On Mar 25, 2009, at 2:18 PM, Lance wrote: > Wow, it seems there is a wide variety of ways that people use > MoneyWell. Unfortunately it doesn't seem like there is an ideal way > for me to use MoneyWell for planning purposes without creating a ton > of buckets. > Hi Lance,
Creating a "ton of buckets" is probably never a good solution since the goal is to manage poor spending habits more than precisely forecast every expense. > Like many people, some of my bills don't occur every month and vary in > amount over the course of the year. The problem I see with calculating > an annual total and then allocating a monthly average to a single > bucket is that I will have no idea how much money I could safely move > out of that bucket if I needed to. > > For example, say I have a $50 Water bill that occurs every 2 months > and a $100 Electricity bill that occurs every month. Using the annual > average method, I would create a single "Utilities" bucket and > allocate $125 to it every month. > Here's the reality, no one knows exactly what future bills will cost us. I know when gas prices when up, both my electric and water bill shot up. There's no way I could have known this was going to happen or planned for it. All I did at that point was dip into savings and cut back on optional spending. > A problem arises when I get halfway through the month and I'm running > low in another area and need to figure out which bucket I can take > some money out of to compensate. If I've been allocating $100/mo for > Electricity, it's very likely that my actual bill was somewhat less > than that and I actually have a surplus of money sitting in this > bucket I can safely move out. However, this surplus is now intermixed > with funds that are earmarked for future bills and there is no easy > way for me to figure out how much I can safely move. > Here's the trick: You don't dip into buckets for required expenses, the critical ones that allow you to survive. Instead you have to focus on ones like dining out and entertainment. You also will need an emergency fund in savings because there is a very good chance that unexpected expenses (e.g., transmission failure on the car, kid breaks an arm, etc.) will blow out any bucket balance for any one month. > It seems to me that this method really only works if your annual > expenses are pretty consistent and easy to estimate a year in advance, > or if you are willing to over-allocate some buckets over the course of > the year and just let the surplus sit in that bucket and never touch > it. > Again, the envelope method is to reduce your accidental spending. It's not to perfectly forecast the future or keep life consistent. The only solution to the variables of your financial life is to build a war chest of money that will save you from going into debt when the curve balls come at you. > What having separate buckets for every bill enables me to do is set my > spending plan for every bill somewhat conservatively (so I over- > allocate a bit) but then when the bill is paid and I know the actual > amount, I can immediately transfer the surplus to another bucket in > need of funds (or to Savings). > But this is the fantasy, that somehow you will be able to forecast everything and plan for the future: you can't. None of us can. Some very smart people with great investment portfolios are not 50 percent poorer than they were this time last year. It's less about forecasting and more about controlling ones own spending impulses. > Unfortunately MoneyWell doesn't provide any way to add a comment or > keep a history of changes to the "Spending Plan" amount for each > bucket, so I guess I'm stuck using the Bucket's memo field. Since this > field is common to all months (unlike the Spending Plan amount) I'm > forced to decide between having a REALLY long memo that retains my > notes from previous months for the whole year OR simply clearing out > this field every month (and losing my history from previous months). > > I really wish there was a better way to handle this. I'm looking at ways to add some more memos for cash flows and other activities but my concern is that these will be hard to view with out a lot of digging so I want to do it right. MoneyWell will let you have multiple spending plans in the near future so you can keep historic figures for planned amounts and still modify them for current changes in your life. Sorry if I'm repeating myself but I want to make this clear. What I'm trying to help people do with MoneyWell is change their personal finance focus. For so many years, I was suckered into the "Quicken mentality" that if I planned perfectly and categorized every detail, I would be in a better financial situation. That was a lie. I still overspent and I still found myself using credit cards to save my butt when the unexpected happened. With this software, I want to give people a chance to avoid this flawed path that I took. The only way to be financially successful is to control spending so you can continue to save money for emergencies. It's not about pretty reporting or colorful pie charts, it's about spending well so you can enjoy life without the stress of debt. Your spending plan should allow you to save and keep you from needing to dip into savings on an average month. I hope this helps and makes sense. Peace, Kevin Hoctor [email protected] No Thirst Software LLC http://nothirst.com http://kevinhoctor.blogspot.com --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "No Thirst Software User Forum" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/no-thirst-software?hl=en -~----------~----~----~----~------~----~------~--~---
