Eryan Cobham

Thinker-tinker. Web Developer.

Money Talks

Money is something that tends to not get talked about much in friendly conversation. Or maybe that’s just my friends/family. It’s a shame though, because all of us seem to have so much to learn about managing our personal finances. So this post is kind of just my attempt to get a little bit of a conversation started, since it’s something I still struggle with often. It’s really a shame they don’t teach basic personal finance in high school.

A while ago, someone I follow on the Internet (is there a term for that? internet-friend?), Tiffany Brown tweeted:

marriage is testing my capacity for trust. give him access to my financial accounts? now what now? – @webinista

A joke of course, but it made me think about a conversation I had not too long before that with a couple other friends. Both of them had recently gotten married, and were talking about how it was about time for them to have those hard-core financial conversations with their wives.

That really got me thinking. Money is something that most people don’t really talk about. Families don’t talk about it, friends don’t talk about it, and sometimes even couples don’t talk about it. I’m not referring to salary or anything—I don’t really think that needs to be discussed freely. I’m talking about basic financial literacy though. Creating a budget, having an emergency fund, deciding whether to save for the future or pay down your massive college loans. None of the intricacies of that kind of stuff ever gets talked about, and it really should be.

So, I’m going to start the conversation by just talking about how my wife and I have organized our finances over the years. No specific numbers or anything, just general stuff we’ve done, in the hopes that some of you will share the same and we can all figure out things that would help out. Everybody’s system is still evolving, so maybe we all can pick up some stuff that’ll help. I don’t have comments here, but please blog and tweet about it and let me know @littlelazer. I’ll try to link to your stuff. I apologize in advance for so much of this being kind of couple-centric, but that’s all I really know.

Phase 1: Starting out with Suze

My wife and I have been together for a little over 11 years, and we’ve been living together for the last 10 of those. She has always been better with money than me. I wasn’t bad with money—my credit was good and I wasn’t bouncing any checks—but I basically didn’t know how to save until she got in the picture. She set me straight right away about carrying any balance at all on my credit cards. I’m almost surprised she stayed with me when she found out I was paying interest (seriously, don’t do that if you can avoid it, pay it off in full every month so you can act like you got a free 30 day loan).

When we moved in together she had already lived with her best friend for a couple years and they had a system in place. There was a joint checking account that both of them paid into, and they paid all the joint bills from that account. We started off doing the same thing.

At the time we were watching quite a bit of Suze Orman (we stopped watching a long time ago, so no idea how helpful she is now), so a lot of the stuff she said on her show influenced what we did. We took her advice and added up all of the monthly joint bills and each deposited a proportionate amount into the joint checking, based on our incomes. Any individual bills (personal credit cards, loans, etc.) we just handled independently. We got a joint credit card too for stuff that both of us used, and we just paid that out of the joint account.

Once we started thinking about buying a condo together we started a joint savings account too. At the time, all of our savings accounts were with ING Direct (now Capital One 360), but now we use Ally Bank. Both of us scheduled weekly deposits, also in proportion to the amount that we were making. We even followed Suze’s advice to make a budget. It started out pretty simple in a Google Spreadsheet, but it got progressively more detailed as time went on. Each month had how much each of us made, how much we put into each savings account, and broke down our expenses into categories (transportation, utilities, debt, etc., and the ever-growing “miscellaneous”).

We got pretty meticulous about putting all of our expenditures into there. We still have the spreadsheets, so I could probably tell you almost exactly how much we spent on groceries in May 2006. After a while we ended up burning out though, it was really tedious to open it up at the end of the day and add in 6 amounts in different categories. Gradually it turned into putting receipts in every week, then every month, until eventually I just stopped. We tried using Mint, but it didn’t stick. Even though we used credit cards for most things, a lot of stuff fell through the cracks, and setting up accounts was a pain.

Phase 2: Keeping it simple

So at this point we already owned a condo (jointly), were burnt out on budgeting and tracking every cent, and didn’t really have any hard savings goals to use as motivation. We were looking for a dead simple way of paying the bills, and ended up settling on a new Google Spreadsheet.

This spreadsheet wasn’t really a budget though. Instead of saying how much we could spend on something each month, all it really did was show how much each of the bills were that month. There’s a column with the name of the bill (mortgage, electricity, etc.), a column with the amount, a column with the day it’s due, and a column saying whether or not its been paid yet. Dead simple. Each month we alternated who had to take the joint checkbook/register and pay all of the bills. That spreadsheet has lasted several years so far, with minimal changes. Once we got married we added in all of our student loan payments, but that’s about it.

Speaking of loans, during this period we started another spreadsheet. This one lists all of our long-term debt. One section is our mortgages, another is student loans, and the third is for credit card debt (almost always at 0% interest—for big purchases one of us would often take out a new credit card at 0% for X months and we’d calculate how much we needed to save each month to pay it off right before the interest kicked in. Useful when you’ve got good credit and a steady job and the discipline to save the money). The debt spreadsheet shows most of the important information for each account: remaining balance, interest rate, current monthly payment, and the final payoff date. I try not to look at those final payoff dates—too depressing in the columns for my student loans. We update the balances every few months. That part is kind of nice, since you can actually see the total debt column slowly but surely dropping. Very slowly.

Phase 3: Back to budgeting?

The next step is what we’re still working on figuring out. We’ve made a few changes this year that require some adjustments. The biggest thing was deciding that it didn’t really make sense anymore to still do so many things separately. The first step was having our paychecks deposited into the joint account. That doesn’t seem like a big thing, but it’s a little weird to me that we didn’t do that before. Chalking that one up to inertia, it’s a pain in the ass to change the auto bill payment information on so many accounts.

Doing that unexpectedly raised some other questions though, most importantly: what’s the point of having individual accounts anymore? And how do we figure out how much to put into those? You still need to have some stuff to yourself, and what if you want to surprise each other? So for now we transfer money into our separate checking and saving accounts as necessary, and don’t really question each other about it. We just buy almost everything using the joint credit card.

We also started using yet another spreadsheet that has the register for the joint account. Definitely easier than using the paper register (does anybody else use those anymore? Am I just that old? Is anybody even still reading at this point?) because we don’t have to hand it off every month, or ever ask the other person to add something to it.

Related to that, we’re continuing to switch as many bills as possible to autopay. The goal there is that when it’s time to pay the bills we don’t need to worry so much about logging into each site and approving the transaction. It’s more about making sure there’s enough money in the account to cover everything and updating the spreadsheet so that we don’t forget anything.

LASTLY, we started budgeting again. No spreadsheet this time. Now we’re using You Need A Budget. I’m pretty sure we don’t use it exactly the way it was intended, but it’s useful despite that. You can set up your budget pretty easily, it’s easy for two people to both use, and you can see what you’re spending money on, where you need to cut back, and you can look at the pretty little graph which shows that you’re eating out way too much. But the killer thing that makes me think I’ll actually want to stick with it is that the accompanying iOS app makes it really easy to enter in expenses. Now I can just do it right away since I always have my phone on me, removing the biggest annoyance from the spreadsheet.

Wrapping things up

I’m really interested in hearing what other people do. There’s always room for improvement, and even though this is the kind of stuff that people usually shy away from, it’s frequently the most useful. So write it up and let me know.