Simplifying the Financial Records

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
User avatar
weltschmerz
Posts: 327
Joined: Thu Jul 30, 2009 9:17 pm
Location: SoCal

Simplifying the Financial Records

Post by weltschmerz » Tue Feb 13, 2018 1:45 pm

For the past 20 years, I have been keeping a detailed spreadsheet of all of my financial transactions. This includes all investments, checking accounts, and credit card accounts. Every month, as soon as a new statement arrives, I input the data into my spreadsheet and make sure everything checks out. Over the years, this spreadsheet has ballooned to a massive size. The investment page had over 5000 rows, the checking page had 3000 rows. I was recently looking at the old data, and I asked myself, what is the point of keeping all this?

Last year I finally stopped tracking all the credit card purchases. I have only ever had 3 instances of fraud in the last 20 years, and they were easy to fix by calling the credit card company. Now I just check the online statement each month to make sure there's no fraud, but I don't record every transaction any more.

This year, I stopped tracking all the checking account transactions. As long as I maintain a buffer in the account, I am confident that I won't overdraft. Again, I check the online statement to ensure there's no fraud, but otherwise, the bank has all my old monthly account statements available as PDFs, and really, will I ever need to go back and see what I spent on rent and utilities 5 years ago?

The last transaction type that I have stopped tracking is my retirement investments. Here is my reasoning:

Pre-tax accounts (401k, traditional IRAs): All of this money is untaxed, so does it matter if I bought Fund X 8 years ago, sold it to buy Fund Y, moved jobs and transferred the money to a new provider, etc.? Every penny has not been taxed yet, so as long as I can show that I did not exceed the yearly contribution limits (which my tax returns show), then the yearly internal transaction data is of no value to me.

Post-tax accounts (Roth IRAs): Every penny of this money has already been taxed, so why keep any internal transaction records at all? My tax returns and Forms 5498 show the yearly contributions, and I believe that's all I will need to keep.

I still maintain a spreadsheet for taxable investments, but I try to keep this as simple as possible, just tracking the purchases and sales. To avoid having lots of small purchases, I avoid any automatic re-investments of interest and dividends, and only invest in bigger chunks. Dividends and interest will be reported to me at year end on the various 1099 forms, so that's when I'll verify that everything looks right. I believe I can maintain this simplified spreadsheet with a minimal amount of effort going forward.

I also maintain a spreadsheet with my overall investment amounts and allocations, but I will only update this once or twice a year to make sure my allocations have not gotten off track.

Since making these changes, I feel a bit freer. Before, I could determine my overall profits/losses down to the penny, and I could calculate my XIRR for each year to several decimal points. I knew my exact yearly spending. It entertained me to keep all this detailed data. Now, all that data is gone. Good riddance.

***One last thing***: If you're just starting out, you probably should track all of your accounts to make sure you are saving enough for your future. But once you are down the road a ways, and you're not living paycheck to paycheck anymore, then you can simplify and streamline your data.

What is your strategy for tracking all of your accounts?

User avatar
Toons
Posts: 12689
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: Simplifying the Financial Records

Post by Toons » Tue Feb 13, 2018 2:00 pm

Quicken Software
Since 1993









:wink:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

kaudrey
Posts: 908
Joined: Fri Nov 22, 2013 2:40 pm

Re: Simplifying the Financial Records

Post by kaudrey » Tue Feb 13, 2018 3:17 pm

Hi,

I have an Excel file that does a variety of things, but never to the level you describe. I have a net worth tab, which I update monthly, which just lists my different asset accounts and the house and deducts the mortgage. It goes back to 2003.

Another tab keeps track of savings, but since I save the same amount every month (unless a big expense comes up), I set this up at the beginning of the year for the whole year, and then just adjust if necessary.

My "Expenses" tab only keeps track of large categories (Travel, Medical, Car, House (mgt/taxes), Capital Expenditures (house repairs), Pets). These are things that are either monthly or less often, so it's easy to keep track.

The Portfolio tab lists all of my holdings so I can check my asset allocation. I update this quarterly.

These feed into "Retirement" spreadsheet, which is really a combo of actual results and projected future results. It has income, account values, and expenses and savings from the prior three tabs, plus a few other categories (taxes, for example), and then the difference between income and all of the other expense categories just gets lumped into "Living Expenses". Going out, this sheet projects income/expenses/portfolio balances, so I can see what I should have when I retire.

It sounds complicated, but I probably spend about 2 hours a month on it, tops. It all flows together and after years of tinkering with it, quick updates once in a while let's me see everything I need to see.

J295
Posts: 1387
Joined: Sun Jan 01, 2012 11:40 pm

Re: Simplifying the Financial Records

Post by J295 » Tue Feb 13, 2018 3:45 pm

Tracked expenses pre retirement and relied on brokerage statements

Post retirement track assets at least quarterly

User avatar
lthenderson
Posts: 3063
Joined: Tue Feb 21, 2012 12:43 pm
Location: Iowa

Re: Simplifying the Financial Records

Post by lthenderson » Tue Feb 13, 2018 4:22 pm

I use an Excel spreadsheet to input the balances of all my retirement assets once a month to get a general picture of how it is progressing. I use Quicken but mostly just to keep tabs on spending amounts per year, no fine detail.

bayview
Posts: 1459
Joined: Thu Aug 02, 2012 7:05 pm
Location: WNC

Re: Simplifying the Financial Records

Post by bayview » Tue Feb 13, 2018 8:46 pm

kaudrey wrote:
Tue Feb 13, 2018 3:17 pm
Hi,

I have an Excel file that does a variety of things, but never to the level you describe. I have a net worth tab, which I update monthly, which just lists my different asset accounts and the house and deducts the mortgage. It goes back to 2003.

Another tab keeps track of savings, but since I save the same amount every month (unless a big expense comes up), I set this up at the beginning of the year for the whole year, and then just adjust if necessary.

My "Expenses" tab only keeps track of large categories (Travel, Medical, Car, House (mgt/taxes), Capital Expenditures (house repairs), Pets). These are things that are either monthly or less often, so it's easy to keep track.

The Portfolio tab lists all of my holdings so I can check my asset allocation. I update this quarterly.

These feed into "Retirement" spreadsheet, which is really a combo of actual results and projected future results. It has income, account values, and expenses and savings from the prior three tabs, plus a few other categories (taxes, for example), and then the difference between income and all of the other expense categories just gets lumped into "Living Expenses". Going out, this sheet projects income/expenses/portfolio balances, so I can see what I should have when I retire.

It sounds complicated, but I probably spend about 2 hours a month on it, tops. It all flows together and after years of tinkering with it, quick updates once in a while let's me see everything I need to see.
You don't eat? :D

I ask because this looks very reasonable and workable, but food is our largest lump expense, generally nudging ahead of the mortgage payment. And while it could certainly be reduced, it couldn't be eliminated.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

kaudrey
Posts: 908
Joined: Fri Nov 22, 2013 2:40 pm

Re: Simplifying the Financial Records

Post by kaudrey » Wed Feb 14, 2018 10:02 am

bayview wrote:
Tue Feb 13, 2018 8:46 pm
kaudrey wrote:
Tue Feb 13, 2018 3:17 pm
You don't eat? :D

I ask because this looks very reasonable and workable, but food is our largest lump expense, generally nudging ahead of the mortgage payment. And while it could certainly be reduced, it couldn't be eliminated.
Hi,

Yes, I do eat! :happy I have just decided that eating is part of "living expenses", because I have to eat to live! I guess my goal isn't to look for areas to reduce; so I'm not overly concerned with normal costs of living. And, true, the mortgage and related expenses are a normal cost of living, but it is also easy to keep track of because it's the same every month, so it just gets totaled on January 1 for the year, and I don't have to keep adding stuff to it.

As long as I am meeting my savings goals, I don't worry about the "living expenses" too much, and I am not a spender by nature, so that has never been a problem. And, I just can't be bothered having to enter in things that happen often (grocery shopping, gas for the car, etc). The "Car" category has insurance and oil changes and repairs, etc, but not gas. Gas is also "living expenses".

It really depends on your goals. I don't need a detailed budget, but I do like to know some of the larger items as I outlined, for help in future planning.

User avatar
climber2020
Posts: 1034
Joined: Sun Mar 25, 2012 8:06 pm

Re: Simplifying the Financial Records

Post by climber2020 » Wed Feb 14, 2018 10:17 am

I do not track anything. I look at my bank account every morning to make sure it looks right, and I look at the charges on the one credit card I use when I pay off the balance once a week. I check my investments once in a while as well. All of this takes me about 2-3 minutes.

bayview
Posts: 1459
Joined: Thu Aug 02, 2012 7:05 pm
Location: WNC

Re: Simplifying the Financial Records

Post by bayview » Fri Feb 16, 2018 5:26 pm

kaudrey wrote:
Wed Feb 14, 2018 10:02 am
bayview wrote:
Tue Feb 13, 2018 8:46 pm
kaudrey wrote:
Tue Feb 13, 2018 3:17 pm
You don't eat? :D

I ask because this looks very reasonable and workable, but food is our largest lump expense, generally nudging ahead of the mortgage payment. And while it could certainly be reduced, it couldn't be eliminated.
Hi,

Yes, I do eat! :happy I have just decided that eating is part of "living expenses", because I have to eat to live! I guess my goal isn't to look for areas to reduce; so I'm not overly concerned with normal costs of living. And, true, the mortgage and related expenses are a normal cost of living, but it is also easy to keep track of because it's the same every month, so it just gets totaled on January 1 for the year, and I don't have to keep adding stuff to it.

As long as I am meeting my savings goals, I don't worry about the "living expenses" too much, and I am not a spender by nature, so that has never been a problem. And, I just can't be bothered having to enter in things that happen often (grocery shopping, gas for the car, etc). The "Car" category has insurance and oil changes and repairs, etc, but not gas. Gas is also "living expenses".

It really depends on your goals. I don't need a detailed budget, but I do like to know some of the larger items as I outlined, for help in future planning.
Makes sense! :beer
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

Post Reply