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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I love simple.
I would love to eliminate about 50% of my remaining possessions. Most of it is junk sitting on a shelf that I tell myself I will use again that I probably will not. Truth be told, if someone stole it (this refers to about 50% of my stuff) I wouldn’t notice for a long time, if ever. So why do I have it?
In the midst of our over-abundance of everything, I am longing for simplicity. I love my coat that goes with dress pants as well as jeans. I love Gmail because it simplified my email management. I love ING because it made my banking easy.
I am a work in progress. I have areas of my life that I am proud of my successes in simplicity (simplifying my closet) and others that are still quite a mess. But, it is a fun journey that is worth traveling.
I always thought that freedom came as a result of many options. I am finding myself feeling more liberated as I ELIMINATE my options. I don’t really understand it yet, but I like it.
Here are my 3 rules as a beginner minimalist:
1. Evaluate your possessions that sit on shelves. Think about how often you will realistically need the item. Think about how much it will cost to replace it if needed. Throw/give the stuff away.
2. Find a place for everything. Keys, pots and pans, neck-ties, toothbrushes. It all needs a home.
3. Enjoy what you have. Get rid of the junk and really enjoy those few items that are worthy to remain in your possession.
Living the simple life
I don’t think I am alone in desiring less when our world is screaming, “more, more, more.” Lynnae wrote about why she likes the minimalist life, Leo wrote a book about it, and I seem to be hearing people talk about it a lot lately.
What about you? Is LESS the new MORE?
This post was featured in the Carnival of Personal finance.
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I am a subscriber to the Gmail blog - because I am a moderate Google nut and like to stay in the loop with what they are doing. Well, I saw this tip on their blog and actually on another productivity blog, and it is just too good not to share.
I guess I will remind you what my favorite Gmail tip is before I get into the second one: Gmail is an email management system. I wrote about this before, but it bears repeating for those who have multiple email accounts and are in desperate need of organization or simplification.
What this means is that you can have all of your email from all of your accounts going directly into your single Gmail account.
You say, “great. I already knew that.”
Okay, but the good part here is that you can also SEND email from your other accounts WITHIN your Gmail account. So, if your email address is Billy@hotmail.com you can now send emails from that address within the comfort of your Gmail home (as well as any other accounts you have.)
So, what is your 2nd favorite Gmail tip?
Ok, so on to the 2nd favorite Gmail tip.
Say my Gmail address is Ihatespam@gmail.com. I can send emails to Ihatespam+bob@gmail.com or Ihatespam+anything@gmail.com and they will all go to my inbox.
You can add a “+” sign to the end of your Gmail id (Ihatespam in this case) and add anything you want after it.
If you think about this just a little bit, you will be able to see that this opens up a lot of possibilities for organizing your inbox.
- You can have work or school emails come to separate address and then filter them to go into different folders in your inbox
- You can have newsletters etc. filtered in to different folders as well
- You can easily weed out spam by using this technique. If, whenever you offer up your email address on a website you add the “+somewebsite” you will always know how spammers got your email address. Then you can quickly filter all of these emails into your spam folder. Problem solved.
My experience with this Gmail tip
I have tried this and really like using this tip along with the filters in Gmail. It really can help organize your inbox.
However, I will say that not all websites allow you to enter an email address that includes a “+”. I was a little bit bummed about that, but hey it is better than none, isn’t it?
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Don’t be an easy identity theft target
Although some identity theft is electronic and sophisticated, most identity theft actually still takes place by dumpster diving and mail theft. So, depending on how secure your garbage can is, you may want to think twice about what you put in it. It is a great place for identity thieves to find a wealth of information about you.
Ways to prevent identity theft
Here are just a few tips and guidelines to follow for decreasing your chance of identity theft.
Never E-mail Sensitive Information
My employer has drilled this into our heads over the last few years. They have said that email is as private as a postcard; a lot of eyes could see it before it gets to its destination. Whether or not that many eyes actually see our email, it is a good idea to err on the side of caution when using sensitive information.
So, whether at home or at work think about what gets typed into an email. Be wary of including account numbers, user names, passwords, Social Security or PIN numbers, or credit card information.
Pick good passwords
Choose user names, PINs and passwords that are difficult to guess. Don’t use your birthday, phone number or any other obvious personal data. They also say it is a good idea to type your log-in information each time you go online instead of letting your browser save it for you.
Limit Personal Information
Always use a healthy dose of skepticism with incoming calls or incoming emails. It that personal really from the company that they say they are? You shouldn’t disclose personal information over the phone or via e-mail unless you initiated the call or email.
Practice Internet Safety
You should try to avoid using public computers to review personal information and account details because simply closing your browser does not automatically clear the browser’s memory. The information stored in cache is still available until deleted.
Look for sites that offer Secure Sockets Layer (SSL) technology. You can tell if a site uses SSL by checking to see if there is a locked padlock in the lower-right hand corner of your browser window. Also, when you log on to a secure site in the address bar you will see the, “http” change to “https.” These are good indicators that the site is secure.
Protect your identity with a shredder
Buy a shredder and destroy (or safely file) anything that has credit card information or your Social Security number.
Be cautious with Outgoing Mail
Deposit outgoing mail in the United States Post Office boxes rather than your home mailbox.
Get Your Credit Report
Review your credit reports from the three main credit bureaus (i.e., Equifax, TransUnion and Experian) at least annually. Federal law requires these credit bureaus to each give you a free copy once a year. If you really want to keep a close eye on your report, you could get one from each every four months.
I recommend using annualcreditreport.com. These guys make it easy to get all three once a year for free. Many other credit report websites will make it very difficult to get the free reports. If you notice that the information on one of your credit reports is inaccurate, contact the credit bureau to investigate.
Equifax offers a service where they monitor your credit report for you. If you don’t have time to monitor it or don’t feel like it, this could be a good option. I personally have not signed up with them yet, so I can’t attest to how good they are.
If you suspect that you have become a victim of identity theft, call 1-877-ID-THEFT.
Check Your Statements
Watch for unusual purchases or transactions on your statements and report them immediately. Also, if your statement appears to have been opened and resealed, contact the issuing institution as once.
Use Antivirus Software
Make sure your antivirus software is up to date, turned on, and enable the firewall on your PC.
Review Privacy Policies
When applying for an account or ordering a product online, review the Web site’s privacy policy to make sure you are dealing with a reputable company who won’t sell everything they know about you to spammers-R-us.
Do you have any tips or tricks that you use to prevent identity theft?
Technorati Tags: identity theft
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To the beginner…
Money management is not just for big corporations. It is for you and I as well. It doesn’t need to be labeled with terms like money management or budgeting. If you are where I was, it means nothing more than GETTING RID OF THE CHAOS.
If you are just beginning to get your financial life in order - I am excited for you! It is a fun journey and it is well-worth the effort. The peace that comes with knowing how much money you actually have and being in control of your spending is truly priceless.
Not too many years ago I was out of control financially with my maxxed out credit card and empty (and likely overdrawn) bank accounts, and not a dollar in savings. I decided that I was not going to live my life out of control and had to get things in order.
It did take a little work and a little time, but it is not much different than cleaning out a junk filled garage. It looks like an overwhelming task, but once you get going, it is easy to keep going. And once it is finished, it brings a sweet taste of satisfaction of a task accomplished.
Money Management
If you are looking for a way to get your bank accounts set up to to make bill-paying simpler I have laid out how I organize my bank accounts. And how I manage my bill payments will show you the steps that I take to keep my bills in order and pay them 2 times a month.
I also use a balance sheet to keep track of my financial life. You can also download a copy of my balance sheet template that I use.
Budgeting
If you are making the wise move to start a budget, I suggest reading why budgeting is like baking cookies to get some fun into your budgeting and these 4 quick tips to sticking with a budget.
Then you can learn some techniques with how to budget with the envelope system or how to budget with ING direct.
Saving Money
If you are having trouble spending too much money, then I suggest you read how to quit spending more money than you make or the trick to saving money.
If you are having trouble finding money to save read how to find money to save. One great way to find extra money to save, is to use the money from your raises at work. Read what to do with a raise for a more detailed analysis of what I do with each raise.
As you take your beginning steps with managing your money you will find that it is a lonely journey sometimes. Most people do not ever get their financial lives in order, and sometimes you can feel like you are not normal. Well, the truth is that in the U.S. “normal” means living paycheck to paycheck and in debt up to your eyeballs. Who wants to be normal anyway? Here are 16 ways to save money by not being “normal”
Building an Emergency Fund
One of the best tips for beginners is to build an emergency fund. Experts recommend anywhere from 1 month to 6 months of your expenses. It really depends on your personal situation.
Don’t be intimidated by the amount, just start saving, realize it may be a distant goal, and keep going and you will get there!! It is a very comforting feeling, knowing that if the car breaks down or the water heater breaks that you have money in reserve waiting for it.
If you are wondering if you need an emergency fund you can read “do I need an emergency fund?” and if you already have one and are looking for ways to make more money with it check out how to make more money with your emergency fund.
Saving for Retirement
So you want to retire? You mean you don’t actually want to work until you are 85? Good, me neither. The good news is that it is never too late to start saving for retirement. And, the earlier you start, the better off you will be. I have a quick and easy solution for twenty-somethings to retire well off.
You can find out more about saving for retirement with these 4 quick steps to retirement savings.
I think this should give you a good start at managing you money like a pro, keeping checking back (or get updates in your inbox) as I regularly aim to provide money management tips for beginners and veterans alike…
Veterans: Do you have any suggestions for beginners? What financial advice do you wish you would have received when you first started the journey?
Technorati Tags: beginner tips, money management
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Good is the enemy of the best
Too many options causes a paralyzing effect. I recently read about a bicycle shop owner who carried about 35 different models. He decided to simplify things in his store by eliminating all of the “good” bikes and only selling the best in each “category.” He had found that most of his customers fell into 1 of 6 categories of buyers: e.g. high performance, high durability, budget bike, etc. He ended up only selling 6 different models, but each one was the best he could find for each type of customer. Once he made this change, his sales sky-rocketed.
There is a freedom that comes with having fewer options. The bicycle shop owner had figured out that some of his customers were experiencing a paralyzing effect from being overwhelmed with all of the options. By eliminating even a bunch of “good” options, he simplified his and the customers’ lives.
I have begun to apply this principle to my wardrobe and have been very pleased with the results so far. My initial fear was that if I got rid of some “good” clothes, that there would be a time when I needed them and I would be kicking myself, but I have not missed them at all. In addition, I love the simplicity and, of course, the extra closet and drawer space.
Organize and eliminate waste
Most of us have clothes for different occasions. Clothes to lounge around the house in, to be casual, to dress up, to dress up really nice, to run errands in, to work in, to exercise in, to play in the snow in, to do yardwork in, and the list can go on and on. I always had a tendency to think that for each occasion I needed multiple outfits, but many occasions happen so infrequently that I only need one (or two) outfits. Or even better would be if you can have one outfit that would cover multiple different occasions.
For example, I used to have about 8 pairs of “lounge around the house” pants, and I would get a chance to wear these types of pants maybe 3 times a week. There was absolutely no need to have that many pants; I just didn’t want to throw them away, because nothing was wrong with them. The truth was, that of those 8, I had my favorite pair that I would have liked to wear all of the time, but didn’t because I felt like I needed to wear the other 7 because they were in my drawer.
It is difficult to get rid of things away when there is nothing wrong with them, but it is necessary if you want to simplify and organize. So I picked out my 2 favorite pairs, gave 6 of the 8 to goodwill, and have not missed the 6 at all. I now get to wear my favorite pants most of the time, and if they are dirty, then I have my second pair. I also have a lot more drawer space and get to wear my favorite ones more often.
I had a similar issue with my work clothes. I had about 12-15 pants and about the same number of shirts. Most of which were mediocre. I hated having to pick which mediocre outfit I would want to wear for that day. So, I began getting rid of the bad, decent, and even good and now I am happy to report that I have 6 shirts and 6 pants that I feel great wearing everyday.
I can’t wear the same outfit every time I go to social events!
True. And I don’t suggest it; people will give you funny looks. 
Anyone can go buy a new outfit every weekend, but with a little creativity you can come up with many different outfits just with the clothes you have. This is why looking at your wardrobe as whole, rather than individual outfits is important. When buying clothes think about how many different ways you can wear them. If it is an item that will not work with anything else in your closet, then it isn’t going to help you simplify.
Don’t buy BECAUSE it is on Sale
There is a lot of money to be saved by shopping in the sale racks, but buying things just because they are on sale is a terrible idea. I used to find mediocre things on clearance and I would buy them because they were so cheap. The result was that I had a bunch of mediocre clothes that cost me (total) a lot of money. In hindsight, I would have been much better off buying something that looked great and paying full price. Now, I still scan the sale racks, but only buy if it is a “great’ piece of clothing that I know I will love wearing. I don’t waste my money on filling up my closet with “decent” clothes.
When you find something on the sale rack ask yourself:
- Will this item replace or fill a need that I have right now?
- Is it quality? Will it fall apart after I wash it?
- Do I want it because it is cheap, or because it looks great?
- Can I use it with various items in my wardrobe?
Your answers to these questions will give you a good indication of whether or not you should make the purchase.
Technorati Tags: simplify wardrobe, organize closet, save money, clothes
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Organize your Bank accounts
If there is one thing that I have learned about personal finances, it is that nothing is one-size-fits-all. There are different tools, methods, products, and investments that work for different people at different phases of their lives. My system that I am currently using to manage my accounts and cashflow did not work for me 5 years ago. But now I couldn’t think of anything easier or more efficient.
Below is a diagram showing how cash flows through my accounts.
This is a simplified version, but it gets the point across.
Variable Expenses
Every two weeks, our paychecks are direct deposited as noted above in the diagram into our accounts at our credit union. Our checking account for GAS & GROCERY gets a fixed amount deposited into it every two weeks. From this account we get our spending cash (or blow money), pay for fuel for our cars, and groceries. None of the three are really fixed expenses, so when gas prices rise we are forced to cut back on our spending money or grocery bill.
I sure hope that gas doesn’t go up to $4 a gallon - I won’t be able to eat!! Keeping a leash on variable expenses is extremely important when trying to save money. Most people do not realize that expenses rise to meet income, and they pay the price because of it.
Look at any well established business and you will find that each department has a set budget for the quarter or year. They have to stay within those limits that have been created for them.
Why do they do this? Because it works. Businesses are in business to make money, so if it minimizes expenses they are happy.I am not suggesting to manage your finances like a CFO, but we can learn a lot about how to get things done from the business world.
Fixed Expenses
Roughly 75% of our paychecks go into our BILLS account. When we set this account up, I calculated how much all of our monthly bills cost, divided it by two and set up a schedule for when each would be paid. So, in all honesty I don’t check the balance in this account very often. Since we know how much needs to be paid out each month, we have exactly that amount deposited in. I use bill pay to pay my bills out of this account every two weeks based on my bill payment schedule.
Budgeting
Part of this fixed amount that gets direct deposited into our BILLS account is our ING savings. ING is a great budgeting tool and if you don’t have an account with them, I recommend that you take a look at what they have to offer.
From our BILLS account (every two weeks) I transfer a fixed amount into each one of our ING savings accounts. As the accounts grow I am earning a nice interest rate on my budgeted money.
I would love to hear how you manage your money or any other thoughts or suggestions…
del.icio.us Tags: Organize , bank accounts , finances
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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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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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Anyone who has ever forgotten to get something from the grocery store realizes that it requires a lot less time to buy everything one day than having to go get something as you need it. It requires a grocery list and a bit of foresight, but it saves you hours throughout the week by NOT having to go back to pick up missed items. Why not implement the same type of planning to the paying of your bills?
Rather than sporadically paying them as they come in, or checking a pile on your desk every few days, you should be able to designate 2 days a month to pay your bills. And of course, if you want to save even more time use bill pay.
- Make a list of all of your bills and next to each one right the day that it is due. If there is not a due date just leave it blank.
- Decide on 2 days per month that you will pay your bills, I recommend the 2 days you when you get paid (if you receive a regular bi-monthly check).
- Assuming the days you get paid are the 1st and 15th - you would then take all of your bills due say the 22nd through the 6th and pay these on the 15th. And on the 1st of the month you would pay the bills due from the 7th -21st. This will give each bill at least a week to get to through the mail.
- Figure out what your monthly dollar amount needed for bills is and divide it by 2. If you get paid $1000 two times each month, then you will want to pay $1000 worth of bills on the 15th and $1000 worth on the 1st. Use the bills that don’t have a due date (i.e. savings accounts) to balance this out.
To see an example, download my bill payment scheduleExcel spreadsheet. I also suggest having a designated checking account specifically to pay bills from. That way you can know exactly how much comes out (the monthly total of your bills), therefore you can know exactly how much to deposit.
Of course if your bill paying days don’t balance out perfectly (paying $1000 both days) don’t spend the money! If you paid $700 this time, you know you will have to pay $1300 next time. If you don’t touch it, you know it will be there waiting.
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