An article in today’s Wall Street Journal mentioned that a Coca-Cola bottler and MasterCard International “plan to equip 1,000 vending machines in the Philadelphia area to accept credit and debit cards…”

Another interesting tid-bit: “The Coke machines will also take MasterCard’s PayPass cards, which enable a consumer to save or tap a card in front of a reader.”

We’ve all heard of the Dunn & Bradstreet study stating that people spend a significant amount more when they use plastic verses cash. Perhaps you’ve also heard of the study that stated that cashless vending machine purchases went through the roof when compared to their cash-requiring counterparts.

Look out Philadelphia. Somebody wants your money.

A little over a week ago, Sean, over at Uncommonwaytowealth interviewed me over the phone. It was pretty fun to chat with him, explain a few of the ins and outs of YNAB, and answer some of his readers’ specific questions. If you want to listen to the interview (about 45 minutes long), head here!

I’m extremely excited about this.

I’m very excited about offering something that lots of YNAB users have been asking about. Head here for info on the Scheduler Plugin

UPDATE: The Scheduler is being slowly phased out. If you’re looking for the ability to automate your entries, I would suggest you look closely at YNAB Pro.

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I write an awful lot about making a dollar work, saving for a rainy day, simple ways to save money. etc. It’s pretty important. A pretty quick way to give yourself a raise is to cut out the fluff in your money (everyone’s fluff is different, mine is probably eating out as it seems to go first during the cutting phase).

I like to stay fit, but when I was 14 I wanted to look like this:

I think that’s a fairly typical desire of any 14-30 year old ;)

I don’t want to digress too much from the topic here but bear with me for a second. A successful bodybuilder knows that he must build a foundation of muscle before he can enter the ‘cutting phase’ in preparing for a competition.

Many wanna-be gym-goers will jump the gun when it comes to gaining muscle and might. They’ll eat moderately, lift intensively, and in a matter of a few short weeks or months, they’ll want to begin “cutting”.

Cutting is basically the phase of a bodybuilder’s competition preparation where he goes on an absolutely stringent diet. The diet will help him become extremely defined, bringing out every muscle striation and bulge he has to offer.

During the show season you’ll find bodybuilders in this ‘ripped’ phase. Their veins are sticking out, their muscles have muscles inside those muscles, etc. Were you to do this you would find out there are more than just two ab muslces :)

But in the offseason what do bodybuilders look like? What are they doing? They’re eating (still good food), and they’re eating a lot. They’re also lifting very intensively and they’re building a new foundation.

Where the wanna-be bodybuilders go wrong is their timing of the cutting phase. If you’re first starting out, you’re well advised to go through a foundation-building routine for a year or more. It takes a while to build up anything worth cutting to show off!

And sometimes when we’re budgeting we make the same mistake. We begin cutting when we should really be focusing on our foundation.

Your ‘foundation’ in this sense is your INCOME.

Honestly, there are times when you really are cut to the bone. There’s not much else you can do. You need to eat. You need a place to sleep. You need clothes on your back. You need some heat for the winter. If you cut much more, there won’t be anything left. This is the time (or perhaps it should have been done earlier) where you need to focus on your income. How can you build your income?

As Dave Ramsey says, your income is your number one wealth-building tool. You need to make the most of it!

Think long-term about this as well. I’m not talking about increasing your income by holding a garage sale, selling stuff on ebay, or working overtime at your current job. Those are all temporary solutions. You need to think about furthering your education, acquiring a new skill, building a part-time business. A furthering of education does not need to be formal. I’ve never taken a class on family budgeting – yet I’m fairly educated on the subject because I’ve read so much about it. If I want to learn about investing so I can increase our income I don’t sign up at the university. I sign up at the local library.

There are dozens of things you personally can do to increase your income. What kind of an employee are you? Does your work merit a raise? Are you going above and beyond in your job? Are you educating yourself at home, during off-hours, about things work related so you can be better prepared to get the job done with a higher quality in a shorter amount of time?

What can you do to make your boss’ job easier?

What kind of talents do you have? Are you an exceptional writer? Can you design? Do you have a knack for landscape architecture? Are you handy? Can you fix things easily? Do you do bookkeeping? What unique selling proposition can you bring to the table? I’m convinced that everyone has an idea that is saleable – but not everyone has the tenacity and courage to hoe to the end of their row and actually go out and market their idea.

Focus on your income. Build your foundation!

I for one don’t want to be pinching pennies forever. I don’t want to just have $5 of blow money each month for myself (do you have any idea how long it takes to save for an iMac when I get $5 per month? 20 years). I don’t want to have just $20 for eating out each month (we mowed through $13 of it at a fancy burger joint on Saturday). I want to be able to buy some new tennis shoes when I need them – and maybe even when I just want a new color! And that’s the only reason!

Budgeting is empowering. Telling your money what to do is an absolute necessity. But everyone knows its more fun and less stressful to work at a company where the money just flows.

Don’t limit yourself to the cutting phase only. Build your foundation as well. A successful bodybuilder knows when to do both, for how long, and in what order.

Read the source article here

We’ll be in the market for our first home in the next year or so. For that reason, my mind has been on credit scores quite a bit lately. I don’t want to pay more than I have to for our mortgage (planning on a 15-year fixed, if you were wondering).

I found this article on MSN direct, and pretty informative and thought I’d pass on a summary of it to YNAB readers.

There are a few things one can easily do to optimize a credit score. However, as I’ve mentioned before, we shouldn’t obsess about it. Time may be better spent reading and learning more, networking, starting a side business, etc.

I found the breakdown of variables in the credit score extremely useful:

As mentioned in the article, it doesn’t matter how much income you make. (Though the amount of credit you’re given does, to an extent, depend on your income. A higher credit limit will lower your utilization and thus, raise your credit score).

It’s smart to monitor your credit score every four months from one of the three bureaus (Equifax, Experian, and Transunion). When you stagger checking your credit report and score, you get to see what it’s looking like over the course of a year, instead of just at one time. This will help protect you further from identity theft, mistakes, etc. You can see the scores that lenders most likely see by going to myfico.

And finally, from the article, a couple of (fairly obvious) things you can do to make sure your credit score is maximized:

• Pay all bills on time.
• Think twice before closing accounts.
• Minimize credit card applications.
• Keep balances low.

Keep in mind that you should probably not be using credit cards if you can’t answer yes to my six requirements before using a credit card.

I found this nice add-in here and had to definitely pass it on to all YNAB users (well, anybody who wants a nice calendar feature in Excel). I just thought it would work really well for entering things in the Register.

6/10/06 Update: I modified the calendar.xla file just slightly. Now, if you choose “Insert Date” and you happen to be on the Register page, after you select the date, the cell to the right (the category cell) is selected. This saves you one click per entry – which might add up to be quite a bit over the long haul! Download the modified calendar popup here.

It kind of helps with the following dialogue:

Her: “Hey, I’m entering some stuff in the budget. When was it that we filled up the car? Friday wasn’t it? What day was that?”

Him: “The 9th? No, the – wait. Let’s see, today’s the 15th…it was the 10th.”

Her: “The 10th was Saturday.”

Him: “Right, like I said at first. It was the 9th.”

You all know that’s not far from the truth.

So anyway, this is a true add-in. A few of the other little tricks we’ve done in the past (automatic date entry) have required that you plug some code into your visual basic editor. This is much easier.

Step 1: Download the (modified) Excel Add-In. Remember to save it somewhere memorable. I suggest you save it in the same place you have YNAB saved (could be C:\Program Files\YNAB…\).

Step 2: Start up YNAB.

Step 3: Go to Tools –> Add-Ins.

Step 4: Choose “Browse…”

Step 5: Locate the Calendar.xla file.

Step 6: Notice the Calendar Add-in has been…added..in..?

Step 7: Now whenever you need to enter a date into a cell (the Register again comes to mind), just right-click on the cell and select “Insert Date”.

Step 8: Notice that today’s date is selected by default. However, strangely enough “Her” was right. Friday was on the 9th… Once that date is selected it will automatically be entered into the cell.

Keep in mind that you still won’t be able to add dates to protected cells (and accidentally overwrite a crucial formula) unless you unprotect the sheet first.

Disclaimer: I have only tested this on my machine, which is running Windows XP, Excel 2002, ServicePack 3.

Just wanted to let all the OpenOffice users know that a 3.0 version is now available. You’re need to contact me to be able to download a copy.

If you want to maintain your old data, the easiest way to handle the transition is to copy and paste values. You’ll need to put in the right start date, paste your outflow entries, your inflow entries, and your budgeted amounts on the budget sheet. Everything else is dependent on those inputs.

It’s now in the OpenDocument format instead of the OpenOffice format. Thanks to Bevan for the tip on doing that

Regarding personal finance: If there were one piece of advice, one word of wisdom, that trumps all other pieces and words, it would be this:

Personal finance is personal

It’s up to you!

Were you to go to the library and read all of the personal finance books available, you’d find quite a few conflicting opinions. Regarding home purchases: Never go into debt. It’s okay to go into debt for a home. Go into debt for a home for the tax deduction. Staying in debt for the tax deduction is stupid. Borrow as much as you can for as much home as you can possibly afford. Don’t buy a home where your payment is more than 25% of your take-home. Do a 15-year fixed mortgage. Do a 30-yr fixed mortgage. It’s okay to do an ARM, you’ll probably be moving. Never do an ARM.

Regarding credit cards: Never use credit cards. Use credit cards responsibly to build up your credit score. Don’t care about your credit score. Buy my credit score kit. Maximize cashback rewards with credit cards. Use other people’s money to make you wealthy. Get Junior a credit card. Never get Junior a credit card. Cut up your credit cards. Use a credit card only for emergencies.

The list goes on and on and on and on.

On the internet especially you’ll find conflicting wisdom. But whose wisdom is really the best?

Here’s some more advice to consider: Read read read! Read some more. Think, ponder, contemplate on what you’re reading. Read voraciously! Educate yourself concerning insurance, budgeting, home purchasing, investing, taxes, wills, estates, etc. You can do this by reading one guru’s book after another. Just pull those little bits of wisdom from all of the books you’ve read and compile them into your principles of personal finance. Remember, this is about you.

Think about it another way. How can any one guru prescribe a universal answer to questions that involve so many unique variables? One for instance: I was listening to Dave Ramsey probably six months ago and a guy called up saying he had a lease and Dave immediately went into the negatives of leasing – how he was getting fleased, etc.

Well, it turns out Dave had jumped the gun and was totally wrong. The guy said his dad worked for Chrysler and I think his total car costs came to something like $150 per month. It was the sweetest lease you’d ever heard of. I guess you could say it was unheard of. Much to Dave’s credit, he admitted to the guy that he had a very unique situation and that it was a great deal.

Imagine that. Dave said in that specific situation leasing was okay.

What about if you lived in California in 2002 and wanted to buy a home? Could you have afforded the guidelines given by many gurus of an X debt-to-income ratio? Probably not. But had you not stretched yourself a bit and purchased, you would’ve missed out on an absolutely huge (some would say irrational) run-up in home prices that would’ve probably removed you from the housing market for the next decade. In that regard, you made the right choice going against some of the gurus’ guidelines.

Nothing is black and white. That’s why it’s so important to be educated in these matters! You want to have enough knowledge that you can take all of the variables in your life that only you know about (these include emotional variables, variables unique to you because of your past experiences, externally unique variables such as a mother you need to take care of, a disabled child, etc.) and come to the right decision. No guru can speak directly to your situation unless they know all the facts and circumstances. And they don’t.

As mentioned above, your course of action is to glean all the wisdom you can from all of these (mostly) wise people. Armed with that wisdom, you make the choice for your personal finances.

I would recommend you begin compiling some sort of personal finance constitution. This should include overarching principles that guide your actions regarding money. I’ll share a few of mine to get you started.

I will:

1. Spend less than I earn.
2. Actively budget my money, which includes:
• Recording what I earn and what I spend.
• Allocating what I have earned to appropriate spending categories.
• Working on the budget monthly with my wife.
3. Invest my money.
4. Diversify my investments, which may include:
• Stock market mutual funds, index funds, or ETFs.
• Real estate.
• Private businesses.
5. Give regularly.
6. Never expect something for nothing.
7. Never borrow money to purchase a depreciating asset.
8. Never gamble.

That’s certainly not complete, and I may update it from time to time, but it’s a start. Some of th gurus would disagree with me, but they’re wrong. Because this is mine, which makes it right.