No Thirst Software

The term “budget” used to feel like a four-letter word in our house. It meant restrictions and deprivation. In some ways it is understandable since the only times we talked about a budget was when we were having trouble paying our bills and needed to reduce spending. Although we are both fairly intelligent, we could never get a budget to work for us, either.

I used to be content with earning enough money that I could spend whatever I wanted (within reason) and not have my heart beat faster when I went to the grocery store because I wasn’t sure I’d have enough money to cover the cost of the food in my cart.

Although I wasn’t eager to look at our finances, I knew we needed to clean up our spending, and I wanted to get out of debt, so I was perhaps more open to the word “budget” than I had been previously. Plus, we now had Moneywell that we could use, which is supposed to make developing a spending plan easy to do.

The surprising part of the process was realizing that some of the blind spending I had been doing was taking money away from the more important things I wanted to do with my money. For instance, although I had been spending lots of money on tolls, lunches, and coffee, what was really more important to me was to take a family vacation. Unfortunately, we hadn’t had money for a vacation in the last several years. Looking at my spending allowed me to see that I was spending approximately $70 per week on things that weren’t even important to me!

Facing the truth about my spending was one of the best things I’ve ever done. It’s allowed me to be more intentional with my spending and to do the things that I really want to do instead of handing over my cash to the first thing that comes through the door.

Do you know where your money is going? Are there things you are buying that have no real importance? Are there things you’d like to have or do but your income doesn’t cover them? Maybe you’re like me and you simply need to reprioritize your spending. It doesn’t have to be restrictive. You just have to “buy” into it. It makes all the difference!

MoneyWell has been on the market for nearly a month now and I’m learning what people love about it and what needs to be understood better. The most often asked questions are about how buckets work. That seems fair, so let’s dig into the process a bit.

What are the Buckets for?

If you’ve ever heard of someone labeling envelopes with categories of spending (e.g., rent, groceries, clothing, etc.) and sticking the money from their paycheck into them, then you understand the basics of MoneyWell buckets.

To control how much you spend, you only give yourself a limited amount each month for each category. Each bucket represents a category. So if you decide to only spend $400 per month on groceries, you would give the bucket labeled “Groceries” a $400 planned amount and then take $400 each month from your “Salary” bucket and put it in the “Groceries” bucket. Now as you spend money at the supermarket, you assign those transactions to that bucket and the amount remaining decreases until you have nothing left to spend. Visually in MoneyWell, you’ll see the bucket tip over and dim out to show it’s empty.

The hardest part of controlling spending is knowing where all the money went. The design of MoneyWell is all around giving you a visual of where you have money to spend and where you don’t. The main window shows you how much is left in each bucket without any need for running reports. Just look at the buckets to know if you are on track.

Rollovers and Money Flows

Okay, buckets aren’t that tricky, but how do I get money into the buckets?

When you add a transaction to MoneyWell, you should always assign it to a bucket. If that transaction is a deposit, then you are adding money to the bucket and, conversely, a withdrawal removes money from a bucket. So all you need to do is track all your transactions and put them in a bucket and MoneyWell takes care of the rest.

When you first start using the program, it will ask you about doing an initial rollover. Rollovers are a way to keep money flowing from month to month. You may not spend all your budgeted grocery money this month and you shouldn’t lose that money for next month so MoneyWell rolls it over and starts your next month’s grocery bucket with the extra cash from the previous month. The initial rollover is just a way to tell MoneyWell how much money you have on hand right now. This may be a different amount from your bank balance.

When you allocate money from your income buckets to your expense buckets, it’s like cashing your paycheck and dividing up the cash into stacks and dropping those stacks into different buckets. These are called money flows and happen any time you want to move money from one bucket to another. After you allocate income, you’ll see the expense buckets turn upright and show an amount you can spend for each.

Setting Bucket Limits

How does MoneyWell know how much to put in each bucket?

To effectively control your spending, you need to create a plan for limiting your spending in each bucket. The spending plan in MoneyWell is that plan. It’s like a budget, but more flexible (this is discussed more in other articles). Your spending plan effectively draws a “fill to here” line on each bucket. When you allocate income, you are taking money from your income buckets and filling the expense buckets to the fill lines.

This helps you automate the process and also forces you to make some decisions about where you want to spend your money. You will find out quickly if your planned spending goes over your actual income.

Let It Flow

Let’s wrap up by giving a simple overview of your money flow. Here’s what you have to do once in the beginning:

1. The first time you run MoneyWell, you do an initial rollover to tell it how much money you have on hand right now
2. You create a spending plan and decide how much you want to spend each month in each bucket, effectively drawing a “fill to here” line on each

Now you will do the following items throughout each month:

1. You enter all your transactions as either deposits or withdrawals and assign each to a bucket
2. After you enter a deposit transaction to an income bucket, you can allocate income, which flows your money into your expense buckets
3. As you spend money, you watch your buckets and stop when each specific bucket tips over
4. If you need extra money for a bucket, you can take money from another by dragging the first to the second to create a money flow (here’s a bit of that flexibility compared to a budget)
5. At the start of each month, let MoneyWell rollover the remaining cash in your buckets to the new month

Once you get used to the way money flows in and out of your buckets, it will become very easy to adjust your spending. There is also a graph on the main window that gives you historic feedback on your spending habits that you can use to adjust your spending plan whenever necessary.

Remember to track every transaction, adjust your plan when things change, and never spend more than you have in your buckets. Do these simple steps and you will take control of your spending.

Control is not always possible. You can’t control the weather or what other people think or say, but you can control your own actions: I’m specifically talking about spending in this case.

As Americans, we love to spend more than we make and we are being offered the tools do to it all the time. How many offers for credit cards do you get in the mail each month? Me, I think I get about a dozen. Let’s see, if I was approved for all of those, I could have almost 150 new credit cards each year! So why is getting control of your spending so important? The simple answer is that debt leads to more debt and can ruin your life and your family.

How often can you tie a fight with your spouse to money? Probably a good percentage of the time. Have you ever had a bill collector call or send you a letter? Do you feel warm and fuzzy because he cared enough to call? Probably not.

Credit card balances are debt. So is that loan from Uncle Phil (and you don’t want Aunt Donna to think you welshed on a loan, do you?). Your mortgage or your new car loan can be distinguished from unsecured debt because the lien holder will repossess these items to fulfill your loan if you don’t make your monthly payment. You won’t have the debt or your car. Even though secured loans aren’t technically debt, you have to be very careful about buying things when you can’t afford the monthly payment. It’s a very quick way to end up in debt because you had to borrow money to get that new car repaired and you have no money left because the loan payment was so high. There’s a good book that is easy to read and lays all this out nicely. Check out How to Get Out of Debt, Stay Out of Debt & Live Prosperously by Jerrold Mundis to learn more about defining debt.

Now that you know that debt is bad (like this was some dark secret), how do you go about getting control of your spending? By creating a spending plan of course! You can call it a budget if you want, but I relate budget to money as I do diet to food. No one wants to go on a diet because you are so restricted from eating certain foods. It’s way too oppressive. Budgets can feel the same way. Even in the software business, when I worked for a larger company, we had a research & development budget. This meant that we had a cap on our creativity. We couldn’t write the world’s greatest software product because we had to get approval first. Ugh! Nasty.

A spending plan is much more flexible. Group your spending into categories (or buckets if you are using MoneyWell) and decide how much you are going to spend on each. Then if you want to go out to dinner, but you have no money left in that bucket, you simply can take it from another bucket. There’s no shame or asking for approval because you are not going into debt, you’re simply reallocating money that you were going to spend on something else.

Make your spending plan something you can comfortably live with and not and something that screams, “You’re on a tight budget! You can’t have fun!” Make a bucket or two for fun. Go to a movie once in a while. Have a nice meal. Buy some fun, cool software (that last one was supposed to be subliminal, work with me here). If all you ever eat is egg whites and skinless chicken, you’re most likely going to break and end up bingeing at Ben and Jerry’s. The same goes for designing your plan: If it is too restrictive, you’ll probably end up on a binge that will make the CEO of Visa whoop for joy.

The hard rule here is that you can’t swipe that credit card. You are only making Mastercard and Visa rich. They may try to convince you that sliding that card is “priceless,” but there is a huge price: your financial security! With the advent of debit cards that are as accepted as credit cards, there is really no argument for saying, “But I need my credit card to rent a car!” Just dump the revolving credit. Trust me, Mastercard and Visa are not going to ask the government to bail them out because of a lack of earnings. I think they’ve made enough off of me alone to improve their earning reports in years past.

You don’t have to buy either MoneyWell or Debt Quencher to get control of your spending (even though I happen to think those are fantastic tools), but you do have to start tracking your spending somehow and you cannot, under any circumstance, get deeper into debt. It’s your happiness: Take control now.

Announcing Credit City’s last chance, one-time-only, deal of the century!

What is it that makes us want to fall for these deals? They used to hook me every time! Even though I knew better, I always had to take a peek at these sales. The truth is that most “last-chance deals” will shortly be followed by another annual or semi-annual “last-chance deal.” If it really was the last chance to save, then what does the store do as an encore? I swear there was a furniture store that had a “going-out-of-business” sale three years in a row! It does feel good to get a low price on something, but I have paid a huge price for my foolish behavior on these occasions. Give me a minute while I don my jester’s hat so I really look the part…okay, let’s continue.

You wanna hear the stupidest thing I’ve done? I’ve bought things because of an incredible deal but I did it with my credit card! The same credit card that charges me a minimum of 18% interest! Here’s where the jester whacks himself in the head with the rubber bat (the audience laughs in approval). What kind of savings do you have to get to make the compound interest charges worth jumping on a sale when you don’t have cash to buy something? No sale that I’ve ever been to, that’s for sure. But I have done it over and over in my life. I think my problem is that I’m an optimist — which is usually a very good thing, except when you are making purchasing decisions. Usually being an optimist in life is great because it keeps you from worrying about all that useless junk that may never happen, but in matters of finance, the pessimist wins.

Nothing Will Ever Go Wrong

One of my favorite faux pas has been the classic, “these payments are going to be easy to make with my current salary” justification. Top it with the, “and I could even pay it off early” support statement, and you have the makings of an optimistic nightmare. The jester now sports a blindfold and starts to juggle butcher knives. You see, we optimists don’t expect the car to break down or a kid to get sick or a company to go bankrupt. We expect to collect our paycheck, tithe 10%, buy some groceries, pay the mortgage, fulfill our credit obligations and, of course, have money left over for savings (oohs and aahs rise from the audience as the jester drops two knives, barely missing some of his more critical appendages). Hey, face it, life is full of little — and not so little — surprises. The car does break down (and your second car needs tires at the same time) and sudden bills do pop up. There is never a good reason to expect that you will be able to cruise along, pile up credit charges, and have no surprises. Don’t play the fool!

Another great reason for spending money when you have none is the “no payments” deals. You know the type that have no payments and no interest for 20 years or so? All right, I’m exaggerating; the grace period is usually 6 to 18 months before you start paying. This always sounds great, and actually would be, if you invested the money you have to pay for this item in a high-yield account. I have done this and it works great (er…wait, no that’s what I did in my head as I was signing the credit documents.) What I actually did was spend the money I had on some emergency or worse — some extravagance! You did notice that I’m still dressed in this silly multi-colored jumpsuit, right? But I’m changing, slowly but surely. I have to change — the jester has become much less entertaining and much too depressing to watch any more.

So how do I stop playing the fool? First, I have to set aside my urges to snatch up a fantastic deal. Great sales are happening all the time, especially with the cool stuff I like to buy — technology items. Computers, camcorders, iPods, televisions, and appliances are always getting better and dropping in price. The computer I’m writing this on has been made obsolete by four generations of Mac notebooks that are faster, better and cheaper. Patience pays when buying new technology.

Can’t Afford It? Charge It!

It’s hard to be patient though when I see something that is cool and new and would go perfect with my new Lexus (that I don’t really have). Oooo! I should buy a new Lexus! The jester is has now switched to juggling hand grenades. Okay, so I have little or no self-control. Now I need to ask the really tough question, “If I need this and this is such a great deal, why don’t I just pay cash for it?” If my answer is, “Because I don’t have enough cash,” then why am I even considering this purchase?!?! Am I dumb enough to think that the pleasure of owning that knick-knack is going to override the pain of the never-ending credit card bills? The jester has changed juggling venues to the edge of a ten-story building while doing Jell-O shots.

Let’s face facts: many of us are not safe with credit cards. Like the jester juggling knives and explosives, it’s only a matter of time before we hurt ourselves with them. So don’t feel bad if you can’t manage credit well; it is a national epidemic. Just do the right thing and slice and dice those plastic daggers. I know that if I have them around, I use them, so I had to eliminate them from my life. I chose to switch to a bank debit card that also can be used as a credit card. The dwindling cash balance in my account keeps me in line better than the threat of future interest charges. I still have to work to avoid store payment plans, but I’ve stopped building my mountain of credit card debt.

Who’s Getting My Money?

Unfortunately, now I had my own little Mount Everest to grind down. I needed to find out how much money I was funneling to my creditors and if there was some way to pay down my debt quicker and save some cash in the process. I found an inexpensive software tool that told me how long it would take for me to become debt free. It wasn’t the easiest or prettiest program, but it got the job done. I had a plan for paying down my debt.

Shortly after I purchased this tool, the supporting website disappeared along with all trace of how to get help or updates for the product. That was my inspiration for developing Debt Quencher™. I wanted a tool that would compare my savings if I paid my lowest balance card first versus my highest interest card. I’m the kind of person that needs to feel like I’m accomplishing something or I tend to give up on it. Paying off even one of my cards is a huge victory for me. By using the comparisons in Debt Quencher, I saw that the difference was less than five dollars. That made the decision a no-brainer, even for a jester like me. I was even able to shave months off my payoff period by tossing just a few extra dollars a month on my lowest balance card payment.

Do you know how much credit you have outstanding right now? Do you know how much interest you’re paying per month? Per year? It’s not too late to get out of debt. If you have made credit mistakes in the past or have had to use credit cards to bail yourself out of a crisis, don’t be discouraged; there is light at the end of the tunnel. First, find a way to track what you owe (Debt Quencher). Next, call your credit card companies and ask for a lower interest rate. Many of them will do it just because you asked. Get on a cash basis for all new purchases and make paying down your credit a priority over any non-essential expense. Once a card gets paid off, close you account so you are not tempted to use it to impulse buy again.

Trust me, life is so much better when you are not a slave to credit. Playing the credit jester is just one small step up from being a mime — and you know how much everyone loves mimes.

My goal with No Thirst Software is to provide the coolest software to help you improve your life. Along with the products, I’d also like to pass on knowledge (be it my own or the greater wisdom of others) to enhance the value of our software tools.