Regarding Money

Do Not Auto-Replenish Your EZ-Pass

Recorded on January 11th, 2017

We’ve been EZ-Pass users for years. It is indeed great, the ability to slip past all those other people waiting in the Full Service or Exact Change lines. I wouldn’t go back to the old way. But I’m a Luddite about how we pay for it. I used to do the auto-replenish option, where they charge you when your account gets below a certain “threshold”. That threshold — being in the $20 range — has less to do with how much buffer is good for you, and way more to do with how large of an interest-free loan they want to keep floating from you.

I turned off auto-replenish a couple of years ago. It’s more of a pain, because you have to manually pay every time you run out of money, but the secret is that you can go all the way down to $0.00 with no consequences. I get an email as soon as we deplete our account, and we are even usually a few cents negative, but they’ll cover you for at least one or two transactions. All you have to do when you get home is sign into your account and pay up, and you can pick whatever amount you want. I do $25, because I want them to keep as small an amount of our money as possible, without being unduly inconvenient for us.

The New YNAB Forces You to Be Real About Your Budget

Recorded on September 5th, 2016

We’ve been on the new version of YNAB (“nYNAB”) for about a month. It’s so nice to be back in the fold, and overall, I like the web-based version. But I just now learned that they completely changed the way they want you to think about the amount you sock away (or overspend) in each budget category every month. Instead of doing it the old “YNAB4” way, where you can just roll over a negative budget category balance from month to month until you “catch up”, nYNAB encourages you to adjust and fix those budget categories during the month where you overspend, so you can trust the amounts left in your categories. And if you’re overspending on a credit card and not budgeting for it, fine, but that overspending is going to show up as debt instead of as negative category balances.

Some very kind members in the YNAB forum pointed me to this video of Jesse Mecham of YNAB explaining the concept. It took me a while to get it, but I agree that it’s better. Just need to keep a watchful eye on the budget category amounts every month.

If you haven’t bought into YNAB yet, I highly encourage you to get on the hoss now. It is the only budgeting method that has ever worked for me, and the only way I can see accurately into the future.

Don’t Forget to Rebalance Your 401(k)

Recorded on August 29th, 2016

Last summer, sadly for the first time in years, I sat down with my laptop and did the adult thing where you actually log into your 401(k) account and pick some new funds to allocate the current balance to.

I knew that the “Bogleheads” forums had some smart people in them and John Bogle of Vanguard was widely regarded as a decent source of investing wisdom, especially for people who don’t know much about investing (like me). I’ve been sold on index funds for a long time. Once you realize how your yearly returns are washed away by the high expense ratios (management fees) of most other actively-managed funds, the math overwhelmingly favors index funds. People like me aren’t going to beat the market, so we should at least aim to replicate its performance.

Knowing that I wanted index funds, I looked at a bunch of articles about asset allocation and settled on the Bogleheads Three-Fund Portfolio. Of course there are surely better ways to invest, and those ways would probably all take longer to research and would invite more risk than picking three broad asset classes like I do.

Here’s what the three-fund portfolio is about:

A three-fund portfolio is a portfolio which does not slice and dice, but uses only basic asset classes — usually a domestic stock “total market” index fund, an international stock “total market” index fund and a bond “total market” index fund. It is often recommended for and by Bogleheads attracted by “the majesty of simplicity” (Bogle’s phrase), and for those who want finer control and better tax-efficiency than they would get in an all-in-one fund like a target retirement fund.

Luckily, my 401(k) offered index funds that exactly matched those described in the three-fund portfolio. I split the entire balance of the account into 34% in the S&P 500 index, 33% in an international equity index, and 33% in a U.S. bond index fund. I set the auto-rebalance to kick in every year after that and to target those same percentages. And then I didn’t touch it for a year.

Tonight I logged in again to check on the first instance of auto-rebalancing since last summer. The returns weren’t great, but they were no worse than what the rest of the equity and bond markets did as a whole, and we didn’t lose money. All this for between 0.02% and 0.09% in fees.

Depending on what articles you read about rebalancing your 401(k), you’ll find that anywhere from 2% to 19% of people don’t bother to do it. That’s awful. If you ignore your investments for years, like I did, your allocations will get way off target and you’ll take on more risk than you intended. But if you commit to tending your garden of investments, you’ll be far ahead of most of the other investors out there, and you’ll at least have the mental calm of knowing you’re in control. You’ll also most likely preserve more of your returns than if you had opted for actively-managed funds with high fees. It takes only a few minutes and is a better investment of your time than TV or Facebook.

Disclaimer: I am not a financial advisor. The content on this website references an opinion, is for information purposes only, and is not investment or tax advice. Nothing on this site constitutes a recommendation to buy, sell or hold any security, financial product or instrument. You are fully responsible for any investment decisions you make. Seek a duly licensed professional for investment advice.

Save Money and Let Go of a Dormant Squarespace Site

Recorded on August 21st, 2016

The other day I heard Gabe and Jeff discuss budget experiments on Nerds on Draft. These were hypothetical “What-if-I-lost-my-job” and “How-little-do-we-need-to-be-happy” scenarios. Of course they broached the touchy subject of subscriptions to services like Dropbox, BitTorrent Sync, Netflix, Hulu, etc. The more they talked, the more I thought about all the regular subscriptions I had just seen in our own YNAB budget. The most painful, non-value-added one for me is Squarespace. A year ago last May, I had some brilliant idea for a new website, and in the heat of inspiration, signed up for a Squarespace site for it. That was a fine thing to do until the days and weeks of not actually finishing that site turned into 15 months of waste. Over $96 dollars worth.

Squarespace is awesome, and is the go-to method to quickly get a site up if you’re not a designer/developer and don’t want to mess with WordPress. They have a dead-simple CMS, gorgeous templates, and a rock-solid back end. Every podcast I love has had them as a sponsor at some point. They’re doing something right.

But judging from the one data point that is me, I believe Squarespace sites could easily be the new incarnation of well-intended domain-squatting. You know: you get a great idea, you register a domain before anyone else gets it, and then you pay $11-$15 a year for the privilege of knowing that you could make a site at that URL if you wanted to, but, hey, you have more important things to do right now. Only with Squarespace you’re actually squatting on hosting and the cost per year is much higher.

I felt bad the more I listened to Gabe and Jeff talk about the leaks in their budgets. It was time to be honest with myself about the site shell I had created and admit that it wasn’t going to be a priority for me, at least during the next year. I’d rather have the money back. The only problem was that the domain was registered through Squarepsace, and wouldn’t that be a pain to deal with?

No. Squarespace has instructions for transferring a domain out of their ecosystem. It’s easy.

Today, I exported to XML the small amount of text and structure I had created in that shell site and then transferred the domain to Hover. It took 10 minutes at the most. Notice how I didn’t say that domain-squatting was bad — it’s just that paying for an idle domain at a registrar is a much less egregious waste of money than paying for actual hosting of that idle website.

If you have a Squarespace site you’re hiding under a bushel, don’t let it just renew repeatedly because you want to keep the domain name. Be honest: are you not going to do anything with the site for a year? If not, export the content, save your images to your computer, and transfer the domain to Hover. You’ll get to keep the domain name, Hover is great, it’s a fast process to get through, and you’ll save a bunch of money over time. You can always sign up for Squarespace again once you’re ready to commit to keeping the site going.

The YNAB Toolkit Browser Extension

Recorded on August 19th, 2016

A friend of mine told me about the new YNAB Toolkit browser extension. The people who wrote it and contribute to it aren’t affiliated with YNAB — they’re just enthusiastic about the new web-based version of the app and see opportunities to add features that the rest of us think are missing.

If you’re a YNAB-online user, you have to get this thing. The extension adds a ton of new features to YNAB. I’m using the Chrome one, because the Safari version is a little bit behind while Apple reviews the update. Some of my favorite additions:

  • The “Check #” column is back in the account register!
  • Net Worth Report (actually, any reports at all are a big step forward)
  • In-cell calculator like in YNAB4!
  • Searching transactions, like in YNAB4
  • Alternating row colors in the register
  • Shortcut buttons show Scheduled or Reconciled items quickly in the register
  • Current month is highlighted in blue in Budget view

The New YNAB Goals Function Is Great

Recorded on August 17th, 2016

Of all the good new features in the online version of YNAB (browser access from anywhere, faster syncing with mobile, direct import of transactions), my favorite by far is the Goals feature. It makes it monumentally easier to stow away money in a bucket every month. You may need to pay the exact same amount to a service (like Netflix @ $9.99/mo), see how long it’ll take to save up $1,000 for something, or calculate how much you should budget each month to be able to pay your insurance premium six months from now. Goals can help with any of these.

Here’s a goal I created tonight for a $190.80 annual bill I know we have coming up in October:

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I don’t want to slack off for now and then have to scramble to come up with all of that dough in the month that it’s due. A much better way to deal with it is to spread that cost out over the months leading up to the total bill being due. In this case, I have August, September, and October in which to do it. For a goal like this, all YNAB needs is a total target dollar amount and a target month, and it’ll calculate the $63.60 I need each month between now and when the bill is due. Each month, it’ll tell me how much I need to add to that bucket to keep up with the plan. When you do your budgeting each month, you can click one button to automatically budget that amount ($63.60) based on the per-month target.

It would have been better if we had started this version of YNAB earlier so that I could have averaged that bill out over 12 months, for a much smaller per-month contribution to the goal, but: shoulda, woulda, coulda. If anything, YNAB teaches you to start now, with what you have and what you know. Learn from your mistakes and do a little better next month.

YNAB on the Web Is Good

Recorded on August 5th, 2016

We are on board with the web-based version of You Need A Budget (YNAB). I had my reservations earlier this year, but I finally decided that the utility of having YNAB in a browser with the ability to pull data in from the bank outweighed my security fears. Actually, I realized that so many health/financial/government institutions store our data on their servers now that I can’t worry myself with how they all do it. I may as well use the slice of data that I can control in a way that makes it easier to live within our means.

Overall, I am very impressed with the new web-based version of YNAB. (It’s not even new anymore, but it’s new to me.) Importing is easier, syncing to the iOS app is faster, we don’t have to worry about Dropbox syncing between devices anymore, I can get to YNAB from any web browser, and we can set per-month funding goals for any budget category.

One key that I must mention that makes the privacy/security part way less scary: Many banks now allow you to set up view-only guest access to your bank accounts. This is a perfect way to give YNAB access to your banking data. There’s no need to hand over the full set of keys to them if you have this option. I’m much more comfortable with YNAB slurping up our data now, knowing that if the credentials were compromised, no-one would actually be able to vacuum out our balance with just that information.

Not everything is perfect. The direct-import feature is still a little weird. This may depend on which bank you use. The way mine works is that nothing new gets imported to YNAB until it clears the bank. If you rely on direct-import, you’re always going to be a couple of days behind the curve, which, for me, doesn’t work with the way I’m used to YNAB. I need to reconcile every day or two to keep up and not let things get too far out of sync. So I continue to manually enter most transactions, but that’s no great burden, and it keeps me more in touch with our spending anyway. If we’re going to eschew actual paper money in favor of chip-cards and Apple Pay, it’s useful to feel a little bit of pain with each purchase.

Sometimes, YNAB will tell you that there’s new data to import, but there really isn’t. What happened tonight was that our checking and credit card accounts both showed that they had a handful of transactions to import, but when I clicked the “Import” button, nothing appeared in the ledger except the message, “There are no transactions to import.” Not a confidence-builder. But it’s not a killer, either, since I view direct-import as just a safety net for when we inevitably go too many days without manually entering purchases.

I do miss the ability to search the ledger for a dollar amount, payee, or category. But I can live with it for the knowledge that I’m headed in the same direction that the software creator is moving. When you can see where the puck is going to go with an app or an operating system, it’s usually a bad strategy to cling too tightly to the old way of doing things. (Apologies to .38 Special.)

My other complaint is that the voice and tone of some of the dialog boxes favors being cutesy over being appropriate. I know that in this world of Instagram and MailChimp and Duolingo that it’s normal to have witty responses to routine user interactions: “Way to go!”, “Boom!”, “You rock!”, etc. But when I’m using a financial app where thousands of dollars are at stake, and I’m doing my first big import from the desktop version of YNAB to the web-app version, I do not want to see something that says:

“This normally takes only a few seconds, but can take up to a few minutes to complete. Banks, right?”

Really, YNAB? You nailed so much other stuff. You got syncing working quite well, you got a web-based ledger to actually function like a desktop app, and you massively improved how credit cards and credit-card debt payments are handled. Don’t blow it with the writing. I know you know about the dangers of being too cute with your copy. Learn from MailChimp’s Voice & Tone Guide about how to match the tone of your status messages to what your users are trying to do. It’s fine to have fun — maybe when people are setting up category names — but otherwise, give people confidence in your product. Make sure they know you take their data and their money seriously.

Sorry to vent. Overall, the new YNAB is really good and I don’t plan to ever return to the desktop version. Now let’s see how long we can go before we have to do another Fresh Start!