Tagged “Personal Finance”

Automatic Investing

The Setup

How Money Flows

  • Every investable dollar is in FFNOX across all non-401k tax advantaged accounts
  • Every investable dollar in taxable accounts is invested in AOA
  • Automatically contribute to my employer's 401K plan every pay period into whatever fund

Automatic Cash Management

The Setup

How Money Flows

  • Payroll direct deposited into brokerage
  • All non-mortgage recurring expenses are paid with the Fidelity card
  • All Amazon expenses are paid with the Amazon card
  • All other expenses are paid with the Chase card
  • Bills autopay from brokerage (credit cards, insurance, billpay to household vendors)
  • Debit cards and live paper checks written against CMA

Automatic Finances

My friend Amy Hoy recently tweeted about financial planning and personal finance. This particular tweet stuck out to me:

In early 2018 I radically simplified my family's personal financial system and made everything as automatic as possible. Amy and Joel Hooks asked me to write up how it works, so this is the start of a series of short posts about how and why I set everything up.

Tiller, Ledger, and Sorbet

Tiller + Ledger

Thirteen years ago I started tracking my finances using a tool named Ledger. Up until 2018 I hand-entered every penny into my ledger files, which absolutely had value but eventually I decided that I wanted to automate things as much as I could.

I happened upon Tiller which scrapes bank accounts and puts the data into a Google spreadsheet. Importantly, Tiller adds a unique ID to every transaction it sees, which means if I want to automate something I don't have to try to implement deduplication.

Back in 2018 the script I used was rough, but I've polished it over the years and, just the other day, published the guts as LedgerTillerExport.

Automatic Insurance

The Setup

  • $1.5 million of term life insurance on me
  • A smaller amount of term life insurance on my wife
  • A private disability insurance policy on me that pays $5,000/mo if I can't program computers anymore, for up to 2 years
  • Employer sponsored short and long term disability insurance
  • Employer sponsored health insurance
  • Auto, home, and umbrella insurance

Organizing Your Consulting Business

This is an excerpt from my upcoming book Handle Your Business - the Succinct Guide to Money and Finance for the Self-Employed. Enter your email at the bottom for updates, early access, and a coupon when the book launches.

A business is a legal fiction. It only exists in so far as we and the courts believe it to. It's an entity made of pure thought, even more so than a computer program. When you write a computer program you're causing the computer to take physical actions. When you form a business, you're literally willing a new thing into existence.

This may seem like a trivial point, but you only get the benefits of a business as long as other people believe it exists. What are those benefits, you ask? There are two big things you get by forming a separate business entity:

  • limited personal liability for the financial liabilities of the company
  • tax incentives

You could just start doing business as yourself. You may have already. You could, in fact, just ignore this whole chapter, and there's nothing really wrong with that. But, you don't get those two things above.

Program Your Finances: Algorithmic Savings

When I started my first full time job in 2007 I started putting away a little bit of my paycheck every two weeks into savings. For the past two years I haven't been doing that manually. Instead, I've been using Ledger's fantastic automated transactions to put money away without having to think about it, both for long term goals and envelope budgeting.

Pay Your Taxes!

"I'm in deep with the IRS."

"We ended up owing $15,000 this year."

"I don't have that kind of money just laying around. How do I file an extension?"

Sound familiar? Maybe you're a freelancer. A consultant. An independent business person. Somehow, some way, you've got money coming in that isn't from a normal everyday W2 job.

One thing's for sure: you have to pay taxes on that.

Program Your Finances: Envelope Budgeting

Note: you can find much more information about ledger on ledger-cli.org, including links to official documentation and other implementations. Also, check out my intro to accounting with Ledger.

A few years ago I heard about YNAB, or You Need A Budget. YNAB is a set of rules and associated software that help people to dig themselves out of financial holes and prosper with a budget. The rules are:

  1. Give Every Dollar a Job
  2. Save for a Rainy Day
  3. Roll With the Punches
  4. Live on Last Month's Income

YNAB embraces both traditional budgeting, where you have a fixed amount of money every month for a category, as well as "envelope budgeting", where you put a fixed amount every month into a category, but if you don't spend all of that it rolls to the next month.

In this blog post I'm going to talk about how to smoothly implement envelope budgeting in Ledger land.

A Robust Reporting System for Ledger

Note: you can find much more information about ledger on ledger-cli.org, including links to official documentation and other implementations

For the last five years I've kept my personal finances in order using the ledger system, a sophisticated command line program that consumes a lightly formatted text file. It's helped me repay debts and get everything in order, helping me financially absorb an injury last month that would have been extremely detrimental just a few years prior.

The stock ledger program is exclusively command-line oriented. For quick checks and greping over output, this is fine. For some time, though, I've wanted a more graphical, more robust way of looking at my finances. I've also wanted a more familiar query language, since version 2.0's queries were someone limited and version 3.0's query syntax is not very well documented yet. Last year I wrote a simple system that pushed monthly reports out to static HTML files, which got me part of the way there but I really wanted something more flexible. Something where I can just write an arbitrary query and have the output dumped to HTML.

Thus, I present Ledger Web. In Ledger Web, your ledger is kept in a text file, just the same as always, reports are ERB files, and queries are SQL. Ledger Web watches your ledger file and whenever it changes dumps it into a PostgreSQL database table. It's also quite customizable, letting you set hooks both before and after row insertion and before and after ledger file load.

Program Your Finances: Automated Transactions

Note: you can find much more information about ledger on ledger-cli.org, including links to official documentation and other implementations

I've been using Ledger for almost five years now to keep track of my personal finances. For three of those years I've lived with a roommate of one form or another. Part of living with a roommate is splitting up bills. Some people decide to do this by dividing the bills up between roommates. For example, Pete pays the electric and gas bills and Andrew pays the water and the cable. Other roommates decide to nominate one person to have all of the bills in their name and post the amounts due every month for everyone to see. This is what my girlfriend and have been doing and it's been working great. All of the bills are in my name and I give her a summary every month and she hands me a check. Easy peasy.

Of course, being a complete and utter nerd means that I have to make this more complicated than it needs to be in the name of reducing the amount of work I have to do.

Program Your Finances: Vacation Tracking

Note: you can find much more information about ledger on ledger-cli.org, including links to official documentation and other implementations

Recently my girlfriend and I visited the wonderful city of Vancouver, Canada. While out of country we tend to use my Schwab Investor Checking account because it carries no fees whatsoever, including currency conversions, and it refunds all ATM fees. Last year when we went to Ireland we just kept all of the receipts and figured it out when we got back, which was excrutiatingly painful. Lost receipts, invisible cash transactions, ugh. It hurts to even think about it. This year, I decided to cobble together a simple system so we could track on the fly. Read on to see how it came together.

Program your Finances: Reporting for Fun and Profit

Note: you can find much more information about ledger on ledger-cli.org, including links to official documentation and other implementations

Another note: I've written a new version of this that is much more dynamic and flexible named Ledger Web.

Last year I wrote what ended up being the most popular article on this blog ever, Program Your Finances: Command-line Accounting. That post went over how I track and report on my finances using a program called Ledger along with a few helper scripts. Recently I expanded that toolset quite a bit and wanted to show how keeping meticulous track of your finances can give you superpowers. Read on for the gory details.

Program your Finances: Command-line Accounting

Note: you can find much more information about ledger on ledger-cli.org, including links to official documentation and other implementations

About three years ago I was in some serious financial straits. I had just started my first job out of college that I had moved across the country for and had to bootstrap almost my whole life. This meant buying furniture, buying a car, outfitting a kitchen, etc. Every two weeks I would get a salary deposit, and within two weeks it would be almost completely gone from my checking account. I actually bounced a rent check or two in there. After the second time that happened I vowed it wouldn't happen again and started keeping track of every penny that I spent using a program called ledger. This was, in hindsight, exactly what I needed to get myself back on track. Actually seeing money moving in and out of my accounts forced me to modify my behavior. At the time, Mint wasn't around, but I don't think it would have helped nearly as much. Forcing myself to actually type out the transactions was the key to changing behavior.

Ledger is almost the most boring, austere accounting program you could think of. There's no pretty graphs, no online interaction, no GUI of any sort. It's basically a command-line driven calculator with a lot of specializations that make it ideal for tracking finances, which is what makes it so ideal for someone who spends a lot of time inside a text editor. It's very easy to script around and it has a very rich query language that lets you get at the data that you want with a minimum of fuss. It's very much the inspiration for Calorific.