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

I guess we all like going out to eat more than we think because that was by far the most popular response (with 49% of the votes) by the more than 300 participants of the survey  in our personal finance community on Finicity.

The second most popular answer (with 19% of the votes) was contributing to savings, so it’s good to know we still value savings…but maybe not as much as eating out.

So why do we enjoy eating out so much - because it’s something we all do…either daily, weekly or monthly?

Obviously, the ease of having someone else prepare your food for you is pretty nice…and usually the food tastes better when you go out too. But maybe there’s something else when it comes to eating out during an economic downturn. It may be a way to escape from the day to day pressures and enjoy some type of luxury since most of the other luxuries diminish during hard times. Or maybe it’s our need to socialize (and not the food) and to be in a social environment with family, friends, co-workers, etc.

Whatever the reasons, we all like going out to eat. And some of the cherished times for my wife and me are those days when we’ve had a hectic week and we’re able to find a babysitter and get away for an enjoyable dinner together – full of laughter, great conversations, good food, delectable desserts, and free from kids whining and crying.

Bon appetit!

Corey Davis, Marketing

When I was younger, my older siblings used to always make fun of me because I hated to spend money. Now that I’m an adult, I have a number of different things that I have to spend money on, such as a mortgage, utilities, transportation, food, etc. One of the great things about using the Finicity Money Manager is that it gives me many opportunities to review my budget and look for ways to cut expenses.

Sometimes the ways to cut spending are pretty obvious, and sometimes you need to be a little creative. My family and friends probably would say that I’m being stupid, rather than being creative with some of the ways that I have found to cut some expenses.

One of the biggest savings that I have been able to maneuver is to refinance my mortgage with Finicity Home Loans. Due to the new lower interest rate that I was able to get, I was able to save a few hundred a month. Some other areas that I have found to save a little (this is where my family and friends think I’m a little weird) are on my electricity bill and gas bill. I was able to cut my gas bill by turning my water heater down, washing my clothes in cold water, and keeping my house cooler. Wearing a sweatshirt or wrapping up in a blanket are ways to counter having the house cooler. I do not have any kids, so it is a little easier to have my house cooler without affecting family members. However, be forewarned that getting out of bed in the morning is a little more difficult. During the summer, I would keep my house warmer so that my air conditioner wouldn’t run as much. These few things have helped me save a few extra dollars every month.

Kyle Lloyd, Accounting

We’re excited that Nicholas Thomas (Finicity co-founder and COO) will be speaking tomorrow at AJAXWorld in San Jose, CA about the future of Internet Software Services.

Here are some excerpts from his presentation.

Mark Wieser, former Chief Scientist at Xerox PARC, envisioned a world where computers provided services to us but did not command our full attention to derive value from them. He fathered the concept of a third era of computing following the Mainframe and PC eras called the Ubiquitous Computing era, where computers were invisible, everywhere, and with us in the real world. The good news? We have finally arrived in that era. The bad news? Internet Software Services need to do more to match Marks original vision.

Many software services on the Internet leverage advertising to generate revenue, but this business model requires its users to be glued to the computer screen to see and click through to other offered products or services. Premium Internet Software Services seeking to become truly ubicomp must free their users from the tyrannical attention-hogging PC-era and present just-in-time information (JITI) to their customers without the burden of clickthrough rates.

Because Fincity’s business model is subscription-based, the company can and is developing ubicomp solutions to enable its users with just the financial information they need at the time and place they need it most … when making the spending decision. Although after-the-fact reporting is helpful to analyze spending trends and past mistakes, Finicity seeks to give our customers the information they need at the point where the spending decision is made.

Finicity pioneered Rich Internet Applications with its first AJAX and WAP clients in 2004 and our Adobe FLEX client in 2006. We are now announcing the development of a new Adobe AIR client for PC, MAC, and Linux that will provide our customers with information they need at a glance without launching a browser. In addition, we are are exploring other ways to provide users with their personal financial information outside of company-developed software clients.

Cheers,

The Finicity Team

Many years ago, I—along with many friends and family members—got caught up in the trend (for me it was an addiction) of creating handmade greeting cards and scrapbooks using rubber stamps and other popular scrapbooking supplies. I frequently shopped at local craft and scrapbooking stores, attended workshops offered by rubberstamp companies, and literally spent hundreds of dollars on supplies that I “just had to have.” Now, as I look at the abundant supplies I amassed (some of which have never been used), I feel a great sense of remorse. I definitely wish that I would’ve been more prudent with my “extra” money. In fact, I’m embarrassed to admit that I often used credit to make impulse purchases! Looking back, I wish that I’d have put even a portion of that money into a savings account, or an “emergency” envelope, and I definitely regret adding to my credit card debt with purchases that I really didn’t need.

Now that I use the online Money Manager, I am definitely more aware of and have more control over my spending. I have an envelope for “personal expenses,” which I use for purchases I make (or want to make) that are wants, but rarely needs. I’m now easily able to monitor my frivolous spending and, lately, I’ve all but eliminated it.

With the recent financial concerns in our country, I have found it necessary to tighten my belt and watch my spending more closely than I ever have in the past. Because I have spent the time to set up my budget, I can easily and quickly know just where I can make adjustments to my budget so that I can pay off debts, build my emergency fund, and have greater peace of mind.

Although I’ve had to learn some hard lessons from my past spending habits, I am pleased to say that I’m definitely making better choices and I’m feeling more in control these days. I have to admit, being (or getting) in control is a great feeling!

Debra Peterson, Executive Assistant

I love this quote above. I don’t know who coined it, but it is a principle that is coming to the forefront of Americans today.

A couple of months ago, I had a mournful experience. My mountain bike of 21 years finally gave way. At $325 in 1987, this bike had served me well! It tread thousands of miles, including miles and miles of mountain terrain and twice across international boarders. I have ridden it up hills and sometime it rode me down hills.

I suspect that only about 60% of my bike was still original. I’d budgeted spending for repairs and even created a spending plan in my budget to put aside cash every month to save for and purchase some nice upgrades. I can still remember the day back in ’92 when I put that new Deor XT Rear derailleur on my bike.

Recently, I found myself in a most regrettable situation. I thought I could make Bridgestone last another few years, so I had not created a budget to replace it. Being a user of Mvelopes (now Finicity Money Manger) for over 6 years, I should have had more foresight. I guess I was in denial because I like to squeeze every last drop out of everything (except brussel sprouts…but that is another story) and I was sure I had time to set up my budget for a future purchase (Mvelopes is perfect for this).

My family, unbeknownst to me, had been preparing for this day. The members of my family had been setting cash aside in their individual budgets for a bike for me. After my family convinced me it was okay and after some research and nearly 2 months in peak riding time without a bike, I found my bike.

Well, I am a saver through and through. Not only did we pick up a good quality bike on sale (21% of retail—fall is a great time to get a deal on a bike), but we were able to use some accumulated points from a Visa rewards program that allowed us to pick up the bike at no cost. I am planning and hoping for another 20+ year ride. Best of all, my wife and kids were able to keep and reallocate the cash they had saved to something else.

We are living in times where we have to find a way to make our cash go further. Don’t be embarrassed if you don’t have the newest car or the trendiest clothes (I don’t). There is so much more comfort and peace knowing you are living within your means than trying to impress a neighbor, friend, or worse, someone you don’t even know!

Personal cash flow management is core to living within our means. Part of personally managing cash is also finding ways to extend the life of the things we use and need. We likely need to take a hard look at our definition of needs and wants, and likely have to do without some of the wants. The price for financial peace is worth it! Although I was tempted by some really nice (rather expense) bikes, I knew that a bike was definitely a want for me. Balanced against needs and financial goals, the decision was an easy one.
Use it up, wear it out, make it do, or do without!

Warren Rosner, Accounting

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