Category: Personal Finance

Earlier today, I published a You Need a Budget review – budget software to help you organize your finances.  I have set up a special coupon code with YNAB so that if you want to purchase this software you can save 10% off the purchase price.

To get the discount just go to the You Need a Budget website and enter the coupon code:

fourpillars

That’s it!  Also, YNAB informed me that if you download the free trial you can get another coupon code for 10% (if you purchase with 48 hours) thereby saving a total of 20%.  The price of YNAB is $49.95 so after the 20% discount the cost will be $39.96.

If you do try the software – either from the free download or from a purchase then please let me know what you think of it.

In this post I’ll be reviewing the budgeting tool called “YNAB” which stands for “You Need a Budget”.  There are quite a few financial software tools available on the market such as Microsoft Money (discontinued) and Quicken, so it can be difficult to sort out which tools (if any) are right for you.  YNAB is a much smaller company and the software is quite different than the normal all-encompassing money management tools.

I do all my budgets and financial “stuff” on Excel spreadsheets but I’ve been thinking of getting some proper financial software.  I have regular bank accounts, a multitude of investment accounts and a small business.  I’m doing ok with Excel, I’m thinking that maybe I should upgrade.  I’ll be taking a look at various financial software starting with this one.

What is YNAB?

YNAB is a financial budgeting tool.  On the simplest level you enter your various transactions into the software and it helps you determine how much money you can allocate to various goals.  It also comes with a set of financial rules which are worth reading by themselves if you are learning the basics of financial management.  It works on the principal of “zero balance” so that all your income and expenses plus savings have to be reconciled each month.

Here are the 4 “YNAB” rules:

1. Give every dollar a job.   This isn’t an election campaign slogan – the idea is that if you don’t have a clear goal for each dollar then it will disappear (ie get spent on crap).  By assigning ALL your money to one function or the other, there should be less leakage of moola.
2. Save for a rainy day.  This is basically spreading out a future fixed cost over time so that you don’t get nailed with a large cost one month (ie annual insurance payment) that you might have forgotten about (or ignored).
3. Roll with the punches.  There is some important flexibilities build into the software so if you do have trouble in a particular month YNAB will make up for it the following month by reducing the budget.
4. Stop living paycheck to paycheck.  If you are currently living paycheck to paycheck then the software is designed to help you get ahead of your payments so that you have a bit of financial breathing room each month.

You can import data from the YNAB spreadsheet version (not supported anymore) or just start fresh.  It also accepts financial feeds from any bank.  I tried importing some data from my bank (CIBC) and it worked great.

Who is it for?

I think this tool is mainly for people who are working to get control of their finances and need a bit of help to get organized.  If you want to improve your finances and aren’t sure where to start, living paycheck to paycheck and/or trying to get out of major debt then you might want to consider this program.  It’s not just a budgeting tool…it’s a way of life.  🙂  Ok, that’s an exaggeration.  It really is more than just a financial tool though- it’s almost like a financial tool with an “improve your finances” philosophy built into it.

If you are someone who is at the point in life where you don’t need to track every expense in order to meet your financial goals then this software might not be as useful to you.  If your investments are the only thing you want to track then Quicken is probably a better bet.  Keep in mind however, that even if you don’t “need” to budget – it can help you achieve your goals quicker even if you are not in debt.  One of our goals is to pay off the mortgage and there is no doubt in my mind that we could achieve it faster with a stricter budget.

I won’t be buying this software because it doesn’t meet my current needs – there was a time when I was paying off debts when this software probably would have helped a lot.

I was impressed by the software itself – the original version of YNAB was Excel-based and I didn’t know what to expect with the new software but it is quite good.  The creators of this software are very passionate about debt reduction and financial management and it shows on the YNAB site.

How much does it cost?

The sticker price is $49.95 but I’ll be posting an offer later on today which will provide a big discount on this price.  Check out the “fourpillars” coupon code for big savings.

What doesn’t it do?

It won’t track investments so someone who is more asset-rich might not have as much use for this software.

Guarantee

Along with the 7 day free trial there is a 60 day guarantee on this software so you are pretty safe if you decide you don’t like it.

YNAB 3.0

In November there will be a major upgrade of this software, but don’t worry – if you end up purchasing the existing version (2.0) then you get a free upgrade to 3.0.

Free trial

You can do a 7 day trial if you are interested in checking out the software before buying.  Or if (like me) you just want to see what it looks like.  Basically you do the normal download and then at the end just click on the “7 day trial”.  There is no obligation and you don’t have to give any kind of information to do the trial run.

Here are the 4 different sections of the YNAB system and some screen prints so you can see what it looks like:

Register

Start by setting up your register – this is a list of all your transactions.  First step is to select a bank account or credit card/loan.  Then you enter the expenses/income etc within that account.  The register is set up like a spreadsheet where the different bank accounts are tabs along the top and you select each account/tab to see the details.

The register screen looks as follows – you can see I’ve set up two accounts by looking at the tabs at the top (checking and savings):  Click on the image to see the full-sized image.

 

You can import data from your bank account quite easily.  Just export the database from the online bank account interface and then import using YNAB.  I used the “Intuit Quicken” export option since that uses the same default file format as YNAB.  If you have set YNAB as the default application for financial downloads (it will ask you on installation) then YNAB will open up automatically with the new data.

Budget

 

Scheduler

 

Reports

 

Whenever I’ve tried to figure out how much someone should contribute to an RESP for their child – I’ve always gotten stuck on the issue of whether the kid lives at home during his school years or goes to school out of town.  My rough calculations indicate that if you contribute the maximum allowed each year for an RESP then you will probably have enough money if the child goes to school out of town (roughly speaking).

But what if you save all this money and they decide to live at home?  In that case the total cost gets cut about 40-50% since they don’t have to pay for accomodation and food.  You can’t really plan for this since most students don’t know where they will be going to school for sure until less than a year before graduating high school.

I’ve always thought that you would just have to get the child to spend more money (drive a new car?) while in school to use up the funds.  Alternatively, you could save some money in an RESP and some in an open account which would cover both situations. In fact, the answer is to just withdraw any contributions that you made to the RESP.  They can be withdrawn by the account owner (ie Mom & Dad) once the child starts school with no penalty of any kind.  You wouldn’t have to withdraw all the contributions – just whatever you feel is the right amount. If the kid is starting her 4th year and there is still $50k in the RESP then that would be a good time to figure out how much the contributions were.

Make sure the student is getting non-contributions

If you run into a similar situation then make sure the financial institution you are dealing with is withdrawing non-contribution money when sending money to the student.  Similarily if you withdraw contributions for yourself – clarify with the financial institution that this is indeed happening.  You can just call the company that holds your RESP to find out what the total contributions are.

One suggestion for saving money that I’ve read on countless websites is to participate in free (or very cheap) activities that are happening in your community.  Things like festivals, open houses etc are good examples.  I’ve never really followed this advice since most “community” events seem to be geared toward people with kids – a group I wasn’t a part of until a few years ago.  Now that I have a couple of little rugrats I seek out this sort of thing mainly because it is something to do with the kids.

We did one such activity a while back with the annual Toronto Fire Academy open house.  We missed this event last year so we made sure to plan for it this year.  Basically the academy does all the training for the Toronto Fire Department:  classes and field training.  They have a large building which I assume holds all the training classrooms.  There are also other training “props” on site – a train car, a car – both of which can be set on fire.   At the open house they had demos for quite a few exciting training exercises.  The great thing about this open house was that although it was geared towards kids, anyone with any interest in seeing things on fire (and who doesn’t?) would enjoy it.

My only complaint about a lot of these local events is that it can be hard to find out about them.

Do you go to local, free events?  How do you find out about them?

Here were some of the highlights of the fire academy open house:

Train Tanker car on fire

This was the best demo of the day – they had us about 300 feet back from the fire and you could really feel the heat.  I can’t imagine how hot is must be when you are only 50 feet away.

Burning car

This was pretty neat – although not as good as the train car.

Ladder truck with extended ladder

This was pretty cool – I had never seen a big fire truck up close and the guy swinging around at the top of the ladder was quite impressive.  The ladder is 105 feet long and he said the truck appears small when you are at the top.  Note the hydraulic system used to keep the truck level.  We also got to sit in the driver’s seat as well.  There were a couple of different firemen who went up the ladder and they both took quite a few pictures with their cell phones.  I guess it’s one of the few times they get to climb the ladder in a relaxed setting.

“Jaws of life” demo

This demo wasn’t as visually interesting as the fire demos but the firemen had both of the doors of the car off in about 10 minutes.  The tools they use are incredible – very, very powerful.  They could probably have gotten the doors off quicker but safety for the firemen and the people trapped in the car is more important so they take a bit of time.

Last year my wife and I took advantage of the ING Direct pre-TFSA deal where they paid extra interest on your pre-TFSA contribution which kind of made it like a TFSA.  This year, ING is doing it again – if you have money earmarked for your 2010 TFSA contribution room then you can put the money into their TFSA “kick start” account and they will pay extra interest to make up for any taxes on the interest.

Of course one big difference this year is that the TFSA high interest account interest rate is 1.05% unlike the 3% offered last year.  Needless to say, you aren’t going to save big bucks by taking advantage of this offer but in our case we save about $9 which is worthwhile since we were going to move this money into a TFSA anyway.  Being able to move the money now is the best perk of this deal.  ING will move the money into an actual TFSA on January 1, 2010.

Here is a refresher on the TFSA rules (Tax Free Savings Account).

We’re keeping our emergency fund in a TFSA

I used to be very anti-emergency fund but I’ve changed my mind on that subject.  Although I still agree in theory that using a line of credit for an emergency fund is a more efficient way to manage your money – having survived several rounds of job cuts in the past year I have embraced the idea of having plain old cash as an emergency fund.  Our EF is $20,000 which is about 5-6 months of expenses.

Earn $25 by setting up a new ING account

ING Direct has a promotion going on where you can use an existing customer Orange Key referral code and both you and the original customer will receive a bonus of $25.

To recieve the bonus you must do the following:

• Set up new account on the ING Direct main page.
• Enter the orange key code 33089336S1.  See pic below.
• Fund the account with $100.

That’s it!

Photo credit Nutmeg15

Google Street View went live today for Toronto, Vancouver, Hamilton, Kitchener, Waterloo, Windsor, Calgary, Canmore, Banff, Lake Louise, Montreal, Quebec city, Halifax.  Apparently Saint John NB, Edmonton, Saskatoon and Winnipeg are next on the list.

If you were impressed by satellite images of your rooftop then you will be really blown away by this service.  I know I was – I spent at least half of my work day playing around with it.

What is Google Street View?

It’s an offshoot of Google Maps – you can select an address, then select “street view” and you will be able to see a picture of the front of your house.  You can rotate the view around and move up and down the street.  Faces, license plates have been blurred for privacy.

Are the pictures recent?

No, apparently last April (2009) Google had cars driving around with cameras that can take pictures of different angles.  They covered every street and every angle and then let the Google computers stitch it all together.

What good is it?

I think one of the best uses for this technology is for someone who wants to buy a house.  They can check out a prospective house for things like curb appeal (which might be out of date) and general location ie is there a wrecking yard next door?
Another use I can think of is if you are planning to visit an address then you can check out what it looks like first.  This would be great for a storefront on a busy street where the numbers aren’t always that visible.
Here are some uses that Google has come up with http://maps.google.com/help/maps/streetview/using-street-view.html#personal

How do you use it?

• Go to the Google homepage.
• Click on “maps”
• Type in an address or intersection
• Click on the red ballon which shows the exact location of the address.

In the popup – click on “Street view” which is just under the picture.

Another way to get things started is to drag the little orange person at the top of the zoom bar onto the spot you want to see.

You should be looking at the address requested or in some cases it will be nearby.

Rotate the view

In the upper left hand corner there is a circle with a hand plus 4 direction symbols.  If you click on the up and down symbols the view angle will go up and down.  If you click on the left or right symbol then the view will rotate the same way.  This allows you to point in the desired direction or even do a 360.

Move location

You can actually move the location of your point of view by clicking on the road or any other object like another house.  If you click on the road then a white circle will appear – double click and your point of view will now be where the circle was.  If you double click on something other than the road – such as a house then your point of view will be right in front of that object.

There is also a shape below the navigation circle with a plus/minus symbols – they will zoom in or zoom out.
There is a small screen on the lower right with a little person – you can drag that person to other locations shown on that screen.

Show someone else

If you get a view you want to share with someone else then in the upper right hand corner you can click on “print” or “send” or “link”.  “Print” should be self-explanatory, “Send” means an email is generated with the link to your view.  “Link” just shows you the link to the view and you can do whatever you want with it.

Other ideas?

Can anyone think of other ideas for this neat technology?

Most house or condo owners have experience with doing some sort of do-it-yourself projects fixing up their homes.  Maybe this year you wanted to take advantage of the renovation tax credit.  Whether you were painting a room, redoing a bathroom or fixing up your deck, you probably noticed that some (or all) projects are hard to do and especially hard to finish.
I think one of the big problems diyers have is lack of experience so they don’t know how much work and time is involved in the task they are planning to do.  I know that I get frustrated when something is taking a lot longer than I had thought.  If it takes me 80 hours to build a deck then I’m ok with that but if I think it’s only going to take me 40 hours then I will be getting pretty annoyed by about hour 50 when it’s nowhere near completed.
Once you have painted a room or two then you probably get the idea that your estimate should include things like:

• trip to store to buy paint/supplies and wait while it is being shaken
• moving furniture
• removing painting/hangings
• repairing drywall
• priming
• painting
• 2nd trip to store to buy something
• painting again (2nd coat)
• rehanging stuff
• put back furniture

Whereas your original estimate involved the following task:

• buy paint
• 1 coat of paint
• done

The problem is that a lot of DIYers will do a particular project once and then never do it again.  Or they don’t do it again for many years and forget a lot of the details (and pain).  An example is a new deck.  If you decide to build a new deck for your house – it’s unlikely you will do another one unless you move to a new house so you just don’t have the experience to be able to estimate the time needed to finish the project which can lead to frustration.

Lack of fitness

Another stumbling block to finishing a project is fitness and stamina for physical labour.  Let’s face it – a lot of us spend our work hours sitting in front a computer, in meetings or some situation where we aren’t doing physical labour.  Even if you do exercise outside of work then it’s likely to be a specific type of exercise and for a limited time.  Many weekend warriors try to budget a lot of time for a project on their days off – typically on the weekend.  The problem is that although you might be able to budget 10 hours on Saturday and 10 hours on Sunday for a tiling project – your body will have other ideas.  I remember when I was getting my first house ready for sale I created a “time budget” where I would work 7.5 hours on Saturday, 7.5 hours on Sunday and 4 hours on two evenings during the week.  It didn’t take me long to realize that in fact I wasn’t putting in those hours.  Saturday morning I would put in a good 3 hours before lunch which was quite productive.  After lunch however it was a struggle to get going again and I often would only get another hour or maybe even 2 hours of good work accomplished that day.  Instead of doing 7.5 hours I would usually only do about 4.5 hours.  By adjusting my expectations and work schedule I was able to plan better.  I would only plan to work in the morning and then just do a bit in the afternoon.  Then I would just doing something completely different ie tv & beer.

To all those frustrated workers I have the following suggestion:

Get some help

Having friends give you a hand or hiring cheap labour is a great way to make a project more palatable.  Yes, it might cost more but it’s likely still cheaper than hiring a contractor to do the job and you will still get the satisfaction of doing the job yourself (sort of).  You will feel much better about a project that you finished with a bit of help than a project that you didn’t finish all on your own. 🙂

This is a lot easier to do for some projects than others.  As well, some people have good networks of friends/relatives who have time to help on projects whereas others will have to pay $$ to get some labour.

One thing to keep in mind with cheap labour vs friends is that you can get the cheap labour to spend all of their time doing grunt work whereas your friends might want to share the dirty jobs and expect you to do some too.

This can be done for non-reno projects as well.  For example I’ve hired students to help with waste disposal and cleaning.  Maybe you need to go through your basement/garage and organize things.  Having someone to help (and do the bad parts of the project) can really increase your morale and get the project finished.

This takes a bit of organization.  You have to have some sort of plan in order to use the labour effectively.  If you hire 1 or 2 workers and they spend most of their time with nothing to do then you are wasting your money.  Hiring help works better for larger jobs where there is enough physical labour to keep someone busy most of the time.

Another benefit of hiring help is that it will keep you on track – left to your own devices you might get bored/tired after a couple of hours and take a break that lasts for several years.  Having someone there will help you stay on task.

Some jobs which are good candidates for hiring help.

• most landscaping projects.
• new lawn
• major garden reno
• deck
• patio stones
• fencing
• drywall
• painting
• kitchen cabinets

All these projects could benefit with extra hands.  They are large enough projects with a major labour component.  Tasks where a lot of strength is needed might also be a lot easier with more help.

Projects where you might not get as much benefit would be smaller projects that you can handle yourself.  Ie painting one room only.  More skilled projects like plumbing, electrical, tiling probably won’t benefit as much with extra hands around.

What do you think?  Would you ever hire some cheap labour to help move gravel and patio stones around for you while you do the fun parts of a new patio?

One of my blogger buddies – Lynnae from BeingFrugal.net highlighted a deal offered in support of the American Cancer Society.  After looking at the bundle I bought one for myself since there are several items in there that I was going to purchase anyway.  The total retail value of the bundle is $800 although it is extremely unlikely that anyone can use all of the items.

You can head over to her page to find out more details and sign up if you want.  Remember that she also has a promo code “BEINGFRUGAL3” which gives you another 30% off so the final package will cost you$20.95 US$.  Patrick from CashMoneyLife has also written about this so you can find his thought on the big bundle.

Some of the items aren’t all the useful to Canadians (ie restaurant.com) but check out the list to see what is of interest to you.

These are the items that I’m interested in:

• Mozy Home Edition – 50% off 1 year.  I’ll be reviewing this service.  It is a computer backup service so that allows you to store your files somewhere other than your house (in case it burns down or computer gets wrecked).  1 year is $60 US$ so this is a $30 saving.  This coupon expires on Oct 28!
• GoDaddy – 1 free domain –   This won’t be of interest for most readers but if you are a blogger of sorts then this might be worth around $10 or so.
• Corel Photo Album – I’ve never used this but it is a photo editing program.  I do this sort of thing quite a bit with the blog.  Worth $40.
• Evernote Premium – I’m planning to try out the free service – not sure if the premium service is worthwhile.  This service allows you to easily scan any documents you have and file them electronically for you.
• Foxit PDF creator – Ok, this wasn’t exactly on my “need to buy” list but I can probably use this.  $30.

Here is a link to the entire list – feel free to explain to me what some of the other things are and if they might be useful… 🙂  Subscription to Zagat???

Keep in mind that some of the discounts have time limits so check the details to make sure you don’t miss out.  Also some of the discounts like gap.com are only eligible on purchases of $100 or more.