortgages, and so forth to give yourself a complete overview of all your finances.
If you are like us, you have a checking account, a couple savings accounts, an investment account (Roth IRA’s, 401(k), 529 college savings plan) a credit card, and maybe another bank that handles the mortgage. Instead of logging into all those separate accounts to see what your overall financial status is, you can safely store all those logins in your Mint account, and you can then seem them all, live and updated, inside your Mint account. There is a running transaction history like a checkbook register, than combines all your transactions, from your credit card, debit card, checks, banking transfers, and the like. If you want to see only transactions from you credit card, for example, you can filter out all but your credit card transactions. The same goes for your checking account, or whatever you wish.
All the combined information is great, but once your accounts are set up, you can then set up a budget. Just like with our excel file, type in each category you spend money on. This may take a while as you think of new categories you forgot to add at the beginning, but in time, you’ll have all your money budgeted properly. Once your budget is set up, the real magic happens. When Mint updates your accounts each time you log in, it then updates your budget categories with the transactions it sees from your spending. It gets a few things wrong initially, but you can sort through it’s guesses, fix them, and it learns which transactions are which over time. Your budget is now live, updated, and accurate, without keeping receipts or updating it manually. You can see your spending, tracked over time, and where you are financially in each budgeted category.
As an example, if you’ve set aside $300 a month on groceries, as you near the end of the month, you can see how much money you have left in that category. Or, if you have set up $100 a month for eating out each month, you can see if you have enough left in that category to go out to eat or not. Magic! Mint will also show you your total monthly budget amount compared to how much you’ve actually spent. So for example, if you’ve budgeted $250 a month for gas, but have only spent $200 at the pump and you are near the last day of the month and you know you won’t be filling up anytime soon, you can cheat and use that $50 to go out to eat with, or spend on clothes, or whatever you want.
Mint will also show you your trends, and even compare them to your past spending and to those in your local area. If it sees that most people around you (Mint users) are spending $300 less than you on car insurance, or are getting a better rate on a mortgage or savings account, it will tell you, and suggest alternatives. For the Ross Perot in all of us, there are pie charts that break down the spending into visual terms. One can even set goals, like to save up for a vacation or a new car. It will track your savings and help you stay on track to attain your goal in the amount of time you wish.
The Pièce de résistance is the free Mint app that can be used on any iPod touch, iPad, or iPhone. With it, you can be out an about shopping, and instantly check to see how much spending you have left in each category. Can I spend another $30 for that new shirt? Can we stop by Burger King on our way home? Is there enough money left to rent a movie after dinner? With the Mint app, you have that information at your fingertips. And as we all know, information is power. Be powerful. Take charge of your finances. Show your money who’s boss.
Of course, if information is power, it follows that with great power comes great responsibility. Mint can only show you what you’ve spent, it can’t actually stop you from spending! You still have to show restraint and self control, but at least doing so is easier if you know you’ve already overspent by a couple hundred dollars in a certain category.
I know without a shadow of a doubt, that if you read Dave’s book, and you use Mint.com to track your spending, you will be successful with any reasonable goal you set. I don’t care if you make $20,000 a year or 2 million dollars a year, you will make it if you follow Dave’s principles and stick to your budget (easily) with Mint. The Bible says that someone who isn’t responsible with a little bit of money won’t be responsible with a lot of money. What does that mean? It means that wishing you had a little bit more money to finally start budgeting and buckling down on getting serious with your money is a false hope. It means that no matter what you earn, you will either be responsible with your cash or you won’t be. Needing just a little more money to be happy, or just a little more to finally get serious is a farce. Irresponsible lottery winners are the perfect example of this. We’ve all seen how they throw money away and sometimes blow it all away. They do this because their foundation, their fundamental principles, weren’t set in responsible stone. Be responsible now, and then later in life, you’ll be glad you were smart with your money.
Mint offers some great advice too. If you set up your budget and realize that you’ll have to curb your spending like crazy, you are certain to fail and give up. If you’ve never budgeted before, start small, and ease into things. If you have to cut some spending, start off by cutting it by 10% or so for the first month or two. Then, cut it by another 10% after a few more months. That way, you don’t get too upset and give up right away. Small changes, like less pizza and movies, can start to add up, and before you know it, you’ll be at your goals. Seeing your finances and budget in graphical form, like you do on Mint, gives you better motivation to stay on track and make good decisions. Just remember, having a budget and using Mint doesn’t mean the life as you know it is over. You can still have fun spending money, and you can still go out to eat. Being responsible doesn’t mean the fun ends, it simply brings you to a sustainable level of spending so that in the future, you can live comfortably, instead of beholden to creditors or credit card payments. Remember, if you are spending more than your earn, it will catch up with you sooner or later.
Let Mint.com set you free, help you attain your goals, and ultimately, allow you to have fun with your money, instead of dreading your money situation. Good luck, and sign yourself up yesterday.