I use mint and love it. Sure, my “data” is all in one spot. Big deal. It is well beyond my control if joe blow wants to steal files from his company and sell them. Sure the risk is higher, but your information is out there regardless. I just spoke about identity theft the other week.

My reasons for using Mint (or other aggregators):

• Instant Access. All in one place and I can access anywhere, any time.
• Efficiency. Instead of logging into 10+ places, I log into one. If I have 10 minutes to kill, I might log in just to see how my entertainment spending is going.
• Budget tracking. I get up to date information on all my spending. I can set up a budget and it will show me how much I’ve spent in the month so far. Very easy.
• Micro managing. I refuse to micro manage my money on my own. I think people who have a budget for toothpaste or staples are clinically insane. These sites do just enough.
• Deals. Sure, they get their money through affiliates and clicks, but they do present offers that can be useful.
• Updates. I like getting an email notice when I’ve spent too much on groceries or my bill is coming due. I don’t track my finances every day, so this is a great benefit.
• Charts. Although I am, not many are Excel wizards who can graph/chart data easily. Mint and the like do that, and are able to slice the data into several ways.
• Data Loss. No worries of corrupt files or busted hard drives. Sure, I could safeguard my information myself, but that would require effort, right?

Those are my reasons. I’m sure any one of you could poke holes into them, but that doesn’t dismiss their benefits.

What are your thoughts?

1. Do you have a budget? If the answer is no, start one today.
2. Do you use the budget? Are you keeping up with yourdiscretionary spending?
3. Are you over/under? Look at the past two months. Have you been close to your target?
4. Did you budget enough? Let’s face it, if this is your first time working with a budget, mistakes are going to happen.
5. Tweak the numbers. If you set your groceries for $400 a month and January/February are coming in at $500, then you might want to increase this bill. However, make sure you look at all your expenses and take away budget from those you aren’t spending on.

How am I doing? I’d say pretty good. We overspent on groceries like #4 above. Looking back at this it really is a good thing. Our restaurant/fast food bill is almost nonexistent. We started to diet and cook more at home, so naturally our grocery was going to be more. We are also eating more fresh items and meat, which have added to the cost. When you look at both categories though, we were below the combined budget so that is really good. I’ve since lowered the fast food budget and kicked up the groceries to cover our new lifestyle.

We did spend a little more the first two months on the travel category. This doesn’t happen often, but because of lower flight prices, we booked in advance travel for May. This money is being saved, however it won’t be covered till May. The good news is that I received a little bonus for work in February which was able to cover that no problem. For more about how to create a monthly budget, check out my very first budget post.

Two months in and I’m pretty happy with my budget. To help me out, I’ve been using Mint, which is a great free website available to track your personal finances. I get weekly reports on my spending and alerts when cash gets low or when I go over in spending. If you don’t have a Mint account, definitely give it a try.

How is your budget going? On you on track? Are you feeling good about it?

What I will say about this budget style that I do like is What they consider to be a week. Most people would start on Sunday or Monday. My friends, however, start the week on Wednesday. This suprised me and I asked why. The simple answer – They didn’t want to lose their weekends. If they started on Monday and spent too much money during the work week, they would be forced to stay at home in order to keep their budget. By starting later in the week, you allow yourself to enjoy the weekend. It’s easier to live poor during workdays than on the weekend. If you do run your budget on a weekly level, you might want to consider a midweek start day to incorporate the weekends a little better.

The next night I got to hang with one of my friends and former coworkers. He’s getting married and is leading the charge to handle all the financial budgeting and booking for the big day. One comment was, although every thing is still expensive, the original quoted prices have dropped considerably. He can thank the recession for that one!

We also talked about being self employed. Currently he is, and I have to admit I’m a little jealous. Having Fridays off every week sounds like a really good idea. I don’t have much first hand knowledge of self employment, but I do know that with the way the economy is now it might be good to have something to fall back on. That’s what is great about this country – anybody can start a business. If you have a marketable and viable skillset, you have the opportunity to be your own boss and sell yourself. There are many tax advantages as well as tax headaches that come with being your own boss, and it’s not for everyone.

Start with spending – This is the no brainer first place to go. Say goodbye to those Starbucks runs and getting the medium size at Wendy’s. Cable bill? You don’t need TV keeping you away from your job hunt. Want internet? Go to the library (that place with books) or Panera Bread. You need to transition from being a spender to being a saver.

Consider borrowing next – The suggestion here is that instead of tapping into your emergency fund, you look towards credit cards, friends, family, and the spouse’s 401k’s to stop the financial leaking. While I agree that keeping cash is very crucial, going into this well can present a whole new host of problems. If your spouse loses their job, that 401k loan will need to be paid back immediately. Above all, most of these will only add to debt or put a physical strain on personal relationships. I’m not a big fan of this strategy.

Empty the assets – This is where you empty out all your savings vehicles. Roth IRA’s are good because there is no penalty on the money you put in (you already paid taxes remember?). Stocks, bonds, and mutual funds should also be tapped into. If you own a house and it’ worth more than your mortgage, you might want to consider selling if times do get rough. Avoiding debt when you don’t have a job is key, although selling your house should be a last resort. It’s probably also not a good time to think of how much you’ve lost on paper with these investments, just get the cash.

Having a financial fire drill is a really good idea and with the economy and recession we are in, there is no better time to start than now. My biggest comment about the article is downplaying the emergency fund. Hopefully everyone has at least 3 months of cash available to cover expenses. There was also no mention of unemployment, which will put some cash in your pocket and keep creditors away while you find a replacement job (or jobs).

Stop, drop, and roll your way through a financial fire drill today. Smokey Bear will be proud.

• It’s not going to be right. Let’s face it, your first budget is not going to be right. If it is, you probably shouldn’t be reading this. Practice makes perfect. Do not be discouraged. You will find yourself looking back in 6 months and laughing at your first few runs at this. This is an ongoing process just like anything else that will need to be adjusted and tweaked. The goal is for you to see what’s going on and be able to be proactive instead of reactive.
• Write everything down.You should have two basic columns – income and expenses. Money goes in, money goes out. You have to get a handle on what and where you are spending. Write down all your expenses – car insurance, rent, mortgage, netflix, gas, food, cell phone, water, gas, electric, pet, haircut, etc. Don’t forget to put down IRA, emergency savings, and other payments to yourself. You should treat these as reccurring bills, not as extra cash or remaining income.
• Follow the money. Now that you have all your expensives listed, give them an estimated payment. Don’t know how much you owe? look at your last 3 months worth of bills. You should have a general idea of what you are expected to pay. For credit card debt, use the mininum payment. Using Excel or other spreadsheet program will help you rearrange the list and more advanced features like color coding.
• Do some math. Now draw a line underneath the final row and make a total label. Now add the income column up, then add the expense column up. Now subtract expenses from the income. Is your number positive? Great job! Is your number negative? this is a major warning sign. You are breaking the cardinal rule of personal finance – Don’t spend more than you earn. You need to find a way to make the income side bigger and the expense side smaller.
• Rinse and repeat. Like I said earlier, you are going to have mistakes. when the bills roll in, find out how far off you are and make changes. Forgot about an expense? write it in (there is where Excel is handy). Copy the information to a new sheet and label it February. Then again for March, April, and May. I think you know where this is going to end. By keeping track month over month you’ll be able to track the changes you made and maybe even check out the progress you make.

Now that is the dirty version of a monthly budget. If you have negative cash flow showing, you have your resolution made for you – fix it. Start selling stuff on Craigslist or eBay. Get a second job selling pizza, or a third job delivering papers. Stop eating at McDonald’s and Applebee’s and start cooking at home. There are many other topics that should be covered when discussing a monthly budget, especially more specifics on how to lower your bills. I’ve got some great examples to share, so be on the lookout. 

If you have a positive cash flow, but you have revolving debt, you aren’t any better. Get rid of that credit card debt. Start paying more off. You have to pay more than the minimum if you want to succeed. You know all those “things” you bought with your credit cards? Sell them.

Advanced tips:

• Color it.  Use colors to highlight different areas of your budget. I’m a big fan of using green for income, red for credit cards and other , yellow for reoccuring bills, and blue for savings/investments.
• Sum it up.  Group your similiar bills and look at the percentage of of your income each takes. If you got more blue than red, that’s a good thing.
• Get Organized. Write down the contact information for all your bills with phone numbers and addresses. This will be helpful whenever you have to call customer service. Also write down the balances on your debts. Looking at this number can be good motivation to push it down to zero.

I am in the process of adjusting my budget. I will post a sample soon that can be used as a guideline.

What suggestions do you have for a monthly budget?