Tracking income and expense with Yodlee

Posted by Matt

This is a topic I've been waiting to post on for a long while now. After lots of looking and testing, I think I've finally found a system for tracking my finances that works for me.

Like most people, I started out with a check register. This was a great way to keep track of what went in and out of my account, but building a budget from the information it contained required a lot of extra effort.

So, I tried out a spreadsheet. Once I put the data into this structured format, it was much easier to categorize and manipulate. In the years since, I've grown to love using spreadsheets, but this method still requires that I manually track every bit of income and expense.

So, the next things I tried were financial software packages (first Quicken 98 and later Microsoft Money) that allowed me to connect my computer directly to the bank to download my transactions. No more data entry! These were both pretty great applications and I'll assume that the refinements that have been added over the last decade are at least partly responsible for their dominance in the market. Unfortunately, not only did I have to pay for the software but back then, I also had to pay the bank a monthly fee to access my account information. Anyone else remember back that far? If it helps, I was downloading the data with a dial-up modem.

So, why haven't I switched back to one of those applications now that free "Internet Banking" has become de rigueur? Well, the short answer is that I'm a picky person. I find that I'm always wanting to "tweak" software and that led me right back to the spreadsheet. There, all my "control issues" are satisfied.

"But wait", you're thinking, "I thought you didn't like doing the data entry?" Well that (finally) is where Yodlee comes in. I'll explain how in a minute, but first, some background information.

Yodlee is a company that provides financial applications to both institutions and consumers. The application I use is called "MoneyCenter" and is essentially an online place to track just about any type of financial account you can think of. Below is a list of the types of accounts that I track with it, but that does not include all of the types of accounts to which it CAN be linked.

• primary bank checking account
• Internet savings account
• mortgage accounts
• 401k plan
• 529 college savings plan
• credit card
• credit card rewards program

I added these accounts to my "dashboard" by providing my online usernames and passwords. Once they are all in the system, Yodlee automatically connects periodically to keep the information on the website up-to-date for you. This allows a whole host of features, but I'll describe the ones I've been using the most.

Net Worth Statement - this allows me to see my entire financial portfolio in one place. There is even an option to include estimates of equity in holdings that do not have an online account associated with them, like I do with our houses (I just had to; seeing all the associated mortgage debt was too unbearable otherwise). The net worth number is also tracked and graphed over time.

Transactions - here is where I get to finally connect back to my beloved spreadsheets. Yodlee pulls in all of the transactions for my various accounts and I can export them to a spreadsheet. What really helps is that Yodlee can be configured to automatically categorize the transactions. For example, I've specified that any transaction that comes through with a description containing "Pride Disposal" is automatically categorized into my "garbage bill" category. Some categorization even takes place without any work necessary by the user; Yodlee is very good at putting transactions from large restaurant franchises into the "Restaurants/Dining Out" category, for example.

At the end of each month, I log in to Yodlee, make a quick run through the transactions to make sure the categorization is accurate (I'm still refining my categorization rules), and then export the transactions in spreadsheet format. I copy that data into a sheet stored on my computer, which has a series of processing rules to display the categories in a way that makes the most sense to me. Many (most?) people can skip the exporting and spreadsheet tweaking steps as Yodlee has another great feature for organizing your data, namely...

Spending Reports - This is where the site gets fancy. The first thing you see on this screen is a pie chart showing a breakdown of all of your spending, along with a table alongside it that shows the breakdown of your expenses. You can use a variety of filters on the report to limit it to the previous week, month, year, etc. or show the activity from a defined group of accounts. Even cooler: say you are surprised by the dollar amount next to Restaurants (like I usually am)...you can simply click on that category name and instantly see all of the transaction details for that category in the specified time frame. Awesome!

This post is much too long already, so let me just quickly mention some of the other features.

• Yodlee Bill Pay - pay your bills online
• Budgeting - set targeted amounts for spending and track progress
• Alerts - receive emails based on custom rules (large withdrawals, exceeding budgets, etc.)

By using this system, I've reduced the amount of time spent recording/categorizing financial records, while simultaneously gaining instantaneous access to the current and historical status of all of my financial accounts. If you're really nuts about finances and numbers, the tool is worth checking out, especially considering that it is FREE!

I should also mention Mint, though I won't do a detailed review here. I tried out the Mint website because it offers similar functionality to Yodlee (it may even use Yodlee behind the scenes), but also does a very basic analysis of your accounts to find money-saving opportunities. The ones it found for me were invalid and I wasn't that impressed with the site's categorization. Also, it only allowed connections to bank and credit card accounts when I tried it out. Sorry, Mint, you had your shot.

Let me close by acknowledging that not everyone is nearly so obsessed with tracking numbers, but I really believe that everyone should have at least some kind of rudimentary system. Any of the options mentioned above is better than nothing. You have to know where the money is flowing in order to ensure (as I said back in my second post on this site) that you have more money coming in than going out!

Do You Need An Accountant?

Posted By Paul

As the tax deadline approaches many people are faced with the question of whether or not they should do their own taxes or hire an accountant.

My view on the subject is that you should do your taxes for as long as you can possibly stand to.

Here is the basic progression I took with my taxes:

1) The EZ form. Ah those wonderful days of getting your taxes done in an hour. If you qualify for the EZ form, then by all means do your taxes yourself. I would say that ANYONE can do the EZ form by themselves or with a little help from a friend or relative.

2) Turbo Tax. When I no longer qualified to do the EZ form I moved to using Turbo Tax. I think Turbo Tax is a great product, it served me well for many years. For those of you who are unaware of this product, it's essentially a piece of software that asks you a bunch of questions and based on your answers it fills out your tax forms for you. If you no longer qualify for the EZ form but your taxes aren't THAT complicated then I would highly recommend this product.

3) The accountant. I remember very well what made me switch over from Turbo Tax to an accountant. It had been a year with a lot of crazy tax events (stock sales, buying my first house, etc.), and I had decided to try Turbo Tax once again. The first problem I ran into was I was unsure of what info Turbo Tax wanted. Turbo Tax would ask me for some value related to the closing costs for my home and I would look through my stack of home buying forms trying to figure out which value(s) it wanted. I made it through Turbo Tax with my best guess as to what it wanted and I ended up with a tax bill that was over $10000 (the biggest I'd ever had)! That was enough to get me to give the accountant a try. I got a recommendation for an accountant sent them my forms and had them do it (case in point, they came up with the exact same number that Turbo Tax did).

At that point I kept planning on going back to Turbo Tax as soon as I had a 'simple tax year', but that just never seemed to happen. Every year since had some significant tax event (house sale, marriage, starting a business, etc.) that made me willing to pay for an expert.

Now that my wife has her own business we pretty much involve the accountant every year. Our finances have evolved to the point where paying an expert is worth it to us.

One other point, is that this last year I switched accountants. Why? I was happy with the service that my accountant gave me, but they had sold their practice to a larger downtown firm and over the last few years their tax prep fees had gradually increased to the point where they were almost double what I had originally been paying. I started shopping around and quickly found an accountant that also gave good service (which for me means good communication via email and phone) and that was almost half the price.

How did I find an accountant? Well I just started asking around. I was lucky to have friends and coworkers that were all similar to me from a tax standpoint, and that were willing to tell me how much their tax preparation cost and how happy they were with their accountant.

So do your own taxes yourself for as long as you can do them with confidence and without driving yourself crazy. Once you decide to get an accountant, ask around to get an idea of price and recommendations, and don't hesitate to shop around if you ever feel like your accountant is getting overpriced.

Are you still PAYING for software?

Posted by Matt
I'm one of those lucky people that everyone seems to come to with computer and software questions, and it sometimes makes me wonder how computers and software ever became so ubiquitous. I think that maybe 1 or 2% of the population is making the miracle of personal computing possible for the rest of society.

In an attempt to head off one of the more common types of questions I hear and hopefully ease the burden on my techie cohorts, I thought I'd post today with some good software suggestions that can also be big money savers (because they are all free!)

OpenOffice: Productivity software. This is a big one and should be considered as an alternative to Micro$oft. It is free because it is open-source. It contains:

• Writer - word processor; similar to MS Word
• Calc - spreadsheets; similar to MS Excel
• Impress - presentations; similar to MS Powerpoint
• Base - relational database; similar to MS Access
• Draw - graphics and diagrams; similar to MS Visio

Google: everything software. If you know any Mac or Linux users, you know how enthusiastic they can be about their respective environments. So far, I don't know of many Google enthusiasts who approach that same level of religious fervor, except for myself. Now obviously everyone knows by now about Google's search engine, but there are a few other applications you might not have heard of yet.

• Gmail - great email software. Very simple to use and plenty of storage space. If you are still using Outlook Express or (yikes) AOL for email, the time has come to move on. Shhhh, it's okay...Google's here now.
• Picasa - this is billed as "the software that should have come with your digital camera" and rightly so. If you take digital pictures and have not installed Picasa yet, stop reading this and do so now. I consider myself fairly organized but still found it a nightmare to try to manage all of my photos in the Windows folder system. Picasa solved all my photo handling problems and then some (editing, emailing, posting online albums, ordering prints, etc.).
• Docs and Spreadsheets - hosted productivity software; word processing, spreadsheets and presentations. These applications are not nearly as feature-rich as their Microsoft or OpenOffice equivalents, but have the advantages of 1) not requiring installation, 2) not requiring backups and 3) allowing you (and others you trust) to access your files from any machine with Internet access.
• Calendar - Shareable and can be configured to send appointment reminders in pop-ups, email or even to your cell phone.

I could go on and on about lots of other Google apps, but this covers most of my favorites. Before we move on, let me quickly suggest Google Page Creator and Blogger if you need a free and easy way to put up a website or blog, respectively.

AVG Antivirus - Antivirus software used to be the one application you had to just break down and buy from one of the big name software companies like Norton or McAfee. Well, not anymore. AVG is free and automatically updates itself to watch for all the latest threats.

AdAware - if you need an anti-spyware application, Lavasoft's is one of the best free ones I've found, but I also have to add that you really shouldn't need these types of applications if you are careful about where you click and what you download.

ZoneAlarm - An extra layer of security for your machine, for those of you who haven't secured yourself behind hardware yet. This product started small a while back, but has matured into a full-fledged suite of products. If you want the free, basic edition, make sure you click the right link at the bottom of the ZoneAlarm download page.

This page should serve as fair warning for people who know me: If you ask for help with other brands of software, the first thing I will likely do these days is suggest you migrate to one of the applications above first. Working with bad software wastes time and energy, and wasting is not the Frugalize way.