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Fun with M$Money

I'm somewhat overextending my lunchperiod, but dangit, i want to finish this deal.. getting finances reconciled.. 4 more Wal-Mart receipts to go.

I think i've figured out a system that works for me :- Its a lot simpler than what I used to do. Perhaps it will help simplify somebody else's life...

  • Step 1: Download transactions from bank. My bank happens to export OFX, and MSMoney 2004 reads OFX, so I'm all set there. This leads to an automatic reconcile (between transaction and resulting daily balance), which is great (used to do that by hand with the statements).

    If it doesn't auto-reconcile, immediately stop and figure out what the problem is -- usually, some transaction got a date change (my bank does that occasionally) which throws things off. The fix is usually a delete of an extra transaction that came down. Can stop here if need be.

  • Step 2: Figure out what those checks are. With my bank, if you click on a check number, you get an image of the check. Very good. Fill it out and move on. At this point, I can close the web browser.

  • Step 3: Categorize what I can. In my case, i have to fill out the Payee from the contents of the Memo field.. and for things like Kroger, Whole Foods, I already know its Groceries.. I assign "miscellaneous" to Wal-Mart, CostCo, Target, etc. At this point, I can usually analyze spending (Step 5) and figure out what hasn't happened yet this month.

  • Step 4: Categorize the Miscellaneous. This is where I fish through whatever receipts I have, and subdivide the Miscellaneous into whatever they need to be.. usually a spread between Groceries, Household Maintenance, and Household Supplies.

  • Step 5: Monthly Report I can actually do this anytime past Step 3, although the Misc. can be several hundred $. I have it divided into Categories vs Months, and I scan along to see a) how did the last month's spending go, and b) is this month "on track". Early warning signal on eating out too much, and gives a qualification as to why a particular month might be bad. Can figure out which bills have been taken care of, and which ones haven't.

What I've learned is:
  • I no longer do Gross Paychecks. I just do Net Pay. I don't need to know the tax info, it takes too much effort to keep that 100% correct such that its useful later in a tax program. That's what W2's are for. (however, if doing a home business, then a totally different level of detail is required).

  • I no longer keep track of Vehicle Loans or Mortgages. I just send the mortgages to Bills:Mortgage and the Vehicle Payment to Auto:Payment. Interest vs Principal, what's left.. i don't need that information. Its nice to know when doing a Net-Worth type deal, but honestly, if I need to know the numbers, I can look them up.

  • I no longer ignore credit cards. If there's one place I go for the detail, its on credit card accounts. We don't have any, and we don't plan on ever having them again, but if we did, darn skippy i'll be checking how much wasted interest is getting used up there.

  • I rely on downloading financial information from my institution. The realization came after 5-6 years of diligently entering all my receipts so I could find out when the bank messed up.. and EVERY mess up was mine. Bank never messed up. If you have a bank that messes up, get a frickin' different bank.

  • I no longer enter every receipt The only receipts I need are the Wal-Mart type ones (hard to categorize without looking at the receipt.). This leads to the next one:

  • For possibly returnable items, keep the receipt with the item box. I learned this from my wife. Goes hand in hand with not keeping all receipts.

  • Use Online BillPay. Its so much easier, and after several years, I've come to trust it. Few places when somebody didn't get paid, got resolved fairly easily.

  • Be comfortable with and know your bank balances. Rather than constantly wondering "umm, is there enough money in the account for this and that and the other", i've settled on this approach:
    • Income Must be Greater than Expense. If you don't have this, you're in trouble.
    • Calculate the total amount I need for a month, and round significantly up. When I was single, this was $2600, now with the whole family + the new car, its significantly higher than that.
    • Anything over, move to other account So, for example, if my paycheck came in and I ended up with $3345.43 in my account, I would move 400+345.43 = $745.43 into the "other" account. "Other" = "next purchase", "savings", basically not-your-normal-monthly-expense.
    • The result is, rather than living in dread of coming down to "0", i ended up living in "this far away from $2600" with the firm knowledge that my next paycheck put me over again. So, when I look at a bank balance, if I saw 1500 there, it was not "bad". it was good - spent 1100 of the month's allocation so far, because I trusted my calculation of my normal monthly expenditure.
    • If for some reason, a paycheck didn't take me back over, then that was an early warning sign that something was up. Granted, with weekly paychecks and monthly mortgages, the numbers can be a bit dicey, but that can be worked out too.

Yay! life is good. Back to the receipts. And then back to work.

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That's way too much work.

I believe my wife agrees with you. :)

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