Household bookkeeping

[ddrueding]

Up to now, we haven't worried about it at all. Income has been more than expenditures by a wide enough margin that it was a non-issue. Now the market is such that we can finally afford to buy a house...we think.

I would feel much more comfortable if we actually kept track for a while. Some basic reporting would be nice as well.

What are you using for your own house? A software package? Excel? Any tips?

 

[sdbardwick]

I've used Quicken since v1 or v2 for DOS, so it works OK for me. The newer versions are bloated, but still work fine. Much better than the 123 worksheet that I used prior.
The online banking features are OK; don't expect integration (payments directly from Quicken, rather than via bank website) with online bill pay for free.
Reporting is easily customized and custom reports memorized.
I'm too familiar with it to provide an objective review; others have found it too fussy to use.

 

[mubs]

I used Quicken once, but it was too much work. Then when things were really tight, I used Excel to do budgeting. Now I use Excel to track my bank account, projected income and projected expenses, etc. So now it's a combination of budgeting plus tracking actuals, all in Excel. Works for me.

 

[MaxBurn]

I am interested in finding something simple as well, always just planned things out in excel or just paper in the past. Seems most packages are way too complex.

 

[Fushigi]

Excel. I have about 2-1/2 years of running budget that fits on a single screen (1200x1600) w/room to spare. Columns for balance, incomes, "out-goes", savings, extras. Project budgets and other major exceptions get their own sheet within the file. I place indicators at the bottom of columns for recurring expenses like monthly satellite TV bill which goes straight to a credit card. At a glance I know which bills go to what card.

It's simple and works for my needs. I don't use it to track investments or anything like that. For those things I use the sites for the providers.

For what-if planning, I insert a column and populate it to accommodate the scenario. If I don't want to mess with the status quo I'll copy the whole sheet into a new sheet and speculate on that. Right now, for instance, in anticipation of buying a new car I've added a column for the car payment. At a glance I can tell the impact not only in the next month but 2 years down the line. It makes it easy to spot trends like a slowly decreasing balance that indicates too much spending.

Also, it is a living document. Life changes so the planning changes as well. If I have an unexpected expense I see the impact right away. Then I can make adjustments as needed to maintain the balances I desire. Not to mention some things like utility bills can vary wildly from month to month.

Finally, being a simple Excel file it is small, portable, and can be viewed from my smartphone if needed.

BTW, about buying a house, when you budget for that, be sure to include planning for variables like fluctuating property taxes (which tend to rise over time) and higher utility bills. Also, regardless of the home's age, count on spending some money each year for maintenance and/or upgrades. $2-5K/yr is what I use. Sometimes more than enough, sometimes not enough but seems to cover a lot of scenarios like the sudden need to replace the air conditioner or water heater. If not used for repairs, you _will_ find upgrades you want to do. Replace flooring, add or expand the deck/patio, landscape the yard, add solar to the roof, etc.

 

[Will Rickards]

I track my stuff in quicken but I do forecasting/budgeting in excel.
I'm trying to switch from using quicken software to quicken online, since all I use it for is a register of sorts. In excel each tab has one pay period. At the top is the income, and on each row below that are the projected expenses. The tabs are generated by VBA code I wrote. I have a master tab with the expenses and their frequency it uses to determine what to pay and the algorithm determines which pay period to pay it in.

As for buying a house you first have to figure out your monthly expenses and monthly income. Then figure out how much you can devote to a house payment each month while leaving money in the budget for other things. Then figure out how much of a mortgage that is. Then shop for the houses. If you do it the other way, that is shop for mortgage/house before figuring out what you can pay, you'll just end up in trouble.

 

[Fushigi]

When we were pre-approved for a mortgage, I took 20% off what we were approved for and said that was our price ceiling. The home we bought was cheaper than the ceiling by about another 6%. Since 2002 our property taxes have risen by around 50% and home owners insurance by around the same percentage so building slack into the household budget is something I'd consider to be mandatory.

 

[ddrueding]

Thanks guys. It looks like Excel is the winner. Does anyone care to submit a sample spreadsheet? I've never done bookkeeping of any kind, and am curious to see what people are including in theirs.

We are planning on getting a house that is about 40% under what we are pre-approved for, but aren't sure we can make 20% down after buying her new car and the prospect of having to buy me a new car. I'd also like to build some money for home improvements into the mortgage.

 

[udaman]

Thanks guys. It looks like Excel is the winner. Does anyone care to submit a sample spreadsheet? I've never done bookkeeping of any kind, and am curious to see what people are including in theirs.

We are planning on getting a house that is about 40% under what we are pre-approved for, but aren't sure we can make 20% down after buying her new car and the prospect of having to buy me a new car. I'd also like to build some money for home improvements into the mortgage.

Well I expect next week we'll hear about how you've gone into escrow already, and if you lose your job next year, we'll hear about how you're having to sell your new home...at a loss.

Maybe you should *plan* well *ahead* of big, long-term financial obligations? Just a thought. Keep track of your expenditures over a long-term (months at minimum) period to see where the money is going, how much you have as a buffer, should things not go well a year or more from now?

The big real estate bust, happened to a great extent because of people not being exactly financial wizards, being over-extended, and not planning for drop in income, etc...so they lost the shirts off their backs, literally, lol. Excell ain't going to do financial planning for you-not sophisticated enough for your needs, you'll have to do that manually. Do some research (much more) before jumping head first into the lake...see, there are sharks in that lake . Throw away those "no fear" bumperstickers, too

*hiking boots*= I'm still researching, will be a few days more at least...and this is an order of magnitude, much smaller purchase.

Use keywords like in your search:

financial planning software reviews mortgage

 

[jtr1962]

First off, I agree with most here about using Excel. I use Excel spreadsheets to track the expenditures in my business. Much simpler than any accounting software, and I can customize it to my needs. Most accounting software, especially the ones aimed at businesses, have a lot of complex features I'll never, ever use (depreciation and amortization for example). No sense going through a complex learning curve to do something simple.

Second, it sounds like you want to start doing a budget so that you can track where your money is going. This is a good thing as it allows you to see everything right in front of you. One of the biggest financial blunders people make are not tracking the small expenditures which add up over time. I can't say how many times I've heard of people who'll buy Starbucks twice and day, and also not leave any shop they go in during their lunch hour without buying something. I'll here stuff like it's only $3 for coffee, or they only spend a few dollars a day in the Hallmark store (incidentally on crap they really don't need but more on that later). Add it up. $8 a day, 5 days a weeks equals $2000 a year. Throw in a few other questionable expenses, like maybe cigarettes or "drinking with guys after work", and these daily expenses start to become serious money.

Third, and this especially applies to you Dave as I've read lots of your posts about how you spend money, you really need to separate wants from needs. You've been lucky so far in that you've been able to make money as fast as you spend it, but don't expect that will always be the case. There's an old Chinese proverb which runs something like "don't spend all your prosperity at once". In other words, when you're making good money, spend as if you're not, and put aside the difference. Doing a budget will allow you to examine where your money goes. That being done you can look at each item and see where you can cut expenses. For example, you walk to work. Do you really need a new car? For that matter, do you really need a second car at all? A car is the second largest expense after housing. I'll grant that in most parts of the US you need some form of personal transport (and it doesn't necessarily have to be a car-an electric scooter might work fine). But many families have two cars or more even when just one will do. Examine you lifestyle and what you really use a car for. It might turn out that the times you really need a second car are few and far between, meaning you can just rent one when the need arises. And do you really need a new car? Many good deals on used cars, and if you're handy you can keep a used car running a long, long time.

Bottom line is everyone needs to see where their money goes. Making a lot of money is no guarantee of solvency. Look at Micheal Jackson. He was a millionaire but lived like a billionaire. Too bad I didn't know him personally. I probably could have made enough money off him in one year to retire.

 

[Will Rickards]

Here is mine.
Just fill out the scheduled transaction tab.
Then the template tab with your every two week income.
Then hit Ctrl + N to generate a new tab. You can do this for however far in the future you want. When you update one tab, the rest will automatically update as they are all just one big running total.

You can edit the first data tab for whatever you want to start with and whatever dates. But make sure to follow the format of dates you see there already.

 

[ddrueding]

Thanks Will. Did you write that macro yourself? I know nothing of that stuff, which probably explains why I keep breaking it. I'll figure out the obvious mistakes on my part before asking you to clarify the less obvious stuff.

 

[Will Rickards]

Yes I wrote it for my own purposes.
So it is kind of specific to my situation with paychecks every two weeks and my desire to pay at least 5 business days in advance.

I took out all my data, except for the scheduled transactions. And those I changed the names of and amounts slightly.

 

[Pradeep]

Always remember that a house is a liability, not an asset. Real estate taxes (in the US this can mean school taxes, county tax, local village/town taxes), bills for sewer and water, potentially hundreds of thousands of dollars in financing interest payments. You are going to put a lot in and may never "get that back" let alone realize a profit.

Also I don't think we've hit bottom yet.

uda no kind of planning can support a house payment long term if you are laid off. That's different from buying an unaffordable home with the anticipation of flipping for a profit.

 

[ddrueding]

Pradeep,

While I'm aware of the added costs of taxes, financing, and maintenance, saying that buying vs. renting isn't financially advantageous seems a bit pessimistic.

I agree that we aren't at bottom, our company's outlook for next year is that it will be worse than this one. One of the houses we are looking at sold for $660K a couple years ago and is now bank-owned at $230K. Where will it end up...$200K? $180K?

It's also more difficult to judge the outstanding inventory of homes in an area. After taking a walk through a neighborhood, it seemed that 5-7% were for sale. After talking to people who lived there, they indicated that another ~5% have been foreclosed for some time, and simply aren't being put on the market. Looks like the banks are trying to avoid a flood.

 

[Pradeep]

Oh yeah, at that price point it should be fine. But I know nothing about California rental/housing prices. Here in New York with staggering real estate tax loads it's a more difficult decision.

 

[ddrueding]

We are currently renting at half what the mortgage payment will likely be. I'll have to look into the tax situation.

 

[Pradeep]

To give you an idea, my mortgage payment is about 65% going to PITI, and 35% in escrow for taxes. The 65% is about what we used to rent at.

So if you use a payment calculator to determine your payment to the bank, that won't be what you end up paying per month to the bank. You can be fiscally responsible and take out a fixed rate mortgage, but the constant increases in taxes can keep your payments going up year after year regardless.

 

[timwhit]

To give you an idea, my mortgage payment is about 65% going to PITI, and 35% in escrow for taxes. The 65% is about what we used to rent at.

So if you use a payment calculator to determine your payment to the bank, that won't be what you end up paying per month to the bank. You can be fiscally responsible and take out a fixed rate mortgage, but the constant increases in taxes can keep your payments going up year after year regardless.

I think my 2009 taxes will be lower than 2008 by a few dollars.

 

[ddrueding]

I think my 2009 taxes will be lower than 2008 by a few dollars.

You had your property re-appraised?

We certainly plan on doing a fixed mortgage (20 year if we can manage it comfortably, better rates).

 

[timwhit]

You had your property re-appraised?

Property in Cook county is re-assessed every three years.

 

[ddrueding]

AFAIK around here Proposition 13 prevents them from going up, and you can request a re-appraisal every 5 years if you think it should go down.

 

[Fushigi]

My property taxes have gone up by about 50% since we bought our home in early 2002. They tend to go up some each year but have gone down once or twice.

It's not just the appraised value that sets your taxes. There's also the tax rate. Adjusting one, the other, or both will impact what you pay. I don't konw if CA's Prop 13 protects from both factors rising or just one.

Our area is assessed (or gets a revised assessment) annually. The annual assessment is a running three year average so the "blow" of a sharp rise in property value is blunted. However, that also means that the appraised value is slower to react to a drop in market value as has happened recently.

At this moment there is house for sale in our subdivision with the same basic floor plan as ours. It has numerous upgrades that would lead to at least a $20K difference in selling prices. It's current market price is within $1K of the revised assessment I received a few days ago. :frusty:

 

[ddrueding]

It's not just the appraised value that sets your taxes. There's also the tax rate. Adjusting one, the other, or both will impact what you pay. I don't konw if CA's Prop 13 protects from both factors rising or just one.

Both. My grandmother still pays $65/mo in property taxes.

 

[Fushigi]

No wonder your state is bankrupt. My home is rather average and my tax bill is over 10x that.

 

[ddrueding]

Yup. I'm not a fan. But I do understand why it is there (old ladies kicked out of their homes just because of property tax).

 

[jtr1962]

My mom gets a few hundred off her real estate taxes due to being a senior citizen but her annual taxes are still something like $3700, and this on a house which is now worth only about $525K. In fact, the taxes have still been rising even though the appraised value has been dropping (it peaked at ~$725K a few years back).

But $65 a month? That's just plain crazy. It just goes to show how strong the senior lobby (AARP) is.

 

[Fushigi]

IIRC real estate taxes are a federal deduction so the hit is at least partially mitigated. And like JTR mentions, there are frequently programs for seniors to reduce their tax burden. Here it works like an adjustment to your assessed value. $5K off, I think.

My property tax bill for 2008 taxes, paid in 2009, were $7,813, down from $8,344 last year. The assessor's estimated value of the house is $315K for 2009 taxes, up about $30K from the 2008 value. But in reality I'd be surprised if we could get $280 in the current market.

 

[CougTek]

Oh I'll buy your house for 280$. I can even give you 300$ since I'm such a good guy. Do you think you can be out by the end of September?

 

[Pradeep]

My mom gets a few hundred off her real estate taxes due to being a senior citizen but her annual taxes are still something like $3700, and this on a house which is now worth only about $525K. In fact, the taxes have still been rising even though the appraised value has been dropping (it peaked at ~$725K a few years back).

But $65 a month? That's just plain crazy. It just goes to show how strong the senior lobby (AARP) is.

Yes, in New York there was the STAR program, which tries to offset school taxes by exempting the first $30K of assessed value. Elderly under certain income limits qualify for enhanced STAR ($60,100 exempted). I believe that has ended effective this year, or there is no money to fund it.

Still $3700 on a $525K house seems very low for New York City, even with enhanced star.

 

[Pradeep]

Some links for jtr:

http://www.albany.edu/edfin/documents/PowerpointPropTax.pdf

And

"New York State has the highest local taxes in the United States – 79% above the national average. Property taxes are rising at more than twice the rate of inflation and salary growth. When property tax rates are calculated as a percentage of home value, nine of the top ten counties with the highest rates in the country are in New York State. In addition, Nassau, Westchester and Rockland Counties are in the nation’s top ten in terms of household taxes."

http://www.cptr.state.ny.us/propertyTaxCap/pamphlet_QnA.html

 

[Pradeep]

http://www.tregny.com/rent_vs_buy

An interesting calculator (have to put your own numbers in for taxes etc) for the big decision.

 

[jtr1962]

Still $3700 on a $525K house seems very low for New York City, even with enhanced star.

The rates are higher for newer houses for whatever reason. This house was built in 1952.

"New York State has the highest local taxes in the United States – 79% above the national average. Property taxes are rising at more than twice the rate of inflation and salary growth. When property tax rates are calculated as a percentage of home value, nine of the top ten counties with the highest rates in the country are in New York State. In addition, Nassau, Westchester and Rockland Counties are in the nation’s top ten in terms of household taxes."

And I think a big part of the reason are the pre-K and afterschool programs (both basically taxpayer-subsidized daycare as far as I'm concerned) here which many residents demanded. Even though they only benefit a small minority, everyone is footing the bill. And the teacher's unions aren't helping either with the continual push towards smaller class sizes as the "cure" for low test scores. Truth is education here is eating up a larger percentage of the budget each year, yet the quality of that eduation remains poor.

 

[mubs]

Truth is education here is eating up a larger percentage of the budget each year, yet the quality of that eduation remains poor.

Hey, you're describing California!

 

[Bozo]

Hey, you're describing California!

And Pennsylvania!

 

[sechs]

But does Pennsylvania have a state-supported research college meant to serve a community which cannot get into it?

 

[ddrueding]

But does Pennsylvania have a state-supported research college meant to serve a community which cannot get into it?

Which one is that?

 

[sechs]

UC Merced

 

[blakerwry]

FYI, I use MoneyDance - http://www.moneydance.com/

I like that it easily connects with my online banking accounts (Checking, Savings, Credit, Retirement, etc) so that I can easily add up all of my and my wife's expenses without needing to keep every receipt.

Each month, I'll go through and tag our expenditures and income. MoneyDance can then show me graphs/charts/etc illustrating where and how I'm spending my money, what my expenses vs income has been, and my net worth.

Like any financial app, there are things that, as a home user trying to stay on budget, I'm never going to need. But for the things I do need - it does them well and was easy to learn.