This is a reprint of an article I wrote for Being Frugal a few days ago…
When I was about 14 years old, my uncle suddenly and unexpectedly went home to be with the Lord. He had meticulously taken care of the finances for their family and left my aunt on a very solid financial foundation. Obviously, this didn’t take away the pain of him being gone, but his preparation eliminated additional stress that would have been present without it.
It’s one of those things we all prefer not to think about, but it is always better to be prepared. My aunt is still reaping from what my uncle sowed by having his things in order.
My FLOP
Being impacted by my uncle’s premature death and wanting to do everything I can do to help my wife, I decided to create a system for keeping things organized.
It has been a work in progress over the last few years, but has evolved into a very helpful tool. Simply put, it is a single file or location for all your financial account details. I call it a FLOP (Financial Life on One Page). FLOP sounds a little cooler than FLOOP, but not much 
In adding to it over the last few years it has come to have three main purposes. The first being that it is a:
1. Balance Sheet
One of the best pieces of advice I received about 5 years ago, when I started my journey to clean up my finances was to keep a balance sheet. I didn’t really understand why at the time, but I did it anyway. I have updated it twice a year since I started it and it has been a great source of encouragement as I have fought to get out of debt.
The reason it has been such a source of encouragement is because a balance sheet not only takes into account the debt you have been paying off, but all of your good financial decisions. So increasing your savings, paying down debt, making wise purchases all will affect your balance sheet in a positive way.
Also, looking at the size of your debts or assets does not necessarily give an accurate report of your financial condition. To get a accurate picture of your financial situation you need a balance sheet to calculate your net worth. It is very easy to do and is just a big subtraction problem:
Assets - Liabilities = Net Worth
If you have never started a balance sheet, I recommend doing it. It is a simple way to track your financial progress as you move towards your goals. For most people it shouldn’t take more than an hour to gather up all your account balances and asset values.
And as with most things, you are either moving forward, or you are going backwards. If you are increasing your assets or minimizing debts your net worth should be growing. If your net worth is getting smaller, then it is an indication that you should re-evaluate how you are spending your money. And even if your situation is not very encouraging, it will force you to see the financial truth so you can make adjustments as needed.
How to create a balance sheet
- Use Excel, Google docs, or some other spreadsheet software.
- List every Asset you can possibly think of from cars to stocks to jewelry for the amount that you could quickly sell it for. (To save time, you can lump together smaller assets like “misc. household items”) Total these items up to get a subtotal of your assets.
- Below the Assets total, list every debt or liability that you have. Mortgages, credit cards, student loans, they all apply. Total your debts to get your liability total.
- Subtract your liability total from your asset total to get your Net Worth.
2. Organize all my login information
Another piece of good advice I got a few years back was to create an extremely unique login ID and use it for every website that I had an ID for. I followed the advice and it has helped, but it is not a fail-proof system. Some sites require your email address, some want more than 8 characters, some want less, etc. And in this day in age, where you just about need to login to open your refrigerator, it can be difficult keeping track of all your login information.
After adding all your accounts in the balance sheet section above, you should have all your account information listed already and you can just add a column to add your login for that company. If you use various passwords you could list them in another column as well, but consider using a password hint rather than the actual password. I still come back to my FLOP at least once a week to figure out a login that I forgot about.
3. Financial roadmap for my wife
The third and most important reason for my FLOP is for my wife. In most families, one person manages the finances and has a better understanding of the overall financial picture. I am that person in my family. Are you that person in yours?
If so, would your spouse (or other beneficiaries) know where to find your financial information? Insurance policies, bank accounts, investment accounts, safe deposit boxes?
I know for my personal situation I know a bit more about our financial details than my wife does. I use my FLOP to layout all of the pertinent details for my wife, if she ever needed them. It contains the name, phone number or web address of each institution, our account numbers for those institutions and any other pertinent info that may be needed.
I then burned the file to a CD and kept it in our safe. Every year or so I put a copy of the updated FLOP in there.
Losing a loved one is a terribly difficult process. Having a “roadmap” prepared in advance for your loved ones is a great way to help eliminate unnecessary stress.
If you are interested, you can download a copy of my template for my FLOP.
This article was included in the Carnival of Personal Finance
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SmartyPig $50 gift certificate
The nice folks over at SmartyPig.com just sent me a $50 gift certificate that I am going to pass along to the readers.
SmartyPig is basically an online savings account that allows your friends and family to contribute to your savings goals. They also provide you with additional incentive boosts from top retailers who sell the items you are saving for. And surprisingly, they are currently boasting a 4.30% (APY) - which is a heck of a lot more than ING Direct is paying or most other online banks.
A few more notes about SmartyPig:
- Opening an account on SmartyPig is absolutely FREE. In fact, you can open your account, create a goal, reach your goal, and redeem your goal, and SmartyPig won’t charge you a thing.
- SmartyPig savings accounts are FDIC insured, so consumers can be confident their financial information and savings are secure. SmartyPig also utilizes the services of VeriSign, HACKER SAFE and TRUSTe.
- SmartyPig is the only online savings initiative that allows family and friends to help consumers reach their savings goals.
- SmartyPig gives consumers even more for their money by offering additional incentive boosts (up to 5%) from retailer partners like Pottery Barn, Best Buy, Royal Caribbean and Home Depot when they reach a savings goal.
- SmartyPig’s approach to savings teaches the benefits of good financial habits, reverses the “buy now, pay later” mentality and makes saving money a fun and easy experience.
The winner will receive a $50 head start to their savings goal!!
What do I have to do to win the SmartyPig gift certificate?
If you would like to be entered for a chance to win the $50 gift certificate just type “SmartyPig” in the comments below before 7:00 p.m. CST on March 30th.
(If you are having trouble finding the comments section, just click on the title of this post and scroll all the way to the bottom.)
A few more notes about the SmartyPig giveaway…
- From those comments entered I will randomly select a winner using random.org.
- Go ahead and enter each week, but only enter once (per household) for each one. (Duplicate entries or IP addresses will be disqualified)
- Make sure you enter your email address when adding your comment so I can contact you if you win. (I promise I will not give your email to anyone else)
- The winner will be announced on March 31st in the comments section of this post!!
- To be sure you hear about the next giveaway why not get ChristianPF via email?
Technorati Tags: SmartyPig, online savings accounts
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YNAB = You Need a Budget. YNAB Pro retails for $39.95 and was kindly donated for the giveaway by the folks at YouNeedABudget.com
If you are interested in getting a free copy of YNAB budgeting software, then keep reading for instructions.
YNAB Pro giveaway
YNAB Pro giveaway There will not be any hoops to jump through in order to win. You won’t have to link back to this site, you won’t have to digg or stumble anything (although it would be appreciated), you won’t even have to say anything nice about me!!
So what do I have to do to win the YNAB budgeting software?
If you would like to be entered for a chance to win the YNAB budgeting software, just type “YNAB” in the comments below before 11:59pm CST on December 24th, 2007. A few more notes about the YNAB Giveaway…
- From those comments entered I will randomly select a winner using random.org.
- Go ahead and enter for each of the prizes, but only enter once (per household) for each one. (Duplicate entries or IP addresses will be disqualified)
- Make sure you enter your email address when adding your comment so I can contact you if you win.
- The winner will be announced on Christmas morning!!
Check back tomorrow for more giveaways!!
del.icio.us Tags: YNAB, Budgeting Software
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Budgeting with ING Direct
ING Direct has played a critical role in helping me get my financial life organized. They don’t advertise themselves as a great budgeting tool, but they really are. You could probably use this same budgeting technique at other banks, but I will show you why it is more beneficial at ING Direct.
1. Open multiple ING savings accounts
The first step is to open up multiple savings accounts at ING Direct (Yes, ING does allow you to open multiple accounts). At most other banks, this is discouraged, if not by the bank itself, by the amount of paperwork required for each. However, at ING once you have opened up your first account, any additional accounts can be opened with about three mouse clicks.
Each one of the accounts that you open will be something that you are saving (budgeting) for. For example, I have my emergency, vacation, car maintenance, entertainment, clothing, and any other savings funds at ING. I put a fixed amount into each account every pay period (ING can automate this if you would like).
2. Open up a ING Electric Orange Checking account
It is really this checking account at ING that makes this budget system possible. You could still use the ING savings accounts to budget without the ING checking account, but it will be much easier if you have the ING checking as well. And to be honest, I don’t think there is a better checking account out there that is better than ING’s.
ING’s Electric Orange checking is unique in a few ways:
- They do NOT offer checkbooks. It is a debit card based account
- You can send E-Checks to someone elses bank account for free
- It has a 3.93%(at the time of this writing) interest rate even with a $10 balance (try to find that at your local bank)
- Free ATM access at 32,000 locations across the country
- There are no overdraft fees. Instead of charging you $30 when you bounce a check, they just lend you the money until you bring the balance back up to $0. So instead of having a $30 NSF fee, you might have a $.50 interest charge. This alone is reason enough to switch. ING has saved me a lot of money with this feature.
3. Use the ING debit card to pay for items budgeted for
Once you have the first two steps taken care of and have saved up money in the accounts you are ready to go. Now is the fun part: SPENDING!! You have to do some work on the car? Just transfer the money from you car maintenance fund (this is a real-time transfer) to your ING Checking and head to the dealer or if you are like me and like to do car maintenance yourself, head to Autozone and swipe the debit card.
How is that for a simple budgeting tool?
I just get a lot of pleasure in simplifying my life. If you have ever used the envelope system for budgeting, you should be able to notice the advantages of this system. Like I mentioned earlier, you can probably do this at variety of banks, but I think it would be difficult to find a bank that offered all of the conveniences of ING as well as the great rates.
The negatives of using ING as a budget tool
The two things I would warn anyone trying the ING budget:
- Stay on top of your transfers from your ING savings accounts to your checking. If you do a lot of budgeted spending for a couple weeks and forget to do the transfers, it can be difficult to backtrack. Like most things in life, it works better with regular maintenance.
- You can only transfer FROM the savings accounts 6 times per month. This really hasn’t been an issue for me but maybe once or twice in the few years that I have been using the ING budgeting method. (But, I figured out a simple hack to getting around this restriction.)
If you are interested in signing up with ING make sure you contact me so I can get you a $25 bonus for signing up.
How to budget with other tools
If the ING budge method doesn’t interest you, then you could try the envelope system of budgeting. If you are looking for budgeting software to help you budget you can check out YNAB’s personal budget
del.icio.us Tags: How to budget , ING Direct
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Google is taking over the world. We all know it, some don’t like it, but I am trying to make the most of it. Admittedly, I am a Google junkie, but they just have so many great products.
One of the newest ones to their lineup is a 411 service. They use a voice recognition program similar to Jott.com to direct the calls. So you don’t actually talk to a person when you call, but if you get connected to the business that you need - who cares?
I think most cell phone companies charge at least a buck or two for this service. For the price, I think Google’s 411 is worth a try.
This is what Google has to say about it…
Google Voice Local Search is Google’s experimental service to make local-business search accessible over the phone.
Using this service, you can:
- search for a local business by name or category.
You can say “Giovanni’s Pizzeria” or just “pizza”.- get connected to the business, free of charge.
- get the details by SMS if you?re using a mobile phone.
Just say “text message”.Dial from any phone
1-800-GOOG-411
(1-800-466-4411)And it’s free. Google doesn’t charge you a thing for the call or for connecting you to the business. Regular phone charges may apply, based on your telephone service provider.
Note: Google Voice Local Search is still in its experimental stage. It may not be available at all times and may not work for all users. We’re fine-tuning the service to get better at recognizing your requests. It?s currently only available in English, in the US, for US business listings.
Technorati Tags: Free 411, Google
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I am always looking for new ways to keep my thoughts, my life and just about everything else organized. I stumbled upon Jott.com, which is an interesting way of getting your thoughts down on paper quickly.
Here is how it works:
- You go sign up at Jott.com
- You call a specific number that they provide you when you sign up
- You leave a voicemail type message for yourself or anyone else signed up with [tag]Jott[/tag]
- Jott transcribes your message to text and emails it to your address of choice
I like it because I often get ideas while I am driving and have no SAFE means of getting them down on paper (believe me, writing while driving is far more dangerous than talking on your cell phone). This process is very simple if you put the number in your one-touch speed dial on your phone.
I just signed up today, my first message I intentionally spoke very quickly and used big words to put them to the test and it took about 15 minutes to hit my inbox. However, I sent another shorter message and it was received in my inbox within about 2 minutes.
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Do I need to say anymore?
I posted about Zecco.com a few months ago in this post. Apparently they lowered their[tag] minimum balance[/tag] from $2500 to $0 since I last posted about them.
What is the catch? For most people there isn’t one. They give you up to 10 [tag]free stock trades[/tag] a day or 40 per month. Anything over that is $3.50 per trade (which is still a steal). I found out that they make the majority of their revenue from options trading and interest on uninvested balances.
I just opened an account with them and I am still in the process of transferring my stocks over. I will post if I have any negative issues with them.
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The simple personal finance definition of this would be: Assets - Liabilities = Net Worth
It probably wouldn’t take you more than an hour to get it set up in an excel spreadsheet, and even less to update it every year. Click here to download my personal balance sheet (Excel).
A personal [tag]balance sheet[/tag] is a great way to get a quick check-up on your finances.
As in just about anything, you are either moving forward, or you are going backwards. The same holds true to your financial situation. If you are increasing your assets or minimizing debts your net worth should be growing. If it is getting smaller, then clearly you need to make some changes.
I update mine semi-annually, because I get encouraged by seeing the progress. Even if your situation is not very encouraging, it is always beneficial to be informed.
I also use mine to keep track of my account logins and basically as a designated location for my wife to have all of our financial details if I were leave earth earlier than expected.
My people are destroyed for lack of knowledge… Hos 4:6
The mind of the prudent acquires knowledge, and the ear of the wise seeks knowledge. pro 18:15
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If you are asking this question now - I am sorry. You have missed out on, in my opinion, the 3rd best advancement in banking in the last 15 years (behind the debit card and high-yielding savings accounts). [tag]Bill Pay[/tag] is a service offered by just about every bank or credit union under the sun. It does just what the name implies; it allows you to pay your bills via your bank online.
Your bank foots the bill for the stamps and sends your payment from your checking account to whatever address you specify. Some banks charge a few bucks a month for this service, but most offer it for free. It saves just about every user 2-3 hours every month. Not to mention the money that you save on postage as well.
At my credit union I use this form to add a new merchant to send bills to. 
Once that has been set up you are ready to pay bills with the click of a button. Then, when it comes time to pay a bill, I simply fill out the form below and don’t think about it for another month.
Thats it. It is that simple. As far as security, I can say is that I have used it for 6 years and never not had a bill get to where it was supposed to go. I worked in a bank for about 3 years and never had anyone come into my branch with any kind of security problems related to bill pay. Please leave me comments if you have had any negative experiences with it.
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This is a quick mental trick you can use to get valuable information on your investments.
Divide 72 by the percentage rate of any investment that you have and it will (approximately) give you the number of years until the investment doubles.
For example, if you invest $1000 with compounding interest at a 9% interest rate, the rule of 72 would suggest that it would take 8 years for the investment to be worth $2000. (72/9%=8years)
If you were getting a 5% return it would take 14.4 years to double. (72/5%=14.4years)
It does require that you use a bit of those 5th grade division skills, but I know you can do it.
So, if you have $10,000 saved at age 30 and you assume a 9% return that $10,000 would double every 8 years.
- at 38 years old it would be $20,000
- at 46 years old it would be $40,000
- at 54 years old it would be $80,000
- at 62 years old it would be $160,000
All without adding another penny to it!!! This is the joy of compounding interest.
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