Budge-It Plus!

So there’s no end to all the software out there to help you manage your money. This one will be no different. Well, except the developer is yours truly!

I’m sure there will be plenty of bugs to work out that you guys will be able to find, but what I tried to avoid was making this worksheet become “all things to all people.” So after paring it down a bit, I’m come up with a nice, no-frills system designed to help you manage your spending plan. (And what the heck is a frill anyway?)

Since there are no macros in this file, I have decided to offer this free of charge (but I don’t hesitate to accept charitable donations if you find the file helpful. If you choose not to, that’s completely fine as well!)

This Excel file contains several features. I’ve also included a few screenshots as you can see below. The file also includes a sample, filled-out (or is that filled-in?) form for you to follow as an example. Let me know if you have any questions. My gift to you folks. Merry Christmas and Happy Holidays!

Screenshot - Top View

Screenshot - Bottom view

Download the spreadsheet here. The link will take you to our Download Center where you can download and use the file.

Each sheet is currently protected. You can unprotect the sheet at your own risk. (There is no password). Send all bugs, questions, etc. To the charles[dot]norwood[at]gmail[dot]com.

Q & A: Getting Started

THINGS YOU MAY HAVE WANTED TO KNOW ABOUT THE ONLINE BANKING CRAZE AND MUTUAL FUNDS, BUT WERE AFRAID TO ASK!

So this week, we're going to have a little Q&A about starting to invest in mutual funds or using an high-yield savings account like ING or Emigrant Direct. These questions arose out of a conversation I had (and of course, was granted permission to reproduce them here!)

-What types of fees are there involved with the investment in either the [high-yield] savings or mutual fund?

Using EmigrantDirect (http://www.emigrantdirect.com) or ING (www.ingdirect.com) will allow you to have an account with as little as $1 in it. I implore you, however, to move your long-term savings out of a regular (low-yield) savings account and into one of these accounts. It's the smart thing to do. Neither of these banks have minimum-balance requirements nor charge any fees. Emigrant's rates are at 5.0% and ING is currently at 4.5%. I use both, and have had no problems.

Mutual funds vary of course. You will have to go to the mutual fund's websites and find out specific information (like fees and expense ratio information). I do of course recommend Vanguard Funds, American Century, and even T. Rowe Price is a nice, long-term company as well (you've seen the commercials). In the end, you'll have to pick which works for you, because each company has it's own investment strategies and charge different rates.

-Are there lock up dates where the money would not be accessible, and if so, what types of penalties are there?

The HY (High-Yield) savings does not have a lock-up date. (Not like CDs, (certificates of deposit) which have a date where your money is "locked up" and cannot be withdrawn until the agreed-upon date, with few exceptions).

You can move the money into a high-yield savings account today and move it out next week. You wouldn't do this of course, if you are trying to get the interest accrual. MF (Mutual Funds) may have some. If you are talking about starting a Roth IRA and using MF, then there will be penalties for trading in and out (like taxes). If you plan to touch the money in the next 5 years or less, put it in the HY-Savings. If you're time horizon is longer, the MF should be OK.

-Should I only get with a proven mutual with a 10 year that may not have as good a yield as a younger one?

Yes. Minimum 5 years. The "younger" funds have not endured a market cycle yet. So stick with the guys who have shown they can meet-or-beat the S&P 500 over 5-10 years. Don't compromise on this. Some companies show the 1-yr and 3-yr, but that's nothing. Think about it as a coin flips. It's pretty simple to get 3 heads in a row. But if you get 10 heads in a row (on average) then there's some skill there. So you may see some companies that may have stratospheric returns over a short time. They may even turn out to be pretty good. But it's a chance you shouldn't take until they've really proven themselves.

-Is there a particular company with really good user interface that is easy to understand?

I would start with ING for HY-Savings. It's a slightly lower rate, but its this most user friendly. EmigrantDirect is not as "colorful" but it's still fairly easy to use. If you can use Online Banking with your current bank, this shouldn't be a problem. There are quite a few others out there but I cannot vouch for them at all.

-What are the chances of losing on a mutual fund (negative yield in short or relatively long term)?

Depends on who you choose. With MF's of course there's nothing guaranteed. But great risk can lead to great reward, and that's why they encourage you to start young (so you have time to recover). This shouldn't discourage you, because the money you put into a MF is money "left over" after you've budgeted anyway. Once you've covered all your expenses, then you invest the rest (in the community and in yourself).


What you have to do is minimize your risk. So when you choose your mutual fund according to what we learned previously, you know you can choose your fund more comfortably. If a Fund has outperformed the S&P 500 for the last 10-20 years, chances are it will continue (not guaranteed of course). When you start investing, there will be some volatility (you will have some really up years, some OK years, and some down ones. By choosing long term funds, making sure the expenses are low (like less than 1%), and diversifying (across growth funds, income funds, international funds, real estate funds, etc.) you will position yourself to be quite successful.

-What is a good amount to invest in for mutuals?

Most funds have "requirements" for initial entry (usually between $1000-$10000) unless you work for a Corporation or other business with a 401(k). I usually think the 401(k) is the best to start with because it's pretty diversified. (Plus the company throws in extra money too). The IRA is what you use if you have even more money to put away. You'll again have to check Morningstar.com or a company's website for more information.

Please Keep your questions and comments coming. See you next week.

--Charles

You Can't?

Certainly, you've heard the following:

"You can't get wealthy working for someone else, so go into business for yourself."

You often hear that statement at forums led by savvy business people, and as you look around you're compelled to nod and agree with the others in the audience.

I would caution my dear readers to take that statement and analyze it very carefully and understand how mislead this statement can become. Oftentimes this statement is "supported" by the logic that since the person who writes your check is "more wealthy than you are," then you cannot make any money working for a business or Corporation. Young professionals who enter high-stress, high-paying jobs like investment banking do quite well and can amass a large amount of capital in a very short period of time (that is, if you're in a rush to make a lot of money).

I wonder how they reconcile this with the fact that the people who work for them who also desire to be rich. Using this logic, few would work for anyone--after all, most people want to be wealthy, right? That being said, I do realize their point. In many cases there are instances where working for yourself is more rewarding than working for someone else, especially if you have a skill that would make you successful as a sole proprietorship.

However, because there are many ways to become wealthy, I suggest you do what works for you! If you are working in a public corporation, chances are the company offers revenue-sharing programs, dividends, and offer 401(k) programs in which the company will match your contributions up to a certain percentage or dollar amount. In the end (given that the company is relatively stable, low-turnover workforce) you can end up being quite wealth at a young age, given that you invest your money in a proper way.

So its very possible to retire while "working for someone else," it's just highly-dependent on your industry and what you consider "wealthy," which can mean different things to different people. So if you hear that statement, remember to ask yourself if you have a "job" or a "career." And if you can swing it, you can always supplement your income with a job on the side!

See you next week.