Sunday, December 30, 2007

end of the month Quicken activities

Why do I use Quicken?

It's end of the month. This is when I do most of my Quicken activities. Download all the electronic statements, review all the paper statements. Dutifully download or enter each transaction into Quicken. I place each transaction into the appropriate category. I keep all my receipts so I cross reference each receipt that with the bank statement. (More on keeping receipts later, most people think it's weird but let me tell you, your business is what your receipt so alway keep all your receipts!) Finally, I reconcile each bank statement and make sure all my incomes and expenses are tracked. It take me about 4 to 8 hours over a few days. 4 to 8 hours a month just for bookkeeping. Ugh.. that sounds like a lot and what do I get out of all this?

First, a sense of accomplishment. This is not a minor task, but it's a task that I do every month. To me, it like a badge of honor, a small and quiet one. It should not be a big deal but just something that needs to get done.

Second, I know where my money is going. Honestly, I'm ALWAY amazed at how much I spend at the end of every month. Let me tell you, I'm a pretty careful guy when it comes to spending. Many people would call me frugal in the polite sense. Not quite a cheap ass but definitely working all the angles to get a good value. I have a good head for details, but I alway surprised by the total amount. I can recall many transactions but the total amount is much higher then I expect. This was an early and important lesson for me. You can't trust your instinct on the total spending. Many people wonder where did all their money go. I don't know anyone who can guess their total monthly spending and get it right. I think people tend to forget the common every day spending like coffee, lunch out, grocery, and electric bills. We tend to remember the special sale or unusual spendings. Therefore our mental map of our spending habit is just completely off base. (My random musing is leading to an interesting idea for me.. I should do some research on that idea. )

Third, I know where my money is coming in. This is the most important part. This is the big picture. I have multiple sources of income from real estate rentals, salary, consulting, and other businesses that I manage. Every month, this is where I know if I achieved my desired savings rate or not. I don't keep a budget because I don't want to be a slave to my spending. But I want to plan and save for my future goals. So every month, my focus is always on where is the money coming in and how I can expand the existing sources or acquire new sources.

Back to the original question, 4 to 8 hours per month spend on bookkeeping. The end result is an conscious awareness of the state of my finance. I think that awareness is well worth the price in time. An awareness is nice, but I have not show how Quicken actually affect my decisions. The awareness of my finances is only the first of many many steps necessary to make solid plans.

That will be a topic for another blog.

Saturday, December 29, 2007

why I use Quicken

A friend asked me 'why do you use Quicken?' I have been an avid Quicken user since 1997 and I make no secret about it. At first, I thought the question was why I use Quicken instead of Microsoft Money or some other software. Pretty soon, I realized the question was really why I track my spending and to what level of details I track it. I spent a lot of time on Quicken in the last 10 years. Granted, the activities have evolved and become much less time consuming than it used to be. The core of the question is very valid. Has Quicken actually impacted any decisions that I made in my life? If so, why and how. If not, why wasting my time.

My first reaction was a defensive justification and a quick attack back, which also made me realize that I'm quite emotionally attached to the subject. I'm going to start a series of blogs exploring the emotional and practical details of tracking my spending and its impact on my life.

what does the title means to me..

I am the sum of my decisions and the intended and unintended consequence of the decisions. Life is filled with everyday choices that we make, most unconsciously and quickly forgotten. Other are ongoing themes that we are constantly evaluating and re-evaluating. Because we learn from the decisions and the impacts are long lasting, some of my personal themes are financial planning / education, software engineering, technology, and starting your own business. So this blog hopefully will evolve into an dialog of my present self to my future self and along the way... all the readers that stop by and share with me your experiences.