I've been tracking my spending (cash not withstanding) since 2003, and my favorite part is looking at net worth changes per month, and how they change over time. For example, if I look at 7 years, I see that I've got a rate of $xxx but if I just look at the past 12 months it's now a much better rate of $xxxx! Occasionally, a single day looks awful... every three months I track changes to investment values and dividends paid out. And the past year and a half or so has been negative almost every time! Those days "suck" but I can still look at "how it's going in the big picture" and know we're doing alright. We're headed in the right direction.
I hope more people try approaches like yours.
PS: If you can see a 60% drop and think, yay! great time to invest then feel free. Otherwise, checking once a year is probably fine.
Essentially -- unrealized losses don't matter unless they are uncover-able losses.
Except I combine the daily rate with a running treasury (each day starts with the previous day's ending balance). All expenses must be paid out of the treasury, so if I want to purchase something I have to save up for a while.
Importantly, the 'treasury' is separate from my actual savings, which are deducted at a constant rate from my daily income.
The really fun part comes with estimation: I have several years of data now, so I've been able to develop a pretty complex spreadsheet which predicts my network over time. Every month I compare where I thought I was going to be and where I'm at, adjusting estimates to get more accurate over time. It's gotten to the point where I can pretty reliably predict my net worth to within $100. (One time, I even got it right down to the cent, from 6 months out.)
Then I spend probably an hour at the end of the month doing a retrospective on how accurate my estimates were.
I also divided my expenses by the day but also the week: paid weekly. Had to make sure I never went passed the minimum I needed for bills. Also, made sure I had enough in the account for my largest, non-rent bill as splitting it by day didn't guarantee the amount would be there. Far as ledger, I went with MoneyWise app for Android. Just loaded it, typed in description/amount, hit save, and done. Can set to an arbitrary balance which gave me starting point (or occasional reset). Then, remove amount for day at the beginning or at least once I woke up haha. Then, just continue tracking expenses.
Might try your method at some point as it's interesting.
Note: Originally posted in Disqus on the page. Reposted here for anyone else's benefit.
The point of estimating your expenses is to cause surprise and provoke thought when your estimates are terrible. The point of categorization is to aggregate expenses into larger groups to help find places to cut. Maybe you don't see "$40 for dinner" as a crazy expense but summed over a month it turns out "$1000 on food" is crazy.
In Civ you will know that building such Monument will take X turns or making some other technology progress will consume Y science points. I was thinking that it would be cool to be able to track when and how long someone will be able to afford something. It would be extra cool if this could factor in stock options you received in a company or any other assets so that you can draw a projection of the 10 year finance based on current earning/churn.
Seriously, that's very clever, and you have the same complaints about existing systems that I do. As a fellow Civ V fan, I'm eager to give this a shot.
I think I'd like a service that let me get paid 1/14th of a paycheck every day and also pay [1/28 | 1/29 | 1/30 | 1/31] of my bills every day. Then, your day-to-day finances are literally an exercise of making sure there's always a small balance and that the pay-bill spread always remains positive.
This is separate from the idea of an emergency or rainy day fund, which should be an additional 3-6 months expenses in an easy-to-access account, like a linked savings account.
I realize that if you're currently living paycheck-to-paycheck this can seem daunting. Definitely check out the video lessons on the YNAB site, and think about buying the software. There's probably a way to implement it in Quicken, but I have no idea.
Some might be turned off by having to manually input charges, by having to plan a budget each month, by being offended that they "could do the same thing in a weekend with Excel", but it's the best solution I've found for my wife and I. Not automated enough that we get disconnected from finances, but smart enough that we can easily see where we stand and run a few reports on our spending.
The system is pretty flexible, there's no need to categorize every stick of gum you buy, just use your best judgement and try not to cheat yourself.
What I like most about YNAB is the flexibility. It can be hard at times to follow the rules they set, but that is one of the rules! 'Roll with the punches'.
A paycheck every two weeks can never give you less than two paychecks a month. It'll give you three paychecks in two out of twelve months. So the issue you describe could never cause you to be unexpectedly short of cash? How could you have a "close call"? (I'm assuming here that a paycheck gives you money, and bills take it away.)
It is multi-user, though I'm the only user at the moment. If anyone wants to give it a whirl, shoot me an email which you can find in my profile.
My philosophy is to avoid the banking APIs by putting in expenditures manually. I would love to integrate with OFX, but I don't have the time to maintain it.
I am definitely considering turning it into a solution that everyone can use. I have plenty of work to do on it and the weekend can't come fast enough.
If you haven't thought of it already, some estimations are probably worth considering - electricity and water can be more or less stable, and you might benefit from taking those baseline costs out of your calculation.
Also, it might be useful to add metadata in the form of tags or tag-groups in your spreadsheet; this will give you a bigger/more nuanced dataset if/when you have a hankering to analyze your behavior.
Less usefully, it would be cool if it looked like Civ.
A couple of things I've noticed as I've done something similar:
1) Categorizing the little things as you go along was way too tedious for me too - even in really stripped down form. I really like the idea of categorizing All The Things though. How I dealt with this was to download 90 representative days worth of credit card history into LibreOffice and remove all of the "still gets paid even if I'm cryogenically frozen" payments. I then manually categorize everything that is left (quick because the categorization is batched up and auto-complete works wonders), divide by 90 and generate a pivot table that shows the daily sum of each of the categories. Where I think we diverge though is that rather than trying to keep this snapshot up to date, I just make a mental note of it as "Okay, I average $XX/day on everything else".
As long as you know your starting CC balance then it's pretty easy to figure out how you are doing for the pay period. Just a matter of $start + $daily_cc * $days.
2) Kinda similar to the web app (in spirit if not functionality), I set up a little Python CLI tool that simulates my recurring expenses (along with my recurring $XX "all other crap" fund from above). Once you've set up the recurrence relations you can step through two weeks at a time, pausing to change state, transfer money, etc. It's basically like using a debugger which is an enjoyable way to test out various ideas you have that's a little bit more freeform than a spreadsheet where its hard to see how various ad hoc tweaks layer on top of one another over time.
Maybe I should just categorize everything as "spending" and get over it.
(I can imagine ways that granularity should be helpful, like if one area got out of control, or for tax reasons if I ran a business or had a HSA, but they've just never come up.)
It seems like reporting ought to be continuous and instantaneous.
I imagine there are historical reasons why things have worked that way, since it was inconvenient for humans to compute aggregations any more frequently. However, now we have computers. Why report on a month or quarter or year? Why not look at the report every day, or as often as needed?
It simply isn't possible for a bank for example, to press a button and see where the money is. It takes several days of operations to get anything near accurate and meaningful.
This sounds like a joke, but it most seriously isn't. (this is before the qualitative nature of valuing stuff, this is simply the question 'where is the money?')
If you don't build it, I'll probably wind up hacking it together for myself. :)
EDIT: I'm going to give this a shot in the short term and see what happens, rather than writing my own scraper :) https://github.com/mrooney/mintapi
Congratulations, you've independently invented double entry accounting. Beware that applying it to PF is highly addictive ^_^
But in the end, this seems exactly like normal envelope method accounting software, but without bank integration and with a daily view. You just have one big envelope for "Daily spending" which can be anything. You still keep an envelope for each bill, and you still keep an envelope for each irregular bill and big ticket item.
A system like YNAB could eclipse this by simply adding a daily view, and reinforcing their point about keeping your estimated spending categories few and broad. You could switch to YNAB (or whatever) seamlessly, and have your bank transactions pulled in automatically.
Am iImissing something?
For managing expenses, Excel is sufficient.
Now you just have to determine how long it will take you to hurry "wonders"... ie. buying a house, retirement, etc.
Also, have you looked into your financial institution to see if there's an API for automatically pulling your purchases? The only problem with your system now is it require constant vigilance to keep adding purchases.
These are all rates, so presumably they're the same order of magnitude, right?
Have you tried making a plot of all these values by day? eg see that your weekly rate for the last few days has been diverging down from your monthly rate, so maybe you should start to slow down after that binge last week and recover.
I feel like I suddenly have a much better grasp of actually how much money I make.
Sid Meier, on the other hand, is a gaming legend.
In any case, I think we have conclusively determined that neither Sid Meier nor Alex Recker is married to the CEO of Yahoo.