Personal Finance Blog | Money Management Blog | Financial Help

Overspending, in many ways, is what is at the root of most people’s financial problems. Essentially, they spend more money than they have and put the rest on credit. They build up debt until it reaches critical mass and then either cut back out of necessity or, use the equity in their home to pay it off and start the whole cycle again. Talk about mortgaging your future away.

At Finicity, one of the first things we tell people is to start spending within their income and get to “30 days funded” as soon as possible. Having a full month’s worth of income in the bank allows you to schedule all of your bills to be paid automatically and provides you with a cash buffer that prevents you from accumulating further debt. The way you accomplish this is make a commitment to yourself to spend within your envelope balances 100% of the time.

That’s why you need to set up a budget and stick to it. The problem is that “budget” may be a bit of a bad word. It implies things like responsibility and accountability—stuff no one, including myself—really likes to think about. However, having a budget and employing personal fiscal responsibility is the only way to truly achieve your financial goals—like getting out of debt and reducing your financial stress.

Fortunately, Finicity Money Manager makes that a whole lot easier. By using it to plan your expenses before you spend, you can meet all your financial obligations and still have money left over to maintain the lifestyle you’ve become accustomed to. Truthfully, having a budget usually means having more money in your account—not less. And that’s peace of mind that is far more valuable than any safety net an overdraft account will provide.

Nick Lashley, Customer Support

I was sitting in a meeting last month when someone was giving a presentation on family finances and since I’m the kind of guy who has a hard time concentrating on numbers (they read more like Egyptian hieroglyphs to me) I started to zone out pretty quickly. In fact, if I recall, the presentation lasted about 15 minutes and I probably daydreamed right through it.

Then, towards the end, the presenter said a line that caught my interest: “smart families don’t pay interest—they earn it.” I’m not sure why it struck me, but it did. After all, my finances are in poor condition (remember, I’m the new guy here at Finicity) and I’m always worried about how much interest I’m paying on the various credit cards, department store cards, consumer credit accounts and so forth. However, I’m rarely worried enough to do anything about it because, again, numbers scare me.

But this saying: “smart families don’t pay interest—they earn it” challenged my self-perception. I thought to myself, “hey! I’m smart! I know lots of stuff about lots of things! I have multiple college degrees! How dare you say that I’m not smart because I pay interest!” Then, of course, the reasonable side of me kicked in and I evaluated the statement and came to a startling realization—I pay lots of interest and that is not one of the smarter things I’ve chosen to do in my life.

So, I started thinking about that statement: “smart families don’t pay interest—they earn it” and there started to be a paradigm shift in my head. Instead of ignoring my financial problem (which, let’s face it, I can do with skilled ease these days) I was going to have to attack it. More importantly, I couldn’t face the problem like I had in the past—with haphazard and inconsistent tracking of my expenses. I needed something that would allow me to set up a plan and stick to it. In other words, a real, live, honest-to-goodness, adult budget.

That thought scared me. I started to get bogged down in thoughts like how much time it was going to take and how boring it would be (remember: numbers are not my thing) but then I remembered the saying: “smart families don’t pay interest—they earn it” and I made a decision.

Rather than trying to take control of my finances in one fell swoop, I decided to start small, and for me, that means paying off one credit card. To start, I did a simple run down of my income and my necessary expenditures, looked at how much I had left and decided that I would allocate enough money each month to double my minimum payment on one credit card.

Having set that up, I felt better about my situation. Next month, I’ll get brave and see if I can up the amount I’m paying to the card in order to pay it off faster. In other words, I’m starting out small with my budget, and I’m feeling much more successful managing my finances. You might even go so far as to say I feel a little bit smarter today.

Andrew Parker, Marketing

I’ll admit it. I’m a holiday junkie. The lights, the presents, the veritable cornucopia of feel-good glitter everywhere, stirs in me a powerful need to buy stuff. Couple that with a desire to ensure that my wife and my son have a magical Holiday season and you have a recipe for financial disaster. In fact, the only variable isn’t when the disaster will occur, but how much damage will be done.

You’d think, being a marketer, I’d be hip to all the tips and tricks of the trade, but the truth is, I get suckered into the advertisements and deals that inevitably spring forth this time of year like weeds in my backyard. I’m not prepared for the onslaught, and so I get suckered in, drifting from purchase to purchase in a vain attempt to make this Holiday season better than the last.

The truth is that filling the Holidays with gifts isn’t my problem—it’s the way I approach buying gifts that leads to my inevitable New Year’s budgetary heartburn. See, I’m like most people, I wait until a few weeks before the Holidays, buy what I can in cash and then put the rest on the credit card and say to myself, “well, I’ll just have to cut back the first two months of the year.” The plan never works and I end up stuck with credit card debt I didn’t really need.

My mother, herself a self-proclaimed holiday junkie, has a system for holiday shopping. She takes a certain amount out of each of her paychecks during the year, usually about $50, and then sticks it in her purse and doesn’t touch it for the entire year. While I don’t advocate growing your holiday shopping budget in something as insecure as a purse, Finicity Money Manager works along the same principle. Essentially, if you plan how to use your money BEFORE you spend it, when it comes time to shop, you aren’t filled with buyer’s remorse. Instead you can bask in the feel-good glitter of multiple holiday gifts without the worry of incurring more debt.

While it’s too late for me this year, next year promises to be better. After all, since I’m new to Finicity, I can now take advantage of Money Manager which means more planning and less stress. And, as we all know, that’s a good thing.

Happy Holidays!

Andrew Parker, Marketing

It’s inevitable – my siblings are starting to think about the holidays looming ahead and have started the annual frantic discussion about how to reduce the expense of buying gifts for our ever-increasing family. It happens every single year . . . although, I admit, it does seem to come a little earlier each year. They see the holiday decorations starting to pop up in the stores and they each go into a panic about how to afford presents for their own children, let alone the nieces, nephews and grandparents. The ironic thing – my family really isn’t very big, but we do seem to increase by a little bit each year. I have a total of 6 nieces and nephews, not really that daunting of a group, in my opinion. However, if you don’t plan ahead for your holiday spending, it can seem a bit overwhelming.

I used to join in their panic . . . asking if we could trade names instead of buying gifts for everyone, throwing out the idea of setting spending limits, etc. The holidays would sneak up on me each and every year - I never seemed to have any money for gifts. It caused me a ton of stress and frankly made me dread the holiday season!

Not any more! Now I just smile to myself knowingly, listen to their conversations, and say that I will go along with whatever works for all of them. It’s not that I have any more money than I used to, in fact, it’s probably the opposite! My expenses have increased along with everyone else’s – gas, groceries, utilities, etc. I just plan better now! I set a little aside each month for holiday spending (based on the total that I plan to spend) and I have a set budget for how much I will spend on each child, parent, etc. Whether my siblings decide to trade names, set limits, or buy for everyone, I can make these adjustments easily from within the total amount that I already have set aside in my holiday spending envelope. And if I end up spending less – which would be great – then I just save that money and look at it as being ahead of the curve for next year!

Jennifer Streiff, Business Development

A few weeks ago an old friend of mine was venting on his blog about the costs of an unexpected auto repair. Having been there before, I read his post with a great amount of empathy.  I am not exactly sure what broke, but it was apparently something that made a lot of noise and was several hundred dollars to fix.  His family was then faced with the dilemma that many of us have been in before – I don’t have the money to fix it. But I can’t get the money if I can’t get to work, and I can’t get to work without a car.  So, out comes the credit card!

He is a professor at a university a short distance from his home.  The university is too far away to walk, however, and they live in a somewhat rural area - so public transportation wasn’t really a viable option for him either.  He did the only thing he could think of at the time – he increased his debt load to cover the cost of the repair by putting it on a credit card.

The first problem with this plan is that he will not be able to pay off the credit card in full this month, and probably not next month either.  With interest charges, his several hundred dollar repair will end up costing significantly more!

The second problem in my opinion is that he views car repairs as an unexpected cost.   Now don’t get me wrong, I am not judging – I used to be the same way.   My car has definitely had more than its share of repairs, and without fail, they were always “unexpected.” And since I never had the cash on hand to cover the costs of the repairs, I would just put them on my credit card because, “Hey, I need a car!”   Unfortunately, those balances add up fast!  And the interest charges are brutal!

In reality, these expenses are not really unexpected – cars break down and need to be maintained.  It’s just another periodic expense that I needed to plan for.  Thankfully, I learned the principles of envelope money management and was able to implement these concepts using the Money Manager.   Sure, it took quite a while to build up a balance in my “car maintenance” envelope, because I didn’t have a lot of wiggle room in my spending plan.  However, even putting in $10 here and $20 there into that envelope helped when it came to things like windshield wiper blades, washer fluid, oil changes, etc.  And most importantly, it has prevented me from putting those purchases onto a credit card that I couldn’t pay off.

Jennifer Streiff, Business Development

I’ve got a great job. I get to try to break things and find faults in the work of others and when I find these things I get to tell them all about how their code doesn’t work like it should. It’s very fulfilling.

Along with the great job I get a not so nice commute. I average 70 miles a day. This helps to keep my ego in check. Kinda like the “With great power comes great responsibility” line from Spiderman except that in my case I think it would be “With a great job comes great pain in the wallet”. The gas price increases over the past year have really added up and taken a bigger chunk of my budget, and I hate spending money on gas when I could spend that same money to buy tools for my woodshop.

So not being willing to find a job closer to home and needing to reduce fuel expenditures, I started researching things I could try to increase my fuel efficiency. Obviously, by increasing my miles per gallon I decrease my fuel consumption which then decreases my fuel budget requirements. This is what I have found so far:

• Slow down - The first thing I found was lowering my traveling speed. I used to average 75mph on the freeway. I’ve lowered that to 63mph. Sure it takes a little bit longer to get to work, but only a couple minutes, and if I leave 10 minutes earlier I still get to the office about the same time.

• Be cool and smooth – Don’t punch the gas when the light turns green, accelerate smoothly and slowly. Also, try to coast to a stop at red lights.

• Stay pumped up - I’ve also started checking my tire pressure every Saturday. This isn’t as much a benefit as driving slower but when you drive 20,000 miles a year just to and from work, every little bit helps. On top of helping with mileage, this step also helped to validate to my wife the purchase of an air compressor I had been wanting.

• Get some fresh air – When driving around town roll your window down instead of using the AC. When you hit the freeway, roll that window up and partake of the air conditioned goodness. At slower around-town speeds, you’re better with the window down. On the freeway, with the extra drag created by the open window, you’re better off to add a bit of strain on the engine and get the AC going.

• Dietary supplements – I’ve also been experimenting with different fuel additives that are supposed to increase the vaporization of fuel in your cylinders to get a cleaner, more efficient burn. I won’t say what I’ve been using in case it ruins my engine, but I’ve been able to gain another 10-12% mpg this way - while only spending about $4.00 for every 150 gallons of fuel treated.

Following these tips, I’ve been able to go from an average of 29.5 mpg to 37.2. Spend a few minutes on Google. There are lots of tips out there that can really add up to more gas in your tank and more money in your wallet.

Jeremiah Rodriguez, Software Quality Assurance

As of today my wife and I are officially consumer debt free! We still have our new mortgage, of course (we got a great deal through Finicity Home Loans), but it is way more affordable now that we don’t have to worry about paying down the stupid consumer debt we had so quickly accumulated.

Our debt started with the mistake of applying for a Wal-Mart Credit Card to buy a $240 television a little over three and a half years ago. I reasoned with my wife that since it was 0% interest for 6 months, we could just pay a little each month until it was paid off. Now, I should mention that this was our very first credit card…ever. We were quickly lulled into the “Buy Now, Pay Later” mentality and we, of course, never got around to paying that card off in those first six months. Shocking, I know. And since we hadn’t paid it off, we got slammed with a 17.9% interest rate that was applied quickly to the ever-increasing balance. We would eat out and “put it on the card” here, and then buy some new clothes and “put it on the card” there, continuing to increase that balance. We then, falling further into the “Buy Now, Pay Later” trap, transferred the balance over to two cards with 0% interest for an additional year. Needless to say, things spun completely out of control and before we knew it we had accumulated well over $6,000 in credit card debt, and all in less than six months.

Thankfully, this was about the time we started using Mvelopes.

We quickly had our finances under control and were rapidly paying down our consumer debt using the debt roll-down principle. It wasn’t easy. It took a lot of determination and diligence, but we worked on it together as a team and that made a huge difference. We, of course, had some emergencies that slowed our progress and it took us nearly three years to pay it all off, but we did it!

I recently read an MSN money article “Your 5-minute guide to managing debt” and the closing statement really struck home:

“Whatever you do, don’t give up. You didn’t get into debt overnight, and you won’t get out that quickly. Getting out of debt takes time and patience, but it pays big dividends down the road.”

While it seemed to me that we got into debt overnight, the freedom that we now feel is the biggest and most valuable dividend of them all. We can’t wait to join the ranks of “Credit Deadbeats” as we no longer carry a balance and now pay off all of our cards in full each and every month with the help of the new Finicity Money Manager (formerly Mvelopes)!

Kristopher Higley, Designer

“The only reason a great many American families don’t own an elephant is that they have never been offered an elephant for a dollar down and easy weekly payments.”

-Mad Magazine

Today we’re pressured from nearly all angles to sign up for easy credit so we can purchase everything from elephants to electronics. Need a new credit card? Just check your mailbox. Or the nearest billboard, banner ad, TV commercial, newspaper ad, etc. In fact, I long ago opted out of receiving credit offers and I still get dozens weekly!

But really, how can you refuse? After all, you’re probably already pre-approved for a 0% introductory interest rate, low APR thereafter, 1-5% cash back on all purchases, acceptance in more than 150 countries, and a free Hannah Montana bobblehead (limit two per customer). And if you don’t like the default card they send, don’t worry, you can get blue, gold, green, platinum or even upload your own image online! There will also be numerous other ways they distract you from caring about the contract terms you just signed.

Just remember, no matter what options you choose, the lender has a single goal in mind – to help you rack up as much debt as possible. And if you dare to pay off your credit card balance in full every month and avoid interest charges, you’re no good to them! They’ll consider you a deadbeat and talk trash about you in their company meetings (ok, I made that last part up – but it could happen). Why wouldn’t they want you to earn points, rewards, frequent flyer miles, gift cards, etc. at no cost to you?

So, is there a silver lining to all this? Well, it just so happens that here at Finicity we offer tools which enable you to make informed spending decisions by “pre-spending” your income before you go out and make your purchases. So whether you spend from cash or debit/credit card, as long as you’re spending within your envelope balances you won’t overspend, period. So spend within your income and join the ranks of successful “deadbeats” today!

For another interesting angle on credit cards, see this story from PBS: http://www.pbs.org/wgbh/pages/frontline/shows/credit/etc/synopsis.html

Nick Lashley, Customer Support Operations