You Need a Budget – 5 stars

If I could give something 6 stars I would.

I’ve been debating how to write this post for over a year. The reason is that it’s hard for me to express just how valuable a piece of software has been to Lora and I. For most of my life (as long as I’ve had a computer) I’ve delegated the task of balancing my checkbook and then managing all my finances to some kind of program. First Quicken, then Microsoft Money, then Mint (which Intuit, the makers of Quicken purchased) then Quicken, and finally, after many long years of being a book keeper, I started using You Need a Budget (YNAB) and it’s transformed how we manage our money.

The approach that I generally took to managing money prior to this looked something like this:

  1. Make sure that I meticulously entered or tracked every transaction
  2. Paycheck gets deposited 2x month (for 2 people, so 4 deposits)
  3. Allocate 100% of that money to pay expenses (money mostly already spent)
  4. Pay off credit cards every month (and not really know how my credit card spending rationalized against available funds)
  5. Squirrel away some money for bills that are not due every month (Life Insurance, Property Taxes etc)
  6. Pray that I got this all right
  7. Cover any “overspend” on the credit cards, which almost always happened as spending money on a credit card does not immediately reconcile against your actual positive balance
  8. Move money around from various accounts to make it all work and occasionally rely on “windfall money” to cover a bunch of things

At the end of the year, I would look at categorized spending and usually go “meh” I guess that is what it is. I didn’t really learn anything, and I wasn’t really connected to our money. I did this for most of my life. Like a robot. An unhappy one.

Also, I wasn’t really doing what I should have been doing, which is having a conversation with Lora about:

  • What are our “fixed expenses” that our current lifestyle requires from us, and is that right? Should we make changes?
  • What are our “savings goals” each month above and beyond things like retirement and savings that get taken out of our paycheck. Things like 529 plans, IRAs, vacation savings
  • What’s “left over” for us to spend in the form of discretionary income?

I was really getting no value from tracking all our income and expenses and it was quite a lot of work. I was getting pretty frustrated with Mint.com and then Quicken at the time. And I hated the word “Budgeting”….

Budgets

Most people here the word Budget and run screaming. For many this means “you can’t spend money because it’s not budgeted” or “you are spending more money than you really have” so the though of dealing with this reality is equally painful.

You Need A Budget is a computer program, and yes, it has the word budget in it. That evil loathed word. Every budget I ever created in Microsoft Money, Quicken or Mint was largely ignored and caused massive frustration and eventually abandoned. But You Need a Budget is not a computer program. It’s a philosophy of managing your money…. really living and existing which you all use money to do. You apply income to establish and manage your family, your hopes and dreams, your existence, meals, education, basics. So shouldn’t you consider what “system” you are using to do all of this?

You Need a Budget

For many of you, you stopped reading already (sorry!). I know this article isn’t meant for everyone. But if you are still reading, I’m now going to discuss how I use YNAB and how it works.

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The YNAB Methodology

  1. Rule 1 – Give every dollar a job
  2. Rule 2 – Save for a Rainy Day
  3. Rule 3 – Roll with the Punches
  4. Rule 4 – Live on Last Month’s Income

The most profound of these two rules is #1 and #4. I recommend reading a bit about this.

Give every dollar a job

Take a look at every account that you’d consider “liquid”. Now every one of those dollars should have a job. Some of it for the mortgage, some for kid’s clothes, some for “college savings” and so on. You don’t leave a single dollar behind.

Live on Last Month’s Income

This was the biggest “aha” for me. You don’t do this:

  1. Get paid
  2. Pay off bills, spending all income from #1
  3. Go 15 days broke
  4. Repeat

What happens if you get in a car wreck, your crown cracks (like mine did last night), you need a new suit for a job interview. You “borrow” by putting it on your credit card and worry about it later? Pay from next month’s income? Repeat this cycle?

I don’t know about you, but that kind of stuff stresses me out. How then I can in good faith have some discretionary income that I feel good about spending knowing that there are all these things that can require immediate funds? How can you save enough for vacation so that when you go on vacation you are not increasing that credit card balance without actual money you have set aside?

I wasn’t really making choices.

Hidden behind the smoke and mirrors of transactional tracking and “magic budgeting” software was this reality that the day to day decitions I was making with my money were not really grounded in any thoughtful approach.

An Example

So, living on last month’s income means the following. Lets say you get paid $2000 every pay check. You get paid twice a month. So that’s $4000 each month.

So, in the month of December you have $4000. You allocate that money to January. You do your budget for January. You allocate 100% of that $4000 by giving every dollar a job. Lets say you allocated $200 for restaurant, $200 for groceries, $100 for personal spending. The rest is allocated to all your other categories. In the end you have allocated every dollar leaving you with $0 to budget for January.

Now January rolls around.

  • You spend $198 on restaurants (against a $200 budget)
  • You spend $100 on groceries (against a $200 budget)
  • You decide to splurge and get yourself a nice gift that costs $150 (against a $100 budget)

So what happens? Well you have $2 left in restaurants, $100 left in groceries and you only budgeted $100 for personal spending, but you want to spend $150 on a gift. Easy, simply shift your budgeted money around to cover it. You can move $50 from groceries to personal spending.

iphone-budget

The point here is that you thought about this, made some tradeoffs and had the money. YNAB treats each budget item like it’s own mini account. For some of you who have heard of the “envelope” budget system this is similar. Thing of all the “jobs” for your money as each having their own envelope. You are taking income from last month, and putting all those dollars into different envelopes. Then when you spend money (in any way, cash or credit) you are immediately removing it from that envelope. The job is done.

In the example above, you paid for all these things with a credit card. When you buy with a credit card it acts like that money is spent right away. This means that your credit card balance doesn’t matter. You are accounting for that spending right way. It also means that when you get your credit card bill there is nothing to worry about. It’s all accounted for. The key to YNAB is that doesn’t matter how many accounts you have, or where the money is. YNAB doesn’t care about accounts, it cares about how much you budgeted and what you spent that month. THIS IS A BIG DEAL. This is what makes YNAB so unique, simple and powerful.

Another example. Say you pay a life insurance premium every year. It’s $600. Well you budget $50/mo into the life insurance category and when the time comes to write the check you’ll have $600 in there untouched. You really don’t have to do anything fancy to “protect” that money over the course of the year. At any time you’ll know how much you have budgeted and that’s the “job” of that money each month. You can apply the same thing to property taxes, charitable giving, car maintenance etc.

So to summarize some key things

  • You are putting aside all the income from the current month, to be budgeted for next month
  • You are spending money in that next month and reducing the balance in the budgeted categories
  • Credit Card, Checks, Cash is all accounted for the same way

If you “go over” and spend more than you have budget, this is what the other 2 rules cover.

YNAB Software

I could go on and on. But I’ll stop. This article is already long enough.

The YNAB website has tons of info, training material, education.

It’s Not Just Software. It’s a Mission.

However, the software is dammed good. How does it work?

  1. Download the Mac or PC desktop app
  2. Download the app for your iPhone or Android phone (for both you and your spouse)
  3. Put your budget in Dropbox (the only way to sync)
  4. Optionally download the iPad app which is a good substitute for the Mac or PC app

The software is very elegant and simple. All you need to do is record every transaction and assign it to a budget. Lora and I do this on our phones.

iphone-transaction

A lot of software geeks go “bleh”. You mean no automatic importing of my OFX data direct from banks and credit cards? I mean I like mindlessly importing stuff days or weeks after the fact where the damage is done, and then clean it up later (you can tell I’m a bit judgmental here as that was once me).

You record your transactions when you spend money. The iPhone apps makes this trivially stupid easy. it even uses location data to make recording future transactions easy by selecting the merchant you are physically at.

Final Words

January 1, 2015 is a great time to start. First of the year means that if you stick with it, you’ll have a year of data at the end of the year which makes budgeting easy.

When Lora and I first starting using it, we had a conversation at the end of each month on how we did against our budget and then budgeted fro next month. It took less than an hour and was a good conversation to have. These days the system is so dialed in we don’t even bother.

And I no longer stress or worry. We have a healthy “rainy day” fund and know how to use it now to cover all sorts of expenses. Every vacation is paid for before we go on it, every christmas present was paid for using money budget starting in January. We know where our money is going, how much we are saving, and we can safely say we feel good about our situation because we can see it clear as day.

Oh, and a minor other little thing. We have a single checking account now and spend all our money on a single credit card. It turned out multiple accounts just made everything complicated and turned out to be unnecessary. You may find the same as well. I’ve not looked at or cared about how much is in the checking account for over a year and the credit cards get paid via auto-pay (full balance) every month. Financial auto-pilot.

So, if you’ve gotten this far, congrats. Truth is I could have written a lot more but I’ll stop. If you are at all intrigued by this go and kick the tires. Use this URL to download YNAB

http://ynab.refr.cc/C8V2C6R

You’ll get some money off the purchase if you chose to buy and I’ll get a referral. They have a 14 day trial, and great email content, videos and help.

If there was one piece of software I could not live without, it would be this.

★★★★★
Exceptional. A spectacular product.

Joseph Joseph Salad Bowl – 5 stars

We eat salad every night. We love salad. For the past few years we’ve been using the same salad bowl and we love it.

Salad bowl? Yep, I even cover those.

We like bowls that are big enough to make a large salad, they need to be big enough to have high walls so you can mix in the dressing. Also, salad utensils that can aggressively mix in the dressing is important.

For years we used a wood bowl and stainless steel utensils. In search of something better, I came across a salad bowl from Joseph Joseph.

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What’s so great about it? Quite a lot actually.

  1. It is big enough to make a Salad for 4-6 people
  2. The salad utensils are built right into the bowl. You can insert them into the sides when not in use
  3. The whole thing goes in the diswasher making for quick cleanup

The bowls are made of melanine. Which for now is considered food safe. Either way, it’s not being used for hot foods and not for more than a few minutes which minimize any potential food transfer. If you are freaked out about this, you cn stick to wood, stainless steel or glass bowls.

We’ve been using this bowl for a few years now and love it. It makes it easy and mess free to make, serve, eat and clean salad.

Rating:

★★★★★
Exceptional. A spectacular product.

August Smart Lock – 3 stars

The idea of the automated home has been around for a while now. However, it’s our mobile phones, and the advent of Bluetooth 4 Low Energy (LE) and geofencing that has unlocked the potential for this to become mainstream.

In my last post on the Tile, I should have mentioned that this uses Bluetooth LE to do its magic.

Besides finding things, why  not automatically unlock your doors when you arrive at home? There are a number of products on the market today that do this sort of magic. The most popular and mainstream are probably the Kevo Smart Lock and the August Smart Lock. Apple recently started selling the August Smart Lock [$249].

The Kevo Smart Lock is rather invasive as you have to replace your whole deadbolt. A problem for me is that our house is keyed with Baldwin/Schlage blanks, and the Kevo lock is keyed with Kwickset, which are different keys. So that was a non starter. I like having 1 key for every lock in our house.

The August Smart Lock doesn’t require you change out your deadbolt. Rather it replaces the inside part of the deadbolt, so you are not really doing that much to your locking system and it’s easy to install.

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So how is it?

Well, it’s OK. There are bugs and kinks, and my quick summary is “really cool” but not ready for main stream.

First, lets discuss what you can do with the August Lock.

  1. Lock and unlock your door with your phone
  2. Set your lock to automatically lock after a set period of time (Everlock)
  3. Set your lock to automatically unlock when you return home
  4. Allow guests to lock and unlock your door

I purchased 2 August Locks for our house where we have deadbolts. I imagine this world where I can leave my house without any keys (well just car key, which is a smartkey and I just push a button). In practice though it only works so so.

Here are my main issues:

1. Auto unlock does not always work.

I’m not sure if this is the interaction between the geofence and bluetooth (August uses geofencing to ensure the battery isn’t constantly looking for your lock – which is smart) but it’s not flawless by any means. It’s a little deflating to come home and not have a $200 gadget work as described

2. The auto lock (ever lock) is great as I often forget to lock the door and my wife gets grumpy about this. However, in practice it can be problematic as I really only want this to run at certain hours, and how when I’ve gone out quickly to take the trash out and the door locks behind me.

3. The auto lock can damage your door frame if the door is not completely shut when the August attempts to lock the door. It’s a bit too aggressive about locking. It would be great if it were able to detect if the door were “shut” before it attempted to lock the door.

4. Finally, the biggest issue I have with the August is a design flaw. The battery door is held in by magnets, and often people in our house turn the lock and inadvertently unseat the battery cover.

So in short. It’s  neat. I’m pretty happy with mine. When the auto unlock works is downright magical. When I’m getting out of my car with my bag and my hands full and the kids in tow, walking right into the house is great.

I expect v2 will address most of these issues. For now, it gets 3 stars.

★★★☆☆
Good, but nothing exceptional.

Tile – 4 stars

In our household, we’ve had our locks replaced almost every year. It’s nuts. But we have around 8 sets of keys, we give them to the baby sitter on the weekends, visitors who stay with us and every so often we lose a set of keys. We look for hours and never find them. One year our son grabbed the keys, played with them and then left them somewhere. Our inquisition into where they were proved unsuccessful and then a few days later we found them in an art supplies box. Fun.

There is a solution to this problem and it’s called Tile. I purchased a Tile about a year ago and it recently arrived. I quickly paired it with my phone, and was sold. I immediately ordered another 4 pack to attach to all our household keys. In fact, last night I could not find my car keys and I wish I had the tile on. I eventually found them but it took me a few minutes of searching.

This is Tile [$25 @ Amazon, or $70 for 4 pack]

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It’s a small piece of white plastic with a battery and Bluetooth radio. You install an App on your phone, pair your Tile, and then give it a name and purpose.

tile-phone-tiles

Then you can launch your Tile app and it will show you where all your Tiles are. If you have multiple phone in your household, it can utilize their phones to locate items too.

The best feature in my mind is that you can issue a “locate” signal and the Tile makes some noise!

There are some interesting uses for this device:

  1. Keys
  2. Purses
  3. Remote Control
  4. Luggage

For us, the most useful application is simply keys.

I purchased the 4 pack a few weeks ago and it arrived yesterday. I’d recommend getting the 4 pack given the price per item is $17.50 vs $25 for one.

Any downsides?

I can think of two downsides.

  1. You need to have this app running on your phone, and using Bluetooth. Regardless of how battery friendly Bluetooth 4.0 is, you are still giving up some battery life. This is not a problem on my epicly awesome iPhone 6 Plus which lasts 2 days.
  2. The battery life of the Tile is about a year as far as I’ve read. That’s a fairly expensive replacement cost if you have a few of these. In our case though, it’s cheaper than having our locks re-keyed. Tile says they are working on a renewal / replacement program.

For these two reasons I give it 4 stars.

★★★★☆
Great. Worth purchasing.

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Capsule Wallet – 5 stars

Hope everyone had a fantastic Thanksgiving and survived Black Friday.

As we are headed into the Holiday Shopping season I thought I would do a post on a nice men’s gift (or womens if you carry a slim wallet). I recently purchased a wallet by a company called Capsule. They got their start on Kickstarter and have successfully transitioned to a full online business.

BKTOR-Cash

I’ve tried many wallets over the last year (most from Kickstarter) and this wallet has the right balance of everything i’m looking for:

  1. It holds cash, folded in half
  2. It holds 4-5 cards in the main compartment
  3. It hold a quick access card in an outer sleeve

You might ask, how can I manage not having a Costanza wallet.

iyU2NVauF5p8

Well, I carry the following items:

  1. A few bills (I don’t use cash, everything goes on the Amazon credit card) and I use Square Cash a lot.
  2. Two bank cards
    1. Chase Amazon Card – my goto card given my excessive Amazon & Amazon Fresh purchasing – 3% on all Amazon purchases including Groceries.
    2. Debit Card – really just for emergencies and getting cash, otherwise I’d leave at home. I’m looking forward to Apple Pay like ATM interactions
  3. Microsoft badge – to get into my building
  4. Health card – you should always carry this
  5. Driver’s license

That’s it. I question needing any more than this. If you ride the bus or train, I could see the addition of a pass. If I get anything like a receipt I need to carry, I take a picture of it.

Recently I discovered the Capsule Wallet via minimallyminimal.com. You can read his review for all the gory details. I will simply end this with a few picks and say that I love this wallet.

BLU_Master_Bills_2_large

Room for a few bills folded once

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You can see the quick access sleeve

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Attention to detail. The packaging is jaw dropping

I got the Blueprint in saffiano leather.

If you act now, they have 15% off sale which ends tomorrow. It will make a great gift. But warning, if you are buying someone with more than 6 every day carry cards, you might want to reconsider.

★★★★★
Exceptional. A spectacular product.

Amazon Fire TV Stick

Over the years I have owned a number of alternative devices to paying for cable and using a horrid cable box. First there was the Apple TV and I’ve now owned every version of the Apple TV. The Apple TV is a great product with a few exceptions. I chose Amazon for my Video purchases long ago due to their commitment to cross platform and cross device and would prefer that my purchases are playable on my XBox and other devices. Especially now that Amazon pretty much owns the kid’s tablet device market. Both our kids have Kindle Fire HDX (last year’s model) loaded with Amazon’s Kid’s Free Time App giving us some peace of mind. If you are in the market for a kid’s tablet I’d look at the “Kids Edition” which is basically a Fire HD 7 with a 2 year warranty against all the damage your kids might do.

It’s downright silly to get an iPad for your kids given that they cost a lot of money and require a lot of work to lock them down making them virtually useless for anyone else to use.

Anyway, back to the topic I’m writing about. A few months ago I purchased an Amazon Fire TV.

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I wasn’t using it much when I first got it as there wasn’t any HBO content. There is now some via Amazon Prime, but word is that the HBO app will land by the end of the year.

Besides that issue, the device is pretty awesome. The most innovative feature is the voice remote. You can speak to it like Siri and not have to navigate around to watch stuff. Unlike Amazon on the XBox you can rent and purchase items directly on the device. And there is a Kid’s Free Time app as well, similar to the Kindle Tablets.

Any downsides to this device? Not really. It competes in a crowded space with Roku, Apple, and Google’s Chromecast (although that’s not really a comparison).

And the biggest difference between this and the Chromecast? It doesn’t require a phone, tablet or PC to operate. Chromecast is only for “casting” content from your device. Fire TV Stick is standalone meaning you can turn on your TV and play stuff without anything else. This alone makes the Chromecast a bit of a joke now as the Fire TV Stick also has the same “casting” features.

The device uses bluetooth for the remote, so if you have a custom remote setup, you’ll need one of the newer Harmony Remotes that support bluetooth.

Enter the Fire TV Stick

A few weeks back Amazon did something unthinkable…. no, not launch a phone. That was a bit of a disaster for them. They did something that’s closer to home and their strenghts. They took most of the functionality in the Fire TV (priced at $99) and removed some of the high end gaming features (which are really not what you’d buy this device for anyway) and packaged it up in a miniature stick like the Google Chromecast. Oh, and it’s $39.

The Amazon Fire TV Stick.

stick

This thing is pretty tiny. It plugs directly into the back of your TV. That’s honestly pretty neat since you don’t have to worry about running cables, or anything else. You just need power for the USB cable, and that’s it.

amazon-fire-tv-stick-review-inTV2

When you plug it in for the first time, it will spend about 30 min downloading an update. And then it will be automatically configured for your Amazon account (just like the kindle).

Interesting side note. Amazon is really really pushy about using their own supplied usb plug and cable for this device. They are so picky about it that the device complained when I started it up that I was not using the supplied cable and plug. In fact I was use an Amazon plug (5W) that came with the Kindle Fire HDX. But that was not acceptable. There must be some kind of software/hardware based detection which I find rather curious.

The device comes with a small remote, not the same voice remote as the Fire TV. You can purchase that separately for $29.99.

Given a choice between lots of devices out there to stream TV content, my choice hands down is the Fire TV or Fire TV Stick for the following reasons:

  1. It’s an open ecosystem. Anyone can write an app without any restrictions. Not true for Apple TV or even Xbox.
  2. It’s cheap. The cost to having streaming is lower than anything else out there
  3. It’s a standalone device.
  4. It’s backed by Amazon. Unlike the Fire Phone, this product is core to what they do. Sell you content. And they are dammed good at it. It’s not a “hobby” for them.
  5. It’s got most of the apps you’d want to stream (minus the HBO issue).
  6. It’s easy to integrate into any TV environment. If you have a TV on the wall and can run any cables, you can use this.

You might ask why not a Roku? Seriously? When you have a choice to buy Amazon branded entertainment hardware over a company no one has ever heard of, the choice is pretty clear. Watching Amazon content (and even Netflix content) will be superior on this device. After all, this thing just runs Android apps anyway.

So, what’s the final verdict?

★★★★★
Exceptional. A spectacular product.

Unfortunately this device is either so popular or they were afraid of making too many, and it’s back ordered till Jan 15th. I got mine last week because I order everything like this within minutes of the announcement. It’s always easy to cancel your order if you change your mind, but there is no skipping the line if you wait.

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