Saturday, March 28, 2009

Online Budgeting Tools: Stepping Up Their Game

We’ve been pre-occupied with all the bailouts so I wanted to go back to basics this week. I’ve found some excellent planned-spending tools that are both online and free! My problem with many of the budgeting tools I’ve seen in the past is that it is only good for tracking and not planning. So you can always see what you spent, but there weren’t many user friendly tools out there to allow you to plan your spending ahead of time and then monitor how you manage your expenses against a set budget. for most, it's pretty pointless to monitor spending that's already gone. You can see that at your typical online bank.

So what I’ve been doing is managing my budget in Excel. It can get a little tedious, plus I have to manually link my accounts in real time to my excel sheet (meaning going online to each account, finding the balances and entering them), and that’s quite taxing. Then this week I came across three nice little secure online spend monitoring programs that do this for you: Buxfer, Mint, and Quicken. Take a look at each one and you can decide which is right for you. All are very user-friendly, they just are tailored to different crowds.

Quicken
You’ve probably heard of Intuit’s Quicken, but now they offer their online service free of charge. Quicken Online is the only one of the three that has an established brick-and-mortar equivalent out there. It probably has the most bells and whistles. Not only can it follow your expenses, it alerts you of upcoming expenses (bills due, etc.) Quicken will also project your “real” balance up to a month or so in advance (by deducting upcoming bills from upcoming paychecks).

Buxfer

Buxfer is probably best designed for the organization/college crowd (those living with roommates, groups of people sharing expenses). Not only can it link all your bank accounts into one viewing location, but it also has an option where it can track group spending and can break it down to each individual. So for instance, if you’re out with a group It also lets users pay each other in a way similar to PayPal. It also allows mobile alerts when user-set spending thresholds are violated.

Mint
I have an account with Mint, which has a nice user interface (but is a bit simplistic). Mint seems to do a better drop categorizing your expenses. Similar the Buxfer, Mint allows mobile alerts and will alert you when you go over pre-set budget amounts. The power of Mint comes in when you start the analysis though. It monitors your spending and determines where you can trim spending and compares your spending (graphically) to those in the US. You can even see average monthly spending data down to the vendor. However, Mint maintains data on their servers, so there is some risk of having your data out there.

My favorite right now is Mint, because it has the cleanest interface and loads faster than Quicken. Quicken is probably the most “powerful” of the three, especially if you own a home and have property to manage. All three are very good online budgeting tools and can help keep your spending in check.

Tuesday, March 17, 2009

What's Gangsta?

You hear all this talk about how "gangsta" rappers are. But let me tell you what's really gangsta:

- Gathering so large a foothold in the US Economy that you can convince the American government that your if your business fails, the US fails. That would be the Notorious AIG.

- Asking the US government for 85 Billion dollars for just your company. Then ask for about 40 billion more. Then spend out 90 billion of that with no real results. Meanwhile, throw a party out West. Then ask for (and get) 30 billion more this quarter, no questions asked. That's gangsta.

- Losing 61.7 BILLION DOLLARS (!) over the last three months of 2008, and kicking back 165 million in retention bonus money to over 60 of your boys in the company, prompting Republican Senator Chuck D, er, Grassley to say "Kill Yo'self!"

When asked, tell the government you did it so they won't leave the company. Then let it leak that you gave some of that retention bonus to 11 folks who already left. That's Gangsta.

Acting ignorant (or being punked) by a broke company who seeks to get more money after all this. Not gangsta.

Thursday, March 12, 2009

WW Plus: School Reform Ideas - Part 1

This week’s Wealth Weekly Plus focuses on school reform. While there will be partisans on both sides on the school reform issue, there is less disagreement that we have a problem to solve. Personally, I support public magnet and public charter schools. We'll get to that some other time. But here’s where I think we can start:

Teacher Accountability and Performance
President Barack Obama spoke in broad terms when talking about teacher accountability. It was a smart move on his part because both sides of the school reform issue felt he was taking their side. However, I’d like to dive right in. Listening to both sides of the accountability issue I’ve heard teachers say that the measures of accountability are too narrow, leading them to “teach to the test” because the primary measurement of performance is standardized tests.

So let’s add in other measures and weight them. Standardized test do need to be a part of the weighted system because grading is not the same across the country. From the New York Times:


The nation has a patchwork of standards that vary widely from state to state and a system under which he said “fourth-grade readers in Mississippi are scoring nearly 70 points lower than students in Wyoming — and they’re getting the same grade.” In addition, Mr. Obama said, several states have standards so low that students could end up on par with the bottom 40 percent of students around the globe.


This does not stem from a lack of money, but a lack of discipline. Standardized testing can identify what teaching methods are ineffective, but it shouldn’t be the primary focus of the teacher. The student should know how to think through unfamiliar, unconventional problems by using the knowledge they learned in their basic secondary school coursework. If they are taught about circumference and circle properties and cylinders, they should be able to find the volume of an tire inner tube given the right parameters.

So how do we reward our teachers? I'll try to cover that in the next post on this topic.

Thursday, March 05, 2009

FDIC: Can We Hit You Back Next Year?

I came across a pretty scary story this morning regarding the Federal Deposit Insurance Corporation (FDIC). From Bloomberg:


March 4 (Bloomberg) -- Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency.

“Without these assessments, the deposit insurance fund could become insolvent this year,” Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group.

“A large number” of bank failures may occur through 2010 because of “rapidly deteriorating economic conditions,” Bair said in the letter. “Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative.”


So, in everyday speak: “Uh, look. We promised you that the money you have your bank would be insured up to 250,000 if the bank goes under. Will you be cool if we went back on that promise?”

This is not trivial. Remember how the FDIC works. Say you have a bank account with $120,000 in it. (First of all, if you are in this situation, what are you doing?!) The FDIC will (currently) insure all of this. So if your bank fails (like IndyMac did last year); the government (usually) steps in, takes over the bank, and tries to sell the bank after writing down the losses. If the FDIC goes insolvent however, they won’t be able to pay these obligations. So your entire balance will be uninsured.

And What is the FDIC doing to meet this shortfall?


The FDIC last week approved a one-time “emergency” fee and other assessment increases on the industry to rebuild a fund to repay customers for deposits of as much as $250,000 when a bank fails. The fees, opposed by the industry, may generate $27 billion this year after the fund fell to $18.9 billion in the fourth quarter from $34.6 billion in the previous period, the FDIC said.

The fund, which lost $33.5 billion in 2008, was drained by 25 bank failures last year. Sixteen banks have failed so far this year, further straining the fund.



Any takers that this won’t be a “one-time” thing?

What should YOU do?

I don’t have all the answers, but what I’m doing is making sure that funds are spread across several banks. If you have a very large amount of money in one big bank, it’s best to spread it around. Even if you have a small amount of cash, stay informed about your bank's operations, especially if it's a big bank.

(Cross-posted at Swords Crossed, Facebook, and Wealth Weekly).