Author Topic: Part 1 - Assessment  (Read 5628 times)

Its All About Value !!!

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Part 1 - Assessment
« on: August 31, 2012, 11:59:36 PM »
Newbie here...

Does anyone have a recommendation for a website or spreadsheet that I can use to get my current situation documented?  Something that keeps with the spirit of this blog?  Or do you all just have your own custom xls files.  Hoping that some sort of template has emerged.  I want to be able to correctly identify my current savings rate and estimate my current trajectory towards financial independence.  I've seen some references in the forum, but nothing that seemed like the one to use.

Thanks!


galaxie

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Re: Part 1 - Assessment
« Reply #1 on: September 01, 2012, 07:15:48 AM »
Many of us use Mint to track expenses and basic stuff like net worth, but it doesn't have much in the way of projections about the future.

arebelspy

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Re: Part 1 - Assessment
« Reply #2 on: September 01, 2012, 08:27:22 AM »
I use a combination of Mint, NetWorthIQ, and about 4-8 different spreadsheets for different things (XIRR calculations, time to FI calculations, YMOYL-style progress, housing projections, net worth, etc etc)

www.mrmoneymustache.com/forum/mustachianism-around-the-web/mustachian-web-tools-mint-com/

www.mrmoneymustache.com/forum/mustachianism-around-the-web/mustachian-web-tools-networthiq/

www.mrmoneymustache.com/forum/mustachianism-around-the-web/mustachian-web-tools-your-money-or-your-life-spreadsheets/

I personally wouldn't want to combine all those tools into one gargantuan mess.  All of the all-in-one tools I've seen (such as the one at www.lifespreadsheet.com ) aren't flexible and precise enough for me.  YMMV.

If you clarify what exactly you want to track and why, we can probably help you with a more specific example of the best way to do that (or at least the way we prefer to do it).
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Its All About Value !!!

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Re: Part 1 - Assessment
« Reply #3 on: September 01, 2012, 12:01:24 PM »
I really think Mint.com is not for me... I just cringe at the idea of giving my passwords to a third party.

And l feel overwhelmed when looking at the other tools and spreadsheets.  So you're right, I need to narrow it down.  I need to start simple and grow from there.  I'm thinking I should start high level.  I like the simplicity of Networthify:

http://networthify.com/earlyretirement

But I feel like there could be a FAQ for every number that you would enter.  For instance, "Current Annual Income" is supposed to be after taxes, but it should include investment income, right?  So what's the best source for that info?  Is it my tax return?  I could just do AGI - tax paid... would that work?

Then for "Current Annual Expenses", I would just use info from credit cards and my bank, right?  And then the savings amount and rate would fill in automatically.

What about mortgage debt, should that figure into this at all?

The simplest high level formula is:

Income - Expenses = Savings

right?  or is there something better I should use?

arebelspy

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Re: Part 1 - Assessment
« Reply #4 on: September 01, 2012, 01:39:42 PM »
Networthify is a fun tool to calculate time to FI, but it's not helpful at all for calculating your current situation.  You need to already know income, expenses, savings rate, etc. to use it effectively.

or is there something better I should use?

Yes, probably, but you still need to answer this:
Quote
clarify what exactly you want to track and why

You seem to be a little overwhelmed with what you need to do, and thus not sure of where to start.  Correct me if I'm wrong.

So I'd suggest you start simple: Start to track all of your spending. Track all of your income.

Just get a monthly number for how much you spent in a month (categories will be good if you're trying to reduce spending, otherwise they're mostly irrelevant, and a single number is fine) and how much you made.

Get those numbers for several months in a row (do you have data going back at least a few months, if not a year or two?), and we can go from there.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

rationaloptimism

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Re: Part 1 - Assessment
« Reply #5 on: September 03, 2012, 06:20:46 AM »
And, I would add, make a list all in one place of all your assets and liabilities...savings accounts, retirement accounts, debt balances, etc. 

arebelspy

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Re: Part 1 - Assessment
« Reply #6 on: September 03, 2012, 07:55:47 AM »
And, I would add, make a list all in one place of all your assets and liabilities...savings accounts, retirement accounts, debt balances, etc.

Excellent point. 

The more info the better (I.e. interest rates, minimum payments, etc.), but at the very least just a list of items and amounts.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Its All About Value !!!

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Re: Part 1 - Assessment
« Reply #7 on: September 04, 2012, 09:22:58 AM »
Ok, I agree.  I want to track income and expenses... then go from there.  But I'd like to do the initial tracking on an annual basis to account for things that don't happen every month.  Then I can just divide by 12 to get my monthly average.  Do you see anything wrong with that approach?

So starting with annual income, isn't the best place for this info my tax return?

arebelspy

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Re: Part 1 - Assessment
« Reply #8 on: September 04, 2012, 10:13:57 AM »
Ok, I agree.  I want to track income and expenses... then go from there.  But I'd like to do the initial tracking on an annual basis to account for things that don't happen every month.  Then I can just divide by 12 to get my monthly average.  Do you see anything wrong with that approach?

So starting with annual income, isn't the best place for this info my tax return?

Sure, that's fine (assuming your income will closely mirror last years).  For expenses you may have to estimate on some things that occur infrequently. That's fine, to start with.

Start tracking your spending now, and you can try to reconstruct past spending where possible.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

smalllife

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Re: Part 1 - Assessment
« Reply #9 on: September 04, 2012, 10:59:26 AM »
Take a look at YNAB.  It's great for budgeting income/expenses and for getting an overall picture of your investments.  It won't track the market but you can update their value manually. 

Mr. Everyday Dollar

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Re: Part 1 - Assessment
« Reply #10 on: September 04, 2012, 01:22:32 PM »
I'd suggest using a notebook and pen to start. Track everything you spend and what you make for a month with dates. Maybe do that for a few months and after that you will probably have a better idea of how you want to track your income and expenses. You'll start seeing the bigger picture and what sorts of "buckets" you want to make - healthcare, pets, food, entertainment, insurance. These won't be the same for everyone that's why I recommend creating your own tracking mechanism and not using generic budget spreadsheets off the internet.

You're the one that's going to be using it so you better like it!

I use a spreadsheet to track my income and expenses and have done that since 2006 (http://mreverydaydollar.com/tracking-finances/). I tried Mint and wanted to like it but it had some quirks I didn't care so I went back to using my tried and true spreadsheet.

I don't think there's a one size fits all solution. Do what works for you just make sure you're doing something!

Its All About Value !!!

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Re: Part 1 - Assessment
« Reply #11 on: September 09, 2012, 12:57:44 AM »
Thanks for your replies.  And Mr. ED, I like your site!  I think I'll add it to my reading list!

Its All About Value !!!

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Re: Part 1 - Assessment
« Reply #12 on: September 09, 2012, 01:00:28 AM »
BTW, I just added a long post to another thread that kind of relates to this one.  Here is a link:
http://www.mrmoneymustache.com/forum/ask-a-mustachian/calculating-savings-rate/