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Budget Software Reviews: Choose Your Tool for Successful Money Management

By Dustin | Finances & Careers

Best Budget SoftwareBuilding a budget is a primary step toward achieving financial success for your family.  Our family has used some homemade Excel spreadsheets as our “budgeting software” of choice for several years.

However, as I explained previously, our day-to-day money management has really grown stale recently, and it had a lot to do with the cumbersome way that we have tracked our personal finances…think piles of receipts accumulating until month’s end followed by hours of data entry among several spreadsheets.

Our system lacked efficiency, and it frankly got so boring and time-consuming that we let it slide.

I decided it was time for a change.  So, I’ve spent a great deal of time lately researching and reviewing popular budgeting software.  And, lucky for you, I am going to share with you what I’ve found.  You will find below five of the top budget software tools available along with an overview of their features and my opinion on who may find them most useful.

The Best Budgeting Software I’ve Found

1. You Need a Budget

UPDATE: Since my original cursory review, I completed a detailed review of YNAB.  Please read my full review of You Need A Budget.

I am thoroughly impressed with You Need a Budget (YNAB) and its mix of capabilities and simplicity.  YNAB is a computer-based software that you buy for a one-time fee.  It does all of the things a great budgeting software needs to do, but it goes well beyond the typical tasks of tracking income vs. expenses and planning for future purchases.

For starters, it allows you to directly import your transactions from your bank which allows you to say bye-bye to receipts and data entry.  The YNAB community is also very impressive with free online classes, a blog and forums so you can learn all about effective money management.  But what really sets You Need a Budget apart is that it has a powerful “Money Management Methodology” built right in.  The four key rules of this method are reflected in the software’s set-up to make them easy for you to achieve:

  • Rule One: Stop Living Paycheck to Paycheck
  • Rule Two: Give Every Dollar a Job
  • Rule Three: Save for a Rainy Day
  • Rule Four: Roll with the Punches

The only drawback I saw with You Need a Budget is that it’s not web-based, so you’ll be limited to using it on a single computer.  However, the ability to import your bank transactions makes it just as convenient.

Who This Software Is For: Anyone who is looking for a thorough budgeting program built on solid financial principles with good money management lessons included.  This is not the software for you if you need a web-based platform.

Where You Can Get It: You can learn much more about YNAB and sign-up for a free 34-day trial at their website.

2. Pocketsmith

Pocketsmith is a web-based program that you pay for on a monthly basis, although a free version is available as well.  Pocketsmith takes a unique approach to the budgeting interface by utilizing a calendar to forecast your future cash position.

It works like any web-based calendar, except the events are financial.  You put in your scheduled salary, bill payments, rent, and grocery bills, etc. on the appropriate date and you can make them repeat as appropriate.  As you go, PocketSmith takes the events and generates a 6 or 12 month cash forecast (depending on the level of detail you purchase), so you can plan your budget for the coming year.

Pocketsmith allows you to directly import your transactions from your bank as well.  And since it is web-based, you can access your budget and make changes from anywhere that you have access to internet.

Who This Software Is For: Those who are looking for a web-based budget that operates on an intuitive calendar-based platform.

Where You Can Get It: You can learn more about Pocketsmith and sign-up for the free, premium or super version (depending on your need for accounts, budget events and length of forecasts) at their website.

3. Pear Budget

Pear Budget is another web-based budget that requires a small monthly fee.  The creators of Pear Budget present it as “a really simple budgeting and expense tracking service.” Budgeting plus simplicity…sounds like a winning approach!

Pear Budget uses the classic “envelopes” approach to monthly budgeting but brings it online for ease-of-use and full access from anywhere you can get on the internet.  You will have to enter your own receipts, but the program helps keep it as fun as possible.  The built-in step-by-step set-up wizard will have your first budget ready to go in ten minutes, and the system is designed to make updates simple and quick as well.

Who This Software Is For: Those who are looking for a web-based budget that is simple, attractive-looking and based on the classic envelope system.

Where You Can Get It: You can read more about the features of Pear Budget on their (simple) site.  You can also sign up for a free 30-day trial while you’re there.

4. Mint

Mint is a totally free, web-based budget and financial account hub.  In addition to a detailed budgeting component, Mint also allows you to access information for all of your online accounts from a single location.  This gives you a real-time snapshot of your cash, investments, debts and net worth so you can easily track your overall progress.

The budget portion of the Mint program is fairly intuitive and easy-to-use after the initial set-up.  It automatically imports all of your bank and credit union transactions, and you can change their labels to correspond with the budget that you set up at the beginning of the month.

A cool feature is the ability to set alerts that will be emailed to you when your attention is needed (over budget, low checking account balance, large transaction amount, etc.).

Who This Software Is For: If you want a free web-based budget that gets the job done, you’ll want to check out Mint.  However, keep in mind that free comes with a price…in the form of advertisements and “savings suggestions” where you’ll be offered products that could potentially save you money (like a different credit card or auto loan, which are not my idea of money-saving products).

Where You Can Get It: You can read more and sign up for a totally free account at Mint.  You’ll need to feel comfortable providing the log-in information for your online accounts, although you will remain anonymous (they never ask for your name).

5. Quicken

Let’s round-out this budgeting software review by taking a look at a classic player in this market.  Quicken is a computer-based software that you buy for a one-time fee.  It offers a full financial management picture rather than focusing solely on budgeting.  In that way, it is a lot like Mint in a desktop (rather than web-based) application.

Quicken brings your accounts together all in one place and helps you set budgeting and savings goals, and it provides alerts for upcoming payments to help you avoid late fees (assuming you are accessing the software to see the alert).

While its budgeting approach is not as intuitive as the budget-focused YNAB software, it does have the added bonus of integration with TurboTax.  This allows you to export your financial data directly to TurboTax for fast and accurate tax preparation (with the additional purchase of that software, of course).

Who This Software Is For: If you prefer a desktop-based software that provides a full financial picture (rather than focusing on budgeting alone) at the risk of being a bit complicated, then you’ll want to take a look at Quicken.

Where You Can Get It: You can read more about Quicken and its customer reviews on Amazon.

So, What Are We Using?

I hope you enjoyed reading about these popular budgeting software systems, and I trust that you found one that may work for you and your family.  The difference in format, features and price in these products provides a great opportunity to find an awesome budget that serves your needs.

Remember, though, that having a budget and using it is much more important than which particular software you choose.

Personally, I am trying out Mint right now and enjoying its full financial summaries and online access.  However, the usability and awesome money management principles built in to You Need a Budget are really drawing me in.

I’ll let you know when we make our final decision, and I’m sure a full review will follow.  NOTE: We made the switch to YNAB and love it – here’s the full review!

I’m anxious to hear from the community on this topic.  Have you tried any of these systems?  Have I piqued your interest in any of them?  How does your family handle your budgeting currently?

By the way, some of the links in this post are “affiliate links” so if you purchase that product after clicking through from here, I receive a small commission though your price is not affected at all.  It’s a small amount, but I wanted you to know that upfront and let you know that any support you offer Engaged Marriage is always greatly appreciated.

Photo by Don Hankins

Holy Crap! I Eat Out A Lot!

By Dustin | Finances & Careers

Easting Out is Hard on the Family BudgetMy wife and I have recently recommitted ourselves to the budgeting process.  We’ve lived on a budget for the past several years since we discovered Dave Ramsey and followed his plan to become debt free in 2008.

However, in the past six months or so, we got a bit lazy and lackadaisical in our day-to-day finances.  I decided to check out some new budgeting software that would make things both easier and more fun to track than my good ole, self-made Excel spreadsheets.  I learned a lot about what’s available in the world of budgeting software, and you can read my review of five top budgeting software systems for the details.

For this post, I just had to get something off my chest…I seem to have a big problem with eating out at restaurants!

Every day?  Yep.

As I took the time to reflect on our spending habits over the past several months, it quickly occurred to me that I had eaten at least one meal at a restaurant virtually every…single…day!

This habit is really apparent during the work week.  Last spring and summer, I was doing great and using my lunch time to go cycling when it was nice outside or hit the gym on rainy days.  I brought a simple lunch most days and maybe went out for lunch once a week or so and usually when I was traveling for work (and it was reimbursable).

Not lately.  I have literally been going out every day for the past four months or so.  This could be a sit-down restaurant with co-workers, lunch with clients or just fast-food drive-through on the way to a meeting. And our family usually eats at least one meal in the form of carryout each day of the weekend just to top off our excess.

Wow, this explains a lot!

Holy Crap, that’s Big Money!

So, what’s the big deal?  Well, let’s take a look at what this is costing our family.

For just my lunches, I spend probably an average of $11 per meal when you average out a few $6 value meals with more frequent sit-down restaurants with bills around $12-15 with a tip.

At five days per week, that’s $55.  That adds up to around $220 per month.  Or more than $2,800 a year…for lunch!

That’s half of a fully-funded Roth IRA.  Or a nice used car every five years.  If you invested that money every year in a good index fund and averaged 8% annually for the next 30 years, those Big Macs start looking like $350,000!

Holy Crap, that’s a Big Belly!

If you’ve been following the Improve Yourself! challenge, you know that I am trying to shed some extra pounds.  Well, I think I found a big part of my problem.

I looked up the nutritional value of one of favorite meals at Applebee’s Restaurant.  The Oriental Chicken Roll-up with a side of fries weighs in with an artery-clogging 51 grams of fat and more than 1,100 calories.  And that’s with a side of zero-calorie Diet Pepsi!

This is certainly not the worst thing I eat each week, but it probably represents a fair average.  I could instead be eating a healthy turkey sandwich and baked chips at under 500 calories.  That’s a net difference of around 600 calories per meal.

So, over the course of a five-day workweek, I am consuming around 3,000 extra calories!  That’s the equivalent of almost one pound per week…just from my lunch choices!  Or around 50 pounds per year if all else is held constant!

My Family Deserves Better

I am really glad that we decided to take a fresh look at our family budget.  It seems so obvious now, but it really took the effort of focusing on my habits to reveal my lunchtime problem.

So, I have committed to reform my expensive and fattening ways.  I will be limiting myself to one lunch out per week, and I’ll try to make that on a day when I am traveling and get reimbursed for the expense.

Our family is looking forward to having some extra money in our account and less weight around my waist as a result.

How often does your family eat out each week?  Do you have any other habitual budget-busters that you know you need to address?

Photo by pointnshoot

Dave Ramsey’s Baby Steps: A Real Path to Family Financial Freedom

By Dustin | Finances & Careers

Family Financial Freedom

Have you heard of Dave Ramsey and his Seven Baby Steps for success in personal finance?  If not, you are missing out on a fantastic resource for achieving financial freedom for your family.

In a basic sense, Dave Ramsey’s teachings on personal finance are conservative, Christian-based and old-fashioned.

Dave himself often describes his advice as “God’s and Grandma’s ways of handling money” on his mega-popular daily radio show.  And he jokes about how strange it is that common sense has become so marketable within financial circles in the United States today.

It’s the simplicity of his message that makes it so appealing.  When you read anything written by Dave Ramsey or listen to his radio show or podcast, you can understand it.

More importantly, you can follow his advice and implement it quickly, not because it is easy (it’s not) but because it is sensible and simple.

Unlike so many of today’s financial gurus, Dave does not advocate a get-rich-quick path to financial success.  Instead, he offers common sense and provides the tools and motivation needed to achieve long-term family financial freedom.

At the heart of the “Dave Ramsey plan,” are his increasingly-famous Baby Steps.  These seven steps will get you on a budget and take you from a very vulnerable financial status to one of substantial wealth and the ability to help others like you have never dreamed possible.

The Dave Ramsey Baby Steps

Baby Step 1: $1,000 to start an Emergency Fund

An emergency fund is for those unexpected events in life that you can’t plan for: the loss of a job, an unexpected pregnancy, a faulty car transmission, and the list goes on and on. It’s not a matter of if these events will happen; it’s simply a matter of when they will happen.

Baby Step 2: Pay off all debt using the Debt Snowball

List your debts, excluding the house, in order. The smallest balance should be your number one priority. Don’t worry about interest rates unless two debts have similar payoffs. If that’s the case, then list the higher interest rate debt first.

Our family reached the milestone of completing Baby Step 2 in February 2008 after paying off almost $55,000 of debt!  I can’t express the level of financial freedom our family enjoys based on this accomplishment.

Baby Step 3: 3 to 6 months of expenses in savings

Once you complete the first two baby steps, you will have built serious momentum. But don’t start throwing all your “extra” money into investments quite yet. It’s time to build your full emergency fund.

It is recommended that your full emergency fund be saved in a high-interest (i.e. not your local back), easy-to-access (i.e. not a CD or bond) savings account.  Personally, we use and highly recommended an online “Orange Savings” account with ING Direct.  It is very easy-to-use, highly secure, FDIC insured and held by a company with a CEO that shares beliefs similar to Dave Ramsey (and myself). 

If you sign up via my referral to ING Direct and deposit more than $250, you’ll even receive a $25 bonus! Please note I receive a $10 bonus for referring you to ING Direct.  If you’re ready to sign up, just contact me using the Contact form or leave a comment and I’ll send you a referral code so you can get your $25 bonus!

Baby Step 4: Invest 15% of household income into Roth IRAs and pre-tax retirement

When you reach this step, you’ll have no payments—except the house—and a fully funded emergency fund. Now it’s time to get serious about building wealth.

Baby Step 5: College funding for children

By this point, you should have already started Baby Step 4—investing 15% of your income—before saving for college. Whether you are saving for you or your child to go to college, you need to start now.

Baby Step 6: Pay off home early

Now it’s time to begin throwing all of your extra money toward the mortgage. You are getting closer to realizing the dream of a life with no house payments.

Baby Step 7: Build wealth and give!

It’s time to build wealth and give like never before. Leave an inheritance for future generations, and bless others now with your excess. It’s really the only way to live!

There you have it…a simple, but not easy, road map to family financial freedom!  Obviously, there are a lot of details to be learned as you go through the process, and I hope to shed light on those as I continue to add posts related to personal finance.

I have been a member at Dave Ramsey’s membership site since 2003, so I interact frequently with like-minded folks and see/answer a lot of financial questions on a regular basis.  I also encourage you to check out another quality site devoted to teaching these principles at Enemy of Debt.

Of course, the most straightforward way to learn additional information is to read one of Dave Ramsey’s bestselling books.  His first book Financial Peace Revisited provides the background and answers “why” his plan is what it is.  His latest book The Total Money Makeover: A Proven Plan for Financial Fitness provides a clear plan for “what” to do along with many inspiring stories of families that have used these principles to achieve financial freedom.

Our family is currently doing Baby Steps 4-6, which are concurrent steps as long as you need to save for retirement, save for college, and pay down your home mortgage (provided you have decided to own a house).  If you already know about Dave Ramsey, please leave a comment to let us know how you found this message and state where your family currently is in the Baby Steps.

Here’s to long-term Financial Freedom for your family!

Photo by borman818

When Should Newlyweds Buy Their First House?

By Dustin | Finances & Careers

First Home for NewlywedsSo, you are newly married (or preparing for marriage) and ready to get off on the right foot financially.

Everything you have heard leads you to believe that you should purchase a house as soon as possible rather than “throw your money away” on rent.

A house is your biggest investment and the basis for long-term wealth building.

Prices are down, tax credits are available, and everyone from your uncle to your real estate agent are urging you to act now…NOW!

Not so fast.

While I agree with each of the reasons above, this does not mean that you should purchase your first home as soon as you return from the honeymoon (or even before your wedding). Trust me, while having a good estimator for your taxes for the year is always a good asset, it is going to take a lot more than a few tax credits to make buying a house feasible.

Based on my own first-hand experience and the extensive reading that I have done on this topic, I urge you to consider two primary questions before you buy a house (and one is not even a financial consideration).

Are You Ready Financially?

I think most engaged and newlywed couples know that they need to consider their finances before they decide to buy a house.

Typically, this thinking is focused on figuring out the bare minimum credentials that a mortgage broker will require before approving them for a loan.

This is the wrong mindset.  Please do not set your financial sights on just sneaking under the limbo bar of mortgage underwriting requirements.

Trust me when I tell you that mortgage brokers and real estate agents will approve you for a much larger home loan that you should actually take on…even after the recent subprime mortgage meltdown.

I strongly advocate a more conservative approach that generally follows (I’m a bit more lax) the advice of one my financial role models, Dave Ramsey, whose books Financial Peace and The Total Money Makeover have shaped my own approach to personal finance.

Here are the financial goals you should meet before you pursue your first home purchase:

  • Have a solid credit score; 750 or higher should get you the best mortgage rates.  Alternatively, have no credit score because you don’t borrow money and get a manually underwritten mortgage.
  • Have at least 5-10% of the purchase price to apply as a down payment (in addition to closing costs).
  • Ideally, become totally debt-free, but at a minimum you should pay off all unsecured consumer debt.
  • Have an emergency fund of 3-6 months of household expenses saved up.
  • Only take on a mortgage where your total payment (including taxes and insurance) will be no more than 25- 30% of your monthly take-home pay based on a 15-year fixed-rate mortgage.

Basically, if you follow the step-by-step Married Money Management plan, you’ll be ready to thrive.

I know that my advice will seem conservative compared to what you will receive from many, especially those with a vested interest in getting you to buy a house, and a big house, as soon as possible.

However, please consider that my interest is squarely focused in helping you have a happy and successful marriage.

If you stick within these guidelines, you can be confident that you won’t become house-poor and have your home ownership dream turn into a nightmare!

Are You Sure This is Where You Want to Live?

While most couples take the time to evaluate their finances (or are forced to by the lender), many do not properly contemplate the permanency that comes with buying a house.

Generally, you will need to stay in your house for at least two years (preferably five years) in order to make the costs work out.

In other words, you are going to be in the house for a long time if you don’t want to lose a bunch of money on Realtor fees, closing costs, etc.

I strongly advocate waiting to buy a house for at least a year after you get married.

I think you will need that much time to be able to best answer questions like these:

  • Will our careers keep us in this general area?
  • Are we each comfortable with the daily commute that will be required?
  • Is this neighborhood up-and-coming and do other young couples live here?
  • Given we’ll be here for a while (and maybe you have children already), is this the school district we want to send our children?
  • Are we an appropriate distance from our mothers-in-law!?!

If you take a solid year to let your marriage mature, you will have much better answers to these questions.  Plus, there is something to be said for renting and remaining free of the responsibilities of mowing, maintenance, painting, etc. so you can just enjoy your new spouse and focus on your new life together.

But don’t just take my word for it regarding the sacredness of the first year of marriage, just look in the Bible:

DEU 24:5  If a man has recently married, he must not be sent to war
or have any other duty laid on him. For one year he is to be free to
stay at home and bring happiness to the wife he has married.

So, take it easy and just enjoy each other for at least a year.  Use this time to get settled and strengthen your financial situation.

And then find a great home at a reasonable price, and you will set your family up for an awesome financial life!

House photo by karla kaulfuss; Billboard photo by sylvar

Marriage & Finances

By Dustin | Finances & Careers

Money and Careers

Do you and your spouse or fiance ever have disagreements about your finances? Of course you do. It is only natural that we would have some differences of opinion regarding our spending decisions, especially when you are combining households and dealing with all of the other life changes that accompany marriage.

However, it is important to recognize that money fights and financial difficulties are widely regarded to be one of the leading causes of marriage problems and are often cited as a main reason for divorce.

It is vitally important that your marriage include a solid financial plan! The good news is that it is actually pretty easy to make smart decisions about money and set your marriage up for financial success. This is one of my favorite topics, so you can look forward to plenty of information about having a great career, buying a home, budgeting, becoming debt free, investing, giving, retirement savings, planning for college funds, buying a car, spending wisely, increasing your income and much more.

I have read many great (and not so great) books and free online articles on these subjects, and I love checking out useful forums and podcasts. So you can also expect some honest reviews that cut through the B.S. and show you where you can find the best tools to master this important aspect of your marriage.

Stay tuned for tons of useful posts that will give you the knowledge and resources you need to have a “million-dollar marriage”!

Photo by Rob Lee

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