Budget or create saving buckets?

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kayanco
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Re: Budget or create saving buckets?

Post by kayanco » Sun Jun 22, 2014 2:48 am

archbish99 wrote:
kayanco wrote:One thing I read about YNAB, it doesn't automatically connect to banks...so I'm guessing initially it will take a while to set it up...
I would actually say that makes it take less time, unless you have an insane number of accounts. In Quicken, you have to configure the account, find the institution in their list, give it your username and password, answer challenge questions, and wait while it downloads your last several months of transactions.

In YNAB, you create a new account with a name, type, and current balance. Done. The first time you download transactions, it'll ask you which local account that online account should be paired with, and it will remember next time.
Hey, thanks so much for your feedback!

I spend some time today messing around with YNAB...watched the videos too! Looks pretty cool!

kayanco
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Re: Budget or create saving buckets?

Post by kayanco » Sun Jun 22, 2014 3:02 am

One thing I'm not able to figure out, despite going through the videos and online discussions.

Can I simply ignore adding/tracking my credit card in YNAB? In the following scenario:

- I do have 2 months worth of expenses in my checking (so not in "float" per YNAB theads)
- About 90% of my monthly expenditure is on CC (most bills, insurance, groceries, fuel....everything). This is intentional to maximize points.
- I auto-pay CC in full from checking
- So every month my checking only has small # of transactions: one large full CC bill + few small transactions (2 bills, etc)

In effect, everything really is coming out of checking..CC is acting as a pass-through (to earn points :happy) ...

So I'm wondering if I should not add the CC in YNAB, and ignore the middleman?

Meaning:
When I buy groceries or fuel with CC, I should mark it in YNAB as transaction in checking?
I wish there was a video/tutorial for the case where people only have the transactions funnel though CC on the way to Checking.

Otherwise, it seems very confusing how to handle this case...because even on 1st of month when I pay CC in full, we are left with a balance (charges since the "last" statement was generated, and these charges will become part of the next statement generated on 4th, and will be due the following month on 1st....but these non-dude charges include things like: bills, groceries, restaurants from last month)

Or should I add the CC as 0 balance? And track the spending there, and then subtract the CC bill from checking when paid in real life.

(side note: it's freaky how fast this site is indexed :) I was researching Google for a solution to this, and my own post came up in the results :p)

Compound
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Re: Budget or create saving buckets?

Post by Compound » Sun Jun 22, 2014 5:31 am

I use the co360 (ing) multiple accounts method mentioned early in this post. It's actually pretty simple to do. Under one login, you can create multiple subaccounts. I have several accounts labeled in categories such as: car savings, vacation, home improvement, etc. I have monthly auto contributions set from my primary checking to go to each in line with my expected timeline for needing the money. Once setup, it takes no time to maintain. And whenever I login to my account, I immediately get an overview of where I'm at with my savings goals (future spending goals really). And, it costs nothing to setup or maintain.

Good luck.

marielake
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Re: Budget or create saving buckets?

Post by marielake » Sun Jun 22, 2014 1:07 pm

So I'm wondering if I should not add the CC in YNAB, and ignore the middleman?

Meaning:
When I buy groceries or fuel with CC, I should mark it in YNAB as transaction in checking?
I wish there was a video/tutorial for the case where people only have the transactions funnel though CC on the way to Checking.
You should add your credit card to you YNAB accounts. All purchases made on cc should be posted to the cc account. When you pay your bill, you do a transfer from your checking account to the cc account.

I also found the use of cc tricky when I started using YNAB. After using it for a year, I sometimes still find it tricky--this week's challenge was how to post cash that someone gave me as reimbursement for a purchase I made. I find the forums helpful for these dilemmas.

kayanco
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Re: Budget or create saving buckets?

Post by kayanco » Sun Jun 22, 2014 1:22 pm

marielake wrote:
So I'm wondering if I should not add the CC in YNAB, and ignore the middleman?

Meaning:
When I buy groceries or fuel with CC, I should mark it in YNAB as transaction in checking?
I wish there was a video/tutorial for the case where people only have the transactions funnel though CC on the way to Checking.
You should add your credit card to you YNAB accounts. All purchases made on cc should be posted to the cc account. When you pay your bill, you do a transfer from your checking account to the cc account.

I also found the use of cc tricky when I started using YNAB. After using it for a year, I sometimes still find it tricky--this week's challenge was how to post cash that someone gave me as reimbursement for a purchase I made. I find the forums helpful for these dilemmas.
I spend hours reading the discussions around this topic :p

Since you'be been using it. Can comment on this approach??

Not add CC to YNAB at all (not as on-budget, not as off-budget, just not at all)

And "Think of CC as a debit card"

e.g. Buy $100 groceries with card, mark it as transaction in Checking in YNAB Yes it will reduce checking balance (not reality)...to me that means, that money is "locked" or ear-marked, to be the withdrawn from Checking act, in the future, as part of the CC bill. That what I meant. What you folks think?

2nd thing: Some of the suggestions I read, keeping CC in YNAB on-budget (but not using the pre-YNAB), and marking transactions from it, and then when bill is paid, mark a transfer from Checking to CC....I understand this method.
But have a follow up Q: Do you just add the CC as 0 balance? Or do you add the current balance as pre-YNAB, and then add the same amount for it's budget?
Thanks

ddunca1944
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Re: Budget or create saving buckets?

Post by ddunca1944 » Sun Jun 22, 2014 6:16 pm

kayanco wrote:
e.g. Buy $100 groceries with card, mark it as transaction in Checking in YNAB Yes it will reduce checking balance (not reality)...to me that means, that money is "locked" or ear-marked, to be the withdrawn from Checking act, in the future, as part of the CC bill. That what I meant. What you folks think?

2nd thing: Some of the suggestions I read, keeping CC in YNAB on-budget (but not using the pre-YNAB), and marking transactions from it, and then when bill is paid, mark a transfer from Checking to CC....I understand this method.
But have a follow up Q: Do you just add the CC as 0 balance? Or do you add the current balance as pre-YNAB, and then add the same amount for it's budget?
Thanks
Buy $100 groceries with card, mark it as transaction in Checking in YNAB Yes it will reduce checking balance (not reality)...to me that means, that money is "locked" or ear-marked, to be the withdrawn from Checking act, in the future, as part of the CC bill. That what I meant. What you folks think?

This seems needlessly clumsy to me.

2nd thing: Some of the suggestions I read, keeping CC in YNAB on-budget (but not using the pre-YNAB), and marking transactions from it, and then when bill is paid, mark a transfer from Checking to CC....I understand this method.

This is what I do. Easy peasy. (I adhere to the YNAB method of looking at the amount that is available to spend in the category rather than the bank balance. It takes a bit of effort to change focus, but when you do the difference it makes is phenomenal.

But have a follow up Q: Do you just add the CC as 0 balance? Or do you add the current balance as pre-YNAB, and then add the same amount for it's budget?
If you were just starting and had a balance on the cc that is probably the way to go. If it were me, I'd pay off the balance and start with a 0 balance....

marielake
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Re: Budget or create saving buckets?

Post by marielake » Sun Jun 22, 2014 6:35 pm

kayanco wrote:
marielake wrote:
Since you'be been using it. Can comment on this approach??

Not add CC to YNAB at all (not as on-budget, not as off-budget, just not at all)

And "Think of CC as a debit card"

e.g. Buy $100 groceries with card, mark it as transaction in Checking in YNAB Yes it will reduce checking balance (not reality)...to me that means, that money is "locked" or ear-marked, to be the withdrawn from Checking act, in the future, as part of the CC bill. That what I meant. What you folks think?

2nd thing: Some of the suggestions I read, keeping CC in YNAB on-budget (but not using the pre-YNAB), and marking transactions from it, and then when bill is paid, mark a transfer from Checking to CC....I understand this method.
But have a follow up Q: Do you just add the CC as 0 balance? Or do you add the current balance as pre-YNAB, and then add the same amount for it's budget?
Thanks
I don't understand your reluctance to add your CC as an account. I think it would be easier to reconcile if you separate your checking account transactions (tx) from your cc tx in their own separate accounts. Regarding your second question (if I understand what you are asking)--I have 3 cc accounts with 0 balances; for each of them I started with the current balance at the time as it helps with reconciling. In YNAB, you don't budget in the account, you do your budgeting in the budget section which pulls from dollars all your accounts. For example, If I budget $250/month for groceries at the start of the month, the $250 goes on the budget tab, under the grocery category. If in week 1 I spend $125 and charge to a debit card, I post it to my checking account and in week 3, I charge $125 to my cc, I post it to my cc account. At that point, YNAB would should a 0 balance. When I pay the cc, I would do a transfer from checking. You have to think of the budget page very differently from the accounts. The account tabs shows you where your money is located; the budget tab lets you know how much you have in each category, how much you have spent and how much you have remaining to spend .

I think they offer a 30-day free trial. You should just try it out. Know that it goes in sale often. I started last June; just after I purchased it went to sale.

Rodc
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Re: Budget or create saving buckets?

Post by Rodc » Sun Jun 22, 2014 6:42 pm

Man you guys make things complicated.

I would think a simple spreadsheet would do the trick just fine.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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AustenNut
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Re: Budget or create saving buckets?

Post by AustenNut » Sun Jun 22, 2014 9:25 pm

Count me as another fan of YNAB (who switched from Mint about two years ago). The budgeting is great, and it helps to get family members all on the same page. Also, you can pool your money in the accounts which will get the highest percentage (which often are related to having a high balance), and YNAB will still track your specific financial goals regardless of where that money is located.

I would definitely add your credit card(s) as on-budget accounts. For instance, putting a cc transaction as a transaction in your checking account will make no sense when you download your transactions from the bank. The bank will have no record of you having gone to the grocery store, and if you happen to have forgotten to enter that transaction yourself, then your budget is off. Whereas if you've created a cc account, you can download the statement and make sure nothing's been forgotten. And then when you pay the cc balance, you just mark it as a transfer from your checking account.

kayanco
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Re: Budget or create saving buckets?

Post by kayanco » Sun Jun 22, 2014 9:51 pm

AustenNut wrote:Count me as another fan of YNAB (who switched from Mint about two years ago). The budgeting is great, and it helps to get family members all on the same page. Also, you can pool your money in the accounts which will get the highest percentage (which often are related to having a high balance), and YNAB will still track your specific financial goals regardless of where that money is located.

I would definitely add your credit card(s) as on-budget accounts. For instance, putting a cc transaction as a transaction in your checking account will make no sense when you download your transactions from the bank. The bank will have no record of you having gone to the grocery store, and if you happen to have forgotten to enter that transaction yourself, then your budget is off. Whereas if you've created a cc account, you can download the statement and make sure nothing's been forgotten. And then when you pay the cc balance, you just mark it as a transfer from your checking account.
So you load up the transactions from the bank file into YNAB instead of entering it manually?
I'm evaluating both YNAB and Mint right now (never used either)....one thing I'm liking about Mint is:
After initial set of categories...it's very neat, it shows me all tracking, without doing much...ie I might be up and about doing my business, while Mint is keep track of the categories. I can log in once a week and see what I'm been up to past few days ...

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NORDO
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Re: Budget or create saving buckets?

Post by NORDO » Sun Jun 22, 2014 10:23 pm

kayanco wrote:
AustenNut wrote:Count me as another fan of YNAB (who switched from Mint about two years ago). The budgeting is great, and it helps to get family members all on the same page. Also, you can pool your money in the accounts which will get the highest percentage (which often are related to having a high balance), and YNAB will still track your specific financial goals regardless of where that money is located.

I would definitely add your credit card(s) as on-budget accounts. For instance, putting a cc transaction as a transaction in your checking account will make no sense when you download your transactions from the bank. The bank will have no record of you having gone to the grocery store, and if you happen to have forgotten to enter that transaction yourself, then your budget is off. Whereas if you've created a cc account, you can download the statement and make sure nothing's been forgotten. And then when you pay the cc balance, you just mark it as a transfer from your checking account.
So you load up the transactions from the bank file into YNAB instead of entering it manually?
I'm evaluating both YNAB and Mint right now (never used either)....one thing I'm liking about Mint is:
After initial set of categories...it's very neat, it shows me all tracking, without doing much...ie I might be up and about doing my business, while Mint is keep track of the categories. I can log in once a week and see what I'm been up to past few days ...
We enter most manually, but I definitely forget some and use the weekly (my goal - sometimes more, occasionally less frequent) import/download from the banks to pull them into YNAB.

In a rush here so apologies for the brief post but, in short, yes... add all your accounts to YNAB. I'm sure their online classes or forums would be a good place to hunt for more information.

The gist of the process is this...
  • All your money (checking/savings - any account On Budget in YNAB) has to be accounted for in your budget.
  • Divide/assign that money across your budget categories however you like
  • As you spend money (make a transaction) it is deducted from the balance already in the category
The beauty of YNAB is that it doesn't matter where the money actually resides. So, all cash to your name is budgeted and all expenses (regardless of whether they're checks, cash, on credit cards, etc.) deduct from the budgeted amounts.

Of course, you can't go and spend more than you have in your checking account and expect all your bills to clear, but you can see a running balance anytime. We always have a few thousand extra in checking so that's never a worry. Savings (including the amounts in our savings categories in YNAB) reside in our savings accounts. If we spend from there (i.e. take a vacation we've been saving for) then I move enough money from savings to checking to cover those bills.

kayanco
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Re: Budget or create saving buckets?

Post by kayanco » Mon Jun 23, 2014 12:32 pm

I want to summarize the overall advice from folks in this thread (so someone else reading this thread later). Two main methods were given for doing what I originally asked in post 1:

Method 1:
- Use multiple accounts at bank
- Link them to the same web interface/portal, so all are visible together
- Give them nicknames per savings goal: e.g. Car fund, vacation, etc

Method 2:
- Don't open multiple accounts for different goals, but budget the money.
- So irrespective of if all the money is sitting in one place, it is still accounted for in the budget.
Last edited by kayanco on Mon Jun 23, 2014 1:07 pm, edited 1 time in total.

Rodc
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Re: Budget or create saving buckets?

Post by Rodc » Mon Jun 23, 2014 1:05 pm

kayanco wrote:I want to summarize the overall advice from folks in this thread (so someone else reading this thread later). Two main method were given for doing what I originally asked in post 1:

Method 1:
- Use multiple accounts at bank
- Link them to the same web interface/portal, so all are visible together
- Give them nicknames per savings goal: e.g. Car fund, vacation, etc

Method 2:
- Don't open multiple accounts for different goals, but budget the money.
- So irrespective of if all the money is sitting in one place, it is still accounted for in the budget.
I prefer method 2, but really this is a psychology question for any one person. You have to decide which will work best for you personally. Only you can tell.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

kayanco
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Re: Budget or create saving buckets? (Mint vs. YNAB)

Post by kayanco » Mon Jun 23, 2014 1:06 pm

I spent several hours messing with both YNAB and Mint, and want to share my comparison/experience:

Please read and let me know what you think? Or if I missed anything, or misunderstood anything?
I don't have any personal attachment to either, I just want to find the best/most useful one :)

1.
Overall it seems like both YNAB and Mint "can" do the same thing.
Most threads I read on Mint vs. YNAB, said that Mint is back-looking (spending), and YNAB is forward-looking (Budget). I found that both (Mint/YNAB) are both (back/forward).

2.
YNAB: The main power of YNAB is the Budget. We tell it our account balances, and it tell us how much we have to budget.
Mint: Does the same thing. It knows the balances of our account, so we know how much we have to budget

3.
YNAB: We can setup up categories and assign them how much we can spend on them this month. e.g. Groceries $200, Utilities $100
Mint: Can do the same thing in it's budget section.

4.
YNAB: If we over spend, we can see the -ve number and can compensate. e.g. Spent $110 on Utilities (we can see the -ve/extra $10). To fix it, we can reduce the Grocery budget to $190, and increase Utilities to $110.
Mint: Can do same thing. It will show we went over, then we can adjust in other categories, in the same way.

5.
YNAB: If we under spend in one category, it will carry over the balance. e.g. spent $30 out of the budgeted $50 for car maintenance. Next month we know we can afford $70 for car work
Mint: will do the same thing. It will carry forward the unused balance (if we set it up to do that)

In my personal experiments/research, I "felt" the following benefits of Mint over YNAB:

i)
Mint: Many of my transactions are automatic. So when I log into Mint, I get an up-to-date view of how much I've spent so far.
YNAB: I will have to log into my CC/bank(s), look at posted transactions. Then enter them in YNAB, and ONLY then I get the up-to-date picture

ii)
Mint: Works automatically in the background.
e.g. If I'm sleeping, and there is an automatic charge posted in a category overnight. And it cause me to go over budget in a category, Mint can send me an email. When I wake up I automatically know I've overspent. I can take action. e.g. Let's say, I've queued up another purchase in the same category, I can cancel/post-pone it to not go further over-budget.
YNAB: If I review my spending once or twice a week...I will not know what happened till that day, so a few days would have past till I find out about the over-spending

iii)
Mint: Less work, less time. My bank/CC already keeping detailed log of what I'm spending. Mint is also automatically copying those transactions and categorizing them. I only need to make occasionally tweaks….so most of the time, I just have to scroll down and review
YNAB: More work, more time. I am basically duplicating my statements of checking and CC accounts. The same merchants, I have to categorize again manually for every transaction.


These are just the notes/experiences from my usage of both tools. Curious to see what you think??

mlipps
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Re: Budget or create saving buckets?

Post by mlipps » Mon Jun 23, 2014 3:28 pm

Here's where I ran into a pitfall with Mint:

My husband and I had saved $10k (give or take) to spend on our wedding. Those expenses were going to happen sporadically over the course of 9 months. There was no clear way in Mint to allocate that lump sum, then spend from it over the course of several months. That was the reason I switched to using my own Excel spreadsheet. I got tired of messing with it & bought YNAB on Black Friday. I also like YNAB because I can do things on a month by month basis. On the other hand, in Mint, if I increased the coffee budget by $10 in June to compensate for overspending, it would still be $10 more automatically next month unless I changed it back. Drove me nuts, because I had to remember what they were "supposed" to be, and there was no clear way to look at the budgeted amounts month by month and compare like the home screen of YNAB does automatically. But, I use Personal Capital (basically identical to Mint in its automated features) to aggregate all my transactions & accounts & check it every morning. I only update YNAB once a week. I find they work really well in conjunction with each other.

jackholloway
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Re: Budget or create saving buckets?

Post by jackholloway » Mon Jun 23, 2014 4:04 pm

sscritic wrote:
kayanco wrote: Like previously mentioned, one way would be to open 3 separate accounts. And you say to yourself, when Account C hits 2K, I'll go buy my TV. When Account A hits 5K, I'll buy my car, etc.

And they could fill up at different rates...you get a $500 bonus, you put it in A...another month you are able to save extra, so you put extra $60 for B. Since they are separate, you can visually see how close/far you are from each goal.

So my question was, is there a way to do this in a single account?
Now I see where we differ; it's in the when. Two years ago I bought a house. At the time I knew that the house (and I) wanted to replace the old carpeting, get some new furniture, and get a new large screen tv. My daughter and daughter-in-law wanted me to buy a new car for the sake of my grandchildren. So there were four things I wanted to get and therefore was saving for. I had no idea which I wanted to get first; there was no timetable. As it turned out, Christmas 2012 produced the new tv, summer 2013 new wood floors to replace the carpets, and last month, after a failed smog test, the new car. I still don't have any furniture in the living room, although the grandkids like to do gymnastics there, so they are not complaining.

Now I could have just as easily bought the living room furniture first (my guess is it is second to the tv in being the least expensive), but I didn't. I started with some money in non-invested savings and added to it each month, rather than formal investments, because I knew I wanted to buy all these things. Since I had no timetable, I just weighed my desire for the items with my desire to keep a relatively large (for me) cash balance. If I had had a timetable, I might have done a Dave Ramsey snowball in reverse, i.e., buy the least expensive item first as soon as I could afford it, then the next least expensive, and so forth. In a way I have (tv then floor then car), but if I had done this in a strict way I would already have the new furniture, but the new car would have brought my cash too low for my personal comfort. Then there is the reverse reverse Dave Ramsey snowball where you buy the most expensive item first. :)

In the end, I wasn't focused on the when or the order. I just knew I needed money to buy the things I wanted, so I saved money. When I spent it was determined by how I felt at any given moment, with the exception of the new car, which was forced on me by the state.

On the other hand, if I were you and knew I wanted to take a cruise in the summer of 2015, I might save exclusively for the vacation and put off saving for the car and the tv. That is, until one of them breaks down, in which case I will need to use my vacation money for a car or tv. In the end, I am not a fan of buckets; it's all just money to be used as we decide for ourselves. Given that, I don't try to visualize the separate parts of my money, which I realize is your goal. And here I am trying to talk you out of doing so. :)
I go very much the other way. Our household runs on roughly 40 buckets, with some flexibility. We have discovered that if we extract money each check for each thing we want, such that the buckets grow over time, we eventually get the things we want, and do not go buy stuff "just because it is on sale". We used to use excel, then a google spreadsheet, and now some software called something like "budget" as it better fit the envelope model.

The buckets make us aware of tradeoffs - moving money from one bucket to another is a couple of mouse clicks, but the decision to do that is weighty enough that it is worth a couple minutes of discussion. In the example you gave, if we suddenly needed the car, then we have the choices of moving money from the floor bucket, or letting the car bucket go negative. As long as the total money pile is above our worry threshold, we are able to do either.

A bucket going negative is a signal that we did not save at the rate that would result in having enough money saved for that purchase at the time it became relevant. Oftentimes, this starts the "are you sure this is a good enough deal to change the rate of saving or order of purchase" discussion.

I do agree - money is money, and all the rest is just a way to decide _which_ spending decision you are going to make. For us, buckets let us visualize what we will be spending over the next year or two in a convenient way, at the cost of bookkeeping and potentially letting larger piles of free cash accumulate while saving.

EHoops
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Re: Budget or create saving buckets?

Post by EHoops » Mon Jun 23, 2014 4:32 pm

I use SmartyPig, too. It fits what the OP is looking for and earns 1%. The only negative I've found, which does matter, is that it isn't easy to transfer money out of SmartyPig. One must reach a goal with SmartyPig and then close the entire, specific savings account (Ex: Trip to NYC) when one wants the money. Love the 1%, though, for any amount of savings and the psychological ability/boost to save for particular goals.

kayanco
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Re: Budget or create saving buckets?

Post by kayanco » Mon Jun 23, 2014 5:17 pm

EHoops wrote:I use SmartyPig, too. It fits what the OP is looking for and earns 1%. The only negative I've found, which does matter, is that it isn't easy to transfer money out of SmartyPig. One must reach a goal with SmartyPig and then close the entire, specific savings account (Ex: Trip to NYC) when one wants the money. Love the 1%, though, for any amount of savings and the psychological ability/boost to save for particular goals.
Yea I looked at SmartyPig too...it's the highest % I found (next highest is 0.95% for savings)...it would be nice if they let us move some money out w/o closing. And also move money between the goals.

Also, I think 1% is still very little. We should get like 2-3% at least in a savings account.

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Clearly_Irrational
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Re: Budget or create saving buckets?

Post by Clearly_Irrational » Mon Jun 23, 2014 5:31 pm

We use Mint which is mostly backwards looking. We have what looks like a budget, but in reality is a history based spending plan. This seems to work pretty well due to the fact that the main thing we're focused on is maximizing the "surplus" amount. I used to use a much more complicated system with sinking funds and such but we have enough in our account nowadays that's not really necessary.

kayanco
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Re: Budget or create saving buckets?

Post by kayanco » Mon Jun 23, 2014 5:38 pm

mlipps wrote:Here's where I ran into a pitfall with Mint:

My husband and I had saved $10k (give or take) to spend on our wedding. Those expenses were going to happen sporadically over the course of 9 months. There was no clear way in Mint to allocate that lump sum, then spend from it over the course of several months. That was the reason I switched to using my own Excel spreadsheet. I got tired of messing with it & bought YNAB on Black Friday. I also like YNAB because I can do things on a month by month basis. On the other hand, in Mint, if I increased the coffee budget by $10 in June to compensate for overspending, it would still be $10 more automatically next month unless I changed it back. Drove me nuts, because I had to remember what they were "supposed" to be, and there was no clear way to look at the budgeted amounts month by month and compare like the home screen of YNAB does automatically. But, I use Personal Capital (basically identical to Mint in its automated features) to aggregate all my transactions & accounts & check it every morning. I only update YNAB once a week. I find they work really well in conjunction with each other.
Both good points...and I agree, Minty will have trouble with that.

I set up both with the same budget and after few days I found myself leaning towards Mint..mostly for the automation. I felt I was too busy (or too lazy) to add every transaction in YNAB. And if we don't keep it updated we can't trust the system. With Mint, since day-to-day I spend at the same places, after initial category correction it was working great automatically.

But definitely agree with you, and I like that YNAB let's us see and budget a future month differently.

I'm still evaluating both :)

(Btw if YNAB let me manually edit the outflow of each category, I could just cheat, and once a week, just enter the Mint reported amounts :p)
(i.e. not enter the transactions at all, just category totals)

kayanco
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Re: Budget or create saving buckets?

Post by kayanco » Mon Jun 23, 2014 5:43 pm

jackholloway wrote:
sscritic wrote:
kayanco wrote: Like previously mentioned, one way would be to open 3 separate accounts. And you say to yourself, when Account C hits 2K, I'll go buy my TV. When Account A hits 5K, I'll buy my car, etc.

And they could fill up at different rates...you get a $500 bonus, you put it in A...another month you are able to save extra, so you put extra $60 for B. Since they are separate, you can visually see how close/far you are from each goal.

So my question was, is there a way to do this in a single account?
Now I see where we differ; it's in the when. Two years ago I bought a house. At the time I knew that the house (and I) wanted to replace the old carpeting, get some new furniture, and get a new large screen tv. My daughter and daughter-in-law wanted me to buy a new car for the sake of my grandchildren. So there were four things I wanted to get and therefore was saving for. I had no idea which I wanted to get first; there was no timetable. As it turned out, Christmas 2012 produced the new tv, summer 2013 new wood floors to replace the carpets, and last month, after a failed smog test, the new car. I still don't have any furniture in the living room, although the grandkids like to do gymnastics there, so they are not complaining.

Now I could have just as easily bought the living room furniture first (my guess is it is second to the tv in being the least expensive), but I didn't. I started with some money in non-invested savings and added to it each month, rather than formal investments, because I knew I wanted to buy all these things. Since I had no timetable, I just weighed my desire for the items with my desire to keep a relatively large (for me) cash balance. If I had had a timetable, I might have done a Dave Ramsey snowball in reverse, i.e., buy the least expensive item first as soon as I could afford it, then the next least expensive, and so forth. In a way I have (tv then floor then car), but if I had done this in a strict way I would already have the new furniture, but the new car would have brought my cash too low for my personal comfort. Then there is the reverse reverse Dave Ramsey snowball where you buy the most expensive item first. :)

In the end, I wasn't focused on the when or the order. I just knew I needed money to buy the things I wanted, so I saved money. When I spent it was determined by how I felt at any given moment, with the exception of the new car, which was forced on me by the state.

On the other hand, if I were you and knew I wanted to take a cruise in the summer of 2015, I might save exclusively for the vacation and put off saving for the car and the tv. That is, until one of them breaks down, in which case I will need to use my vacation money for a car or tv. In the end, I am not a fan of buckets; it's all just money to be used as we decide for ourselves. Given that, I don't try to visualize the separate parts of my money, which I realize is your goal. And here I am trying to talk you out of doing so. :)
I go very much the other way. Our household runs on roughly 40 buckets, with some flexibility. We have discovered that if we extract money each check for each thing we want, such that the buckets grow over time, we eventually get the things we want, and do not go buy stuff "just because it is on sale". We used to use excel, then a google spreadsheet, and now some software called something like "budget" as it better fit the envelope model.

The buckets make us aware of tradeoffs - moving money from one bucket to another is a couple of mouse clicks, but the decision to do that is weighty enough that it is worth a couple minutes of discussion. In the example you gave, if we suddenly needed the car, then we have the choices of moving money from the floor bucket, or letting the car bucket go negative. As long as the total money pile is above our worry threshold, we are able to do either.

A bucket going negative is a signal that we did not save at the rate that would result in having enough money saved for that purchase at the time it became relevant. Oftentimes, this starts the "are you sure this is a good enough deal to change the rate of saving or order of purchase" discussion.

I do agree - money is money, and all the rest is just a way to decide _which_ spending decision you are going to make. For us, buckets let us visualize what we will be spending over the next year or two in a convenient way, at the cost of bookkeeping and potentially letting larger piles of free cash accumulate while saving.
Yes, exactly. That's the reason I like the bucket idea also. And just because a bucket is only 90% full doesn't mean we absolutely have to wait for 100%...e.g. if a great sale/deal comes along (or some other reason), we can move money. But as you say, we will need to consider the trade off and decide which other goal we will post-pone, etc..

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Re: Budget or create saving buckets?

Post by ddunca1944 » Mon Jun 23, 2014 5:55 pm

kayanco wrote:Here's where I ran into a pitfall with Mint:


I set up both with the same budget and after few days I found myself leaning towards Mint..mostly for the automation. I felt I was too busy (or too lazy) to add every transaction in YNAB. And if we don't keep it updated we can't trust the system. With Mint, since day-to-day I spend at the same places, after initial category correction it was working great automatically.



(Btw if YNAB let me manually edit the outflow of each category, I could just cheat, and once a week, just enter the Mint reported amounts :p)
(i.e. not enter the transactions at all, just category totals)
[/quote]

For me, the manual entry is one of the strengths of YNAB. Because I choose to manually enter every transaction, I am acutely aware of where the money is going. It's part of the reason why YNAB works so well for me. I use the iphone app 99% of the time and enter as I spend. The process tends to curtail mindless spending.
Last edited by ddunca1944 on Mon Jun 23, 2014 6:53 pm, edited 1 time in total.

mlipps
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Re: Budget or create saving buckets?

Post by mlipps » Mon Jun 23, 2014 6:42 pm

Just to be clear, I didn't say the above, OP did. :)

ddunca1944
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Re: Budget or create saving buckets?

Post by ddunca1944 » Mon Jun 23, 2014 6:54 pm

mlipps wrote:Just to be clear, I didn't say the above, OP did. :)
Sorry. I've edited to correct.... :oops:

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NORDO
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Re: Budget or create saving buckets?

Post by NORDO » Tue Jun 24, 2014 10:18 am

ddunca1944 wrote:For me, the manual entry is one of the strengths of YNAB. Because I choose to manually enter every transaction, I am acutely aware of where the money is going. It's part of the reason why YNAB works so well for me. I use the iphone app 99% of the time and enter as I spend. The process tends to curtail mindless spending.
Yep.

It's not for everyone, admittedly, but I certainly try and convince anyone who asks me about it that they should embrace the philosophy.

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AustenNut
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Re: Budget or create saving buckets?

Post by AustenNut » Tue Jun 24, 2014 9:43 pm

Just wanted to make one comment in relation to the ease of using YNAB. The phone app (I'm on Android) helps speed things up as well. If the GPS is enabled on your phone, YNAB also gets used to the places you go. So if you always use your AMEX card at the grocery store, if you pull up the YNAB app while at the store it will already have preprogrammed the store name, the account being used (AMEX), and what category (groceries/toiletries, for instance) and all you have to do is tap in the amount of the purchase.

Also, when you download your statements, YNAB also learns what different places are (like McDonald's = eating out) so it will also prepopulate those fields.

But if you find Mint easier to use and are happier with it, do what works for you. One of the reasons we stopped using it, though, was that it started having problems downloading some of our accounts, so that info was not accurate.

kayanco
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Re: Budget or create saving buckets?

Post by kayanco » Tue Jun 24, 2014 10:04 pm

AustenNut wrote:Just wanted to make one comment in relation to the ease of using YNAB. The phone app (I'm on Android) helps speed things up as well. If the GPS is enabled on your phone, YNAB also gets used to the places you go. So if you always use your AMEX card at the grocery store, if you pull up the YNAB app while at the store it will already have preprogrammed the store name, the account being used (AMEX), and what category (groceries/toiletries, for instance) and all you have to do is tap in the amount of the purchase.

Also, when you download your statements, YNAB also learns what different places are (like McDonald's = eating out) so it will also prepopulate those fields.

But if you find Mint easier to use and are happier with it, do what works for you. One of the reasons we stopped using it, though, was that it started having problems downloading some of our accounts, so that info was not accurate.
Thanks for the feedback guys, I'm evaluating both right now :)

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NORDO
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Re: Budget or create saving buckets?

Post by NORDO » Tue Jun 24, 2014 11:04 pm

kayanco wrote:
AustenNut wrote:Just wanted to make one comment in relation to the ease of using YNAB. The phone app (I'm on Android) helps speed things up as well. If the GPS is enabled on your phone, YNAB also gets used to the places you go. So if you always use your AMEX card at the grocery store, if you pull up the YNAB app while at the store it will already have preprogrammed the store name, the account being used (AMEX), and what category (groceries/toiletries, for instance) and all you have to do is tap in the amount of the purchase.

Also, when you download your statements, YNAB also learns what different places are (like McDonald's = eating out) so it will also prepopulate those fields.

But if you find Mint easier to use and are happier with it, do what works for you. One of the reasons we stopped using it, though, was that it started having problems downloading some of our accounts, so that info was not accurate.
Thanks for the feedback guys, I'm evaluating both right now :)
AustenNut's points above are spot-on.

Just noticed this... if you're considering buying YNAB, you may be able to pick it up for a good discount:
http://www.reddit.com/r/ynab/comments/2 ... mmer_sale/

On a related note, in addition to YNAB's own forums, there's a dedicated sub-reddit with lots of good discussion:
http://www.reddit.com/r/ynab

sketchy9
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Re: Budget or create saving buckets?

Post by sketchy9 » Wed Jun 25, 2014 1:25 am

bloom2708 wrote:We have the following accounts at our local bank now. I had an ING Direct/Capital One 360 account, but decided to move the funds local. I loved ING Direct, but am not a big fan of CO 360.
I'm curious as to what your objections are to CapitalOne360. I didn't really notice much of a change at all when they switched.

CloveLeaf
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Re: Budget or create saving buckets?

Post by CloveLeaf » Wed Jun 25, 2014 11:50 pm

I use excel. It is free and very flexible. Well, google spreadsheet is free.

kayanco
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Re: Budget or create saving buckets?

Post by kayanco » Thu Jun 26, 2014 6:26 am

CloveLeaf wrote:I use excel. It is free and very flexible. Well, google spreadsheet is free.
Yes, I think they all would work ...these are just tools to help us, whatever suits a person should work I think.

Dandy
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Re: Budget or create saving buckets?

Post by Dandy » Thu Jun 26, 2014 1:59 pm

I had a private mortgage that I had to pay every 6 months and taxes every quarter. Each paycheck I would subtract from my check register the proper amount and record it in the back of the ledger. When it came time to pay the bill I would reverse the process i.e. subtract the value from the back of the register and add it to the regular register balance. Worked great for decades.

Now I keep the same process for quarterly R.E. taxes. It is really a form of sub accounting.

A few years ago I opened an online bank savings account. At the end of the month if I have extra I have that bank transfer money from my no interest checking to my online money market account That account is for vacations and large discretionary purchases. A few clicks and I have my fun money separated from my day to day money. No charges no fuss.

You could automate the process if you want the same amount automatically transferred each month. And you could have money sent to money market and another amount sent to on line savings account.

bloom2708
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Re: Budget or create saving buckets?

Post by bloom2708 » Thu Jun 26, 2014 3:16 pm

sketchy9 wrote:
bloom2708 wrote:We have the following accounts at our local bank now. I had an ING Direct/Capital One 360 account, but decided to move the funds local. I loved ING Direct, but am not a big fan of CO 360.
I'm curious as to what your objections are to CapitalOne360. I didn't really notice much of a change at all when they switched.
Good question. It could be that my objections were simply because I dislike the "What's in your wallet?" advertisements we are bombarded with. Capital One just seems like a Credit Card company. I wasn't sure how that would affect rates and fees at 360. So far it doesn't seem like it changed much.

I think a few things happened. I wanted to keep the money in the local bank. Rates dropped to under 1%. I really liked the 4% savings rate of the mid-2000s. I was also just looking to simplify.

So if you are happy with Capital One 360, continue to be happy. I still have a Checking account/Debit card.
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Minnesota97
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Re: Budget or create saving buckets?

Post by Minnesota97 » Fri Jun 27, 2014 1:03 pm

I am big into using buckets, although I try to make it very simple.

Everything that is "bucket related" goes into Cap 360 in one lump sum. I then keep a simple spread sheet of the value of each bucket. I currently have 24 different buckets (ranging from kids braces fund, future car purchase fund, various vacation funds, dog medical fund, future kids wedding fund, etc.). We put modest amounts in each of these regularly for the really long term buckets (braces, wedding, etc.) so that way when these big (and likely) expenses happen, it shouldn't be an issue. We then also add bigger lump sum amounts into shorter term buckets (upcoming vacation, sports season tickets, etc.).

I reconcile the numbers every quarter to make sure it all adds up, and then adjust accordingly each time we add or take something out of the account.

We've been doing this for 15 years and it really helps keep us focused on short and long term goals for these bucket items and its very simple.

Good topic.

MoneySeeker24
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Re: Budget or create saving buckets?

Post by MoneySeeker24 » Sat Jun 28, 2014 6:25 am

I have two accounts in one Bank, but I do manage it through online. One for my regular saving account and one for my emergency fund.

kayanco
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Re: Budget or create saving buckets?

Post by kayanco » Sat Jun 28, 2014 10:59 am

Minnesota97 wrote:I am big into using buckets, although I try to make it very simple.

Everything that is "bucket related" goes into Cap 360 in one lump sum. I then keep a simple spread sheet of the value of each bucket. I currently have 24 different buckets (ranging from kids braces fund, future car purchase fund, various vacation funds, dog medical fund, future kids wedding fund, etc.). We put modest amounts in each of these regularly for the really long term buckets (braces, wedding, etc.) so that way when these big (and likely) expenses happen, it shouldn't be an issue. We then also add bigger lump sum amounts into shorter term buckets (upcoming vacation, sports season tickets, etc.).

I reconcile the numbers every quarter to make sure it all adds up, and then adjust accordingly each time we add or take something out of the account.

We've been doing this for 15 years and it really helps keep us focused on short and long term goals for these bucket items and its very simple.

Good topic.
Minnesota97, Hi....yes, I like this idea. I'm glad to hear how other folks implement this. Your way seems similar to how YNAB does it. As in, the money is actually is just one account, but you create a virtual layer on top of it, to visualize how that money is split up.

With several savings goals, like in your case, I can see the value of doing what you do. Basically at any given time, you have a good idea of how much you can afford to spend on each goal.

Without "some" kind of "bucketing", it would be hard to keep track.
--------------

Since you've been doing this for 15 years, if I may ask, can you please shed some more light on your implementation:
- the kids wedding - is that money you are saving to give to your kids for their wedding? how far out is that goal?
- how far out are your farthest future expenditures?
- in your experience, were there some buckets that came as a surprise later on, and you were glad you had saved up for those? Or things, that you think many people would need, but are easy to miss or forget?

Thanks.

Minnesota97
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Re: Budget or create saving buckets?

Post by Minnesota97 » Sat Jun 28, 2014 5:01 pm

kayanco wrote:
Minnesota97, Hi....yes, I like this idea. I'm glad to hear how other folks implement this. Your way seems similar to how YNAB does it. As in, the money is actually is just one account, but you create a virtual layer on top of it, to visualize how that money is split up.

With several savings goals, like in your case, I can see the value of doing what you do. Basically at any given time, you have a good idea of how much you can afford to spend on each goal.

Without "some" kind of "bucketing", it would be hard to keep track.
--------------

Since you've been doing this for 15 years, if I may ask, can you please shed some more light on your implementation:
- the kids wedding - is that money you are saving to give to your kids for their wedding? how far out is that goal?
- how far out are your farthest future expenditures?
- in your experience, were there some buckets that came as a surprise later on, and you were glad you had saved up for those? Or things, that you think many people would need, but are easy to miss or forget?

Thanks.[/quote]

Some of these are REALLY far out. When each kid was born, I identified "buckets" that we thought were a strong likelihood of happening in their life and that would be a big one time expense: braces, bar/bat mitzvah, car purchase, wedding, etc. So when each kid was born, we created these buckets for each. My son is now 6 and my daughter is 4. I'm sure it seems crazy to some people to methodically build for an expense that may never happen (braces) or for an expense that is 13 years down the road (bar/bat mitzvah) or that may be 30+ years down the road (wedding). But we only put $50/month in each of these buckets per kid. So it's about $600 per year, per kid for these specific buckets. These monthly amounts do not impact our ability to meet any of our savings goals and I do not believe they will impact our ability to retire early. Instead, it's part of our monthly budget that we automatically build in and I have a set amount that transfers from our checking to our Capital 360 account every month for these bucket items, and then I add it to the spread sheet that we keep with an updated date so I know the last time it was updated. I rarely pay attention to the amounts, except when I reconcile once or twice a year, and it sure does feel good to know that we already have a few thousand saved for my kids braces/bar mitzvah/wedding and they are so far away from having it. If we get to a point where my kids don't need braces, then we will just deposit that money in the 529 for each kid. Once we stop saving for the bar/bat mitzvah's, we'll just shift that money to the wedding fund and double up on that. Once we get to a point where I know we don't need more for any of these buckets, we'll stop contributing and shift the bucket. But it sure is nice knowing that these tiny drops in the "bucket" that we manage to peddle away will allow us to have these big expenses fully paid for with little to no impact on our then cash flow, or impact our net worth.

We do this for a number of different areas, those three are just those that are farthest out, especially the wedding, obviously.

This process isn't for everyone, but it really is simple, has no significant impact on our budget and makes sense to us.

katsmeow
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Re: Budget or create saving buckets?

Post by katsmeow » Sat Jun 28, 2014 5:25 pm

I use YNAB. I also use Quicken for a couple of particular uses.

Yes, they both cost money but I find them (especially YNAB worth it).

Couple of comments.

When people talk about YNAB being manual to get info, well, not exactly. I actually do usually type in checking out transactions because those are few. But, really for most places you can download and import the data into YNAB. We do most of our spending in American Express and I download the info periodically. YNAB doesn't automatically download it, but it is simple to initiate the download, doesn't bother me at all.

Quicken is used for a few things that I like. I might drop it whenever it comes up for renewal but I'm happy enough with it.

Quicken is terrible (IMO) for budgeting overall. I can look at my budget on YNAB and immediately know that if I spend what I have budgeted for the month that I'm not going to overdraw my bank account. (We don't keep all that much money in our regular bank accounts so want to know if I'm going to need to make a transfer). If it does tell me that I am going to spend more than I had budgeted for the month then I know I need to scan down my categories and see what I can adjust and figure out what is going on. YNAB is great for this.

Quicken has lots and lots of features that YNAB doesn't have. Some of this is great.

One thing I really love with Quicken (probably my favorite thing) is that I can use Quicken Mobile and use my phone to take a pic of receipt and then attach it to the register entry in Quicken (Mobile will sync with my desktop and now I have that receipt nice and neat with the register entry on my desktop). I absolutely love this. This alone is enough to make me like having Quicken. This makes it very easy to find a receipt and look stuff up.

Quicken is better at tracking investment accounts. YNAB has limited functionality for this kind of thing.

I don't use Quicken for budgeting at all - it is useless - but I do like that you can categorize things in more ways than you can with YNAB and you can tag stuff apart from the categories. I wish YNAB had that feature. With YNAB you can have a master category and then one level of sub=category below it. Quicken lets you have deeper levels of sub-categories which is useful - not so much for daily budgeting but to get historic information for planning future budgeting.

YNAB has fewer features overall, but YNAB support is much better. You can actually go to the YNAB forum and you will get personal attention from people who work on the programming. Getting support from Quicken if you have a problem is pretty much useless as far as I can tell.

kayanco
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Re: Budget or create saving buckets?

Post by kayanco » Sat Jun 28, 2014 7:21 pm

katsmeow wrote:..
Quicken is terrible (IMO) for budgeting overall. I can look at my budget on YNAB and immediately know that if I spend what I have budgeted for the month that I'm not going to overdraw my bank account. ... If it does tell me that I am going to spend more than I had budgeted for the month then I know I need to scan down my categories and see what I can adjust and figure out what is going on. YNAB is great for this.
...
Hey,

I'm glad you use both YNAB and Quicken. Would love you feedback on this. Did you look at the budget section of Quicken?
I looked at, Mint, YNAB and Quicken.
Not sure which version you have, but I looked at 2014, and looks like both Quicken and YNAN can be set up in the same way, and do the same thing. What you described (above), I can do that with YNAB, and also exactly in Quicken.
Quicken gives the remaining balance in a category, has the option to carry the balance to next month. Shows in red if we over spend, and allows to adjust the budget to balance it.

If you've compared the two, I'd love your take on the budgeting aspect of YNAB and Quicken
(Mint has decent budgeting, but it's limited than YNAB and Quicken...although I still found it adequate for my use)
katsmeow wrote: One thing I really love with Quicken (probably my favorite thing) is that I can use Quicken Mobile and use my phone to take a pic of receipt and then attach it to the register entry in Quicken (Mobile will sync with my desktop and now I have that receipt nice and neat with the register entry on my desktop). I absolutely love this. This alone is enough to make me like having Quicken. This makes it very easy to find a receipt and look stuff up....
That does seem like a neat idea!
What's your main use for these receipts, for personal records? Could you, or did you ever, use these digital receipts for returns? If one could do that, that would be neat!! :D I'm really bad with receipt and don't like collecting paper at all.

G-Force
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Re: Budget or create saving buckets?

Post by G-Force » Sat Jun 28, 2014 10:53 pm

I do like having separate savings accounts for different purposes.

I have 1 account each for:
1) Emergency Fund
2) Annual Expenses (tax prep, subscriptions, Sam's club membership, car registration, etc)
3) Property Taxes
4) Insurance

The biggest value of doing it this way for me is that it allows me to turn annual expenses into monthly expenses which is easier for me to handle.

kayanco
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Re: Budget or create saving buckets?

Post by kayanco » Sun Jun 29, 2014 11:25 am

Minnesota97 wrote: Some of these are REALLY far out. When each kid was born, I identified "buckets" that we thought were a strong likelihood of happening in their life and that would be a big one time expense: braces, bar/bat mitzvah, car purchase, wedding, etc. So when each kid was born, we created these buckets for each. My son is now 6 and my daughter is 4. I'm sure it seems crazy to some people to methodically build for an expense that may never happen (braces) or for an expense that is 13 years down the road (bar/bat mitzvah) or that may be 30+ years down the road (wedding). But we only put $50/month in each of these buckets per kid. So it's about $600 per year, per kid for these specific buckets. These monthly amounts do not impact our ability to meet any of our savings goals and I do not believe they will impact our ability to retire early. Instead, it's part of our monthly budget that we automatically build in and I have a set amount that transfers from our checking to our Capital 360 account every month for these bucket items, and then I add it to the spread sheet that we keep with an updated date so I know the last time it was updated. I rarely pay attention to the amounts, except when I reconcile once or twice a year, and it sure does feel good to know that we already have a few thousand saved for my kids braces/bar mitzvah/wedding and they are so far away from having it. If we get to a point where my kids don't need braces, then we will just deposit that money in the 529 for each kid. Once we stop saving for the bar/bat mitzvah's, we'll just shift that money to the wedding fund and double up on that. Once we get to a point where I know we don't need more for any of these buckets, we'll stop contributing and shift the bucket. But it sure is nice knowing that these tiny drops in the "bucket" that we manage to peddle away will allow us to have these big expenses fully paid for with little to no impact on our then cash flow, or impact our net worth.

We do this for a number of different areas, those three are just those that are farthest out, especially the wedding, obviously.

This process isn't for everyone, but it really is simple, has no significant impact on our budget and makes sense to us.
Excellent! Thanks for sharing this, I found it really interesting. Currently my own time horizons are very short-sighted, I just think only a month or so in advance, and it almost gives me a strange/weird feeling if I try to think that far out ahead :)

But from your post I can sense a definitive value in doing what you do.

I was wondering what made you start thinking about these far out things? Like saving for kids weddings, etc? Were you taught this thinking at home? Or did you see other people regretting not saving for stuff like this? As in, what's the rationale/motivation behind doing what you do?

Minnesota97
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Re: Budget or create saving buckets?

Post by Minnesota97 » Mon Jun 30, 2014 8:51 am

kayanco wrote:
Minnesota97 wrote:
Excellent! Thanks for sharing this, I found it really interesting. Currently my own time horizons are very short-sighted, I just think only a month or so in advance, and it almost gives me a strange/weird feeling if I try to think that far out ahead :)

But from your post I can sense a definitive value in doing what you do.

I was wondering what made you start thinking about these far out things? Like saving for kids weddings, etc? Were you taught this thinking at home? Or did you see other people regretting not saving for stuff like this? As in, what's the rationale/motivation behind doing what you do?
No one taught me this strategy, I guess it just felt normal to structure it this way. My wife and I have been focused on age 55 being our targeted retirement date since we got married and have been deliberate and focused on reaching that goal. To me, that not only included aggressively saving to build our net worth, but also methodically saving for big expenses we know will happen in life, or are at least likely to happen. I am not sure I could stomach a $5,000 braces bill in consecutive years for our kids, or a $25,000 or so wedding bill...it just makes sense to me to chip away at building these buckets and if we never encounter these expenses we can be creative in our use of the funds.

kayanco
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Re: Budget or create saving buckets?

Post by kayanco » Mon Jun 30, 2014 10:25 am

Minnesota97 wrote: No one taught me this strategy, I guess it just felt normal to structure it this way. My wife and I have been focused on age 55 being our targeted retirement date since we got married and have been deliberate and focused on reaching that goal. To me, that not only included aggressively saving to build our net worth, but also methodically saving for big expenses we know will happen in life, or are at least likely to happen. I am not sure I could stomach a $5,000 braces bill in consecutive years for our kids, or a $25,000 or so wedding bill...it just makes sense to me to chip away at building these buckets and if we never encounter these expenses we can be creative in our use of the funds.
Minnesota97, thanks for sharing your thoughts on this. I found your feedback very valuable!

Best wishes to you!

eschaef
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Re: Budget or create saving buckets?

Post by eschaef » Tue Jul 01, 2014 8:06 pm

I use Excel to track my "buckets". And I have two checking and two savings accounts.

Savings #1 - Online, for larger amounts and long term goals. You can create multiple sub-accounts easily. I have 3.
Savings #2 - Same bank as Checking #2. I just keep a small reserve in here in case I need cash for something unexpectedly. Rare to touch it.
Checking #1 - All monthly bills are stable amounts and directly debited from this account automatically. My paycheck is direct deposited here.
Checking #2 - All variable spending comes from this account. Gas, Groceries, Short-Term small savings goals. Since I use my rewards credit card for almost all of my purchases, that payment comes from here as well.

In Excel, I have a worksheet separated into 3 vertical sections. Each checking account gets an end section. There, I have the balance in the account, and underneath a list of what the money in the account is meant to pay for. Hypothetical Example:

Checking Account #2
Balance: $1000

Unaccounted for: $0 (=a formula which subtracts the total allocations from the balance. If it is negative I know I have an issue. If I have "extra", it either goes to the next known upcoming expense or it gets transferred to long-term savings. My goal is to keep this at $0.)

Allotted:
CC Payment: $300 (As I pay for things, I subtract the money from the line item budget and add it here)
Gas: $100
Groceries: $200
Fun Money: $50

Additional Expenses
Parking Tag: $150
Wedding Shower Present: $100
Fall Sports Fee: $100 Until Goal $100 (=formula subtracting amount already saved from the amount needed)
Any forseeable expenses or purchases are listed here, so I know how much money to set aside for them.

In the middle section is my savings balance and all of my big picture annual savings goals.

I update this worksheet manually, generally several times a week, and always on a payday or after a significant purchase. I find it enjoyable and satisfying.
Last edited by eschaef on Tue Jul 01, 2014 8:25 pm, edited 1 time in total.

kayanco
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Joined: Sat Jun 07, 2014 12:20 am

Re: Budget or create saving buckets?

Post by kayanco » Tue Jul 01, 2014 8:15 pm

eschaef wrote:I use Excel to track my "buckets". And I have two checking and two savings accounts.

Savings #1 - Online, for larger amounts and long term goals. You can create multiple sub-accounts easily. I have 3.
Savings #2 - Same bank as Checking #2. I just keep a small reserve in here in case I need cash for something unexpectedly. Rare to touch it.
Checking #1 - All monthly bills are stable amounts and directly debited from this account automatically. My paycheck is direct deposited here.
Checking #2 - All variable spending comes from this account. Gas, Groceries, Short-Term small savings goals. Since I use my rewards credit card for almost all of my purchases, that payment comes from here as well.

In Excel, I have a worksheet separated into 3 vertical sections. Each checking account gets an end section. There, I have the balance in the account, and underneath a list of what the money in the account is meant to pay for. Hypothetical Example:

Checking Account #1
Balance: $1000

Unaccounted for: $0 (=a formula which subtracts the total allocations from the balance. If it is negative I know I have an issue. If I have "extra", it either goes to the next known upcoming expense or it gets transferred to long-term savings. My goal is to keep this at $0.)

Allotted:
CC Payment: $300 (As I pay for things, I subtract the money from the line item budget and add it here)
Gas: $100
Groceries: $200
Fun Money: $50

Additional Expenses
Parking Tag: $150
Wedding Shower Present: $100
Fall Sports Fee: $100 Until Goal $100 (=formula subtracting amount already saved from the amount needed)
Any forseeable expenses or purchases are listed here, so I know how much money to set aside for them.

In the middle section is my savings balance and all of my big picture annual savings goals.

I update this worksheet manually, generally several times a week, and always on a payday or after a significant purchase. I find it enjoyable and satisfying.
Thanks. I like your Savings/Checking combo...I'm setting up something similar.

For the second budget part, it seems like you are doing manual Mint or YNAB type budget. Could you post a screenshot of the Excel worksheet? (obviously you can black out anything). A visual would be very helpful.

Thanks.

eschaef
Posts: 170
Joined: Wed Dec 28, 2011 7:38 pm

Re: Budget or create saving buckets?

Post by eschaef » Tue Jul 01, 2014 8:46 pm

kayanco wrote:Could you post a screenshot of the Excel worksheet? (obviously you can black out anything). A visual would be very helpful.

Thanks.
Because I get paid on a 10 month schedule, I have several months of bills set aside at the moment. I generally keep it about a month ahead, so November bills are paid with October's paychecks. This is the YNAB strategy, as well, I believe. I actually prefer to be a month and a half ahead, actually, so that I have all of next month's bills covered by the 15th of the previous month.

The financial plan in the middle is how I allot my "savings" money every month, and when I can expect that goal to be met.
Image

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tom0153
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Location: Little Neck, NY

Re: Budget or create saving buckets?

Post by tom0153 » Wed Jul 02, 2014 1:07 am

Another www.smartypig.com user.

Earlier posts mentioned the rate which is 100x more than what I get in my checking (.01 v. 1%).

While it is necessary to close a specific account of cash is needed, it is also possible to transfer one goal to another. This offers some lattitude in closing an account early and then rebuilding it by shuffling accounts. Plus, a new account can be opened and then a large addition made to it.

Each separate bucket is all part of a single savings account.

I budget most of the my quarterly, semi-annual or annual expenses in this way, and the monthly expenses come out of checking directly.

I have largely stopped using Mint.com for budgeting, although I use it to recap items for my tax return.
Best, Tom

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Meaty
Posts: 613
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Location: Texas

Re: Budget or create saving buckets?

Post by Meaty » Wed Jul 02, 2014 4:44 am

avenger wrote:Wow. That all seems so complicated - why the need to do such mental accounting? Money is money.
+1. Money is fungible. I've always just used one savings account and added to it for upcoming expenditures like vacations
"Discipline equals Freedom" - Jocko Willink

kayanco
Posts: 708
Joined: Sat Jun 07, 2014 12:20 am

Re: Budget or create saving buckets?

Post by kayanco » Wed Jul 02, 2014 12:31 pm

tom0153 wrote:Another http://www.smartypig.com user.

Earlier posts mentioned the rate which is 100x more than what I get in my checking (.01 v. 1%).

While it is necessary to close a specific account of cash is needed, it is also possible to transfer one goal to another. This offers some lattitude in closing an account early and then rebuilding it by shuffling accounts. Plus, a new account can be opened and then a large addition made to it.

Each separate bucket is all part of a single savings account.

I budget most of the my quarterly, semi-annual or annual expenses in this way, and the monthly expenses come out of checking directly.

I have largely stopped using Mint.com for budgeting, although I use it to recap items for my tax return.

I can share some SmartyPig feedback.

I recently tried it as part of my research and in relation to this thread of mine. But I decided to close it down. It's a bit cumbersome to use, plus they make you wait 5 extra days before closing a goal. Overall it's a decent idea, but definitely they can make it better. Right now I didn't find it too useful.

kayanco
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Joined: Sat Jun 07, 2014 12:20 am

Re: Budget or create saving buckets?

Post by kayanco » Wed Jul 02, 2014 12:35 pm

eschaef wrote:
kayanco wrote:Could you post a screenshot of the Excel worksheet? (obviously you can black out anything). A visual would be very helpful.

Thanks.
Because I get paid on a 10 month schedule, I have several months of bills set aside at the moment. I generally keep it about a month ahead, so November bills are paid with October's paychecks. This is the YNAB strategy, as well, I believe. I actually prefer to be a month and a half ahead, actually, so that I have all of next month's bills covered by the 15th of the previous month.

The financial plan in the middle is how I allot my "savings" money every month, and when I can expect that goal to be met.
Image
Excellent! Thanks for posting this eschaef. Very helpful!

Just thinking about these savings goals over the past few weeks, I've identified a few future expenses that I think would be useful to start saving for. For example, I want to take some classes and courses, so I think it would be a good idea to start saving for those, so I have some funds already when the time comes. And so that it won't disrupt any other goals/plans, etc.

Thanks again!

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