Top 3 Personal Finance Sites and Apps

The first step towards financial success is to track your money. You need to know where your money is going before you can make any sound decisions. There are many personal finance websites and apps that can help you do this. They integrate into your bank accounts and have amazing tools to help you manage your finances. Many of them are free so you may have to deal with some advertisements, but other than that, they are strong/powerful tools to aid you with your finances. Here are the top three that I’ve had personal experience with and/or had discussed with others about.

• Mint - I used this for almost a year and I liked it a lot. I was able to integrate all my accounts in it and it helped create good trackers and it let me track some of my personal goals. I had it on my desktop and the iPhone app. The iPhone app had a lot of advertisements, but it’s worth it. I want this blog to become a good source of information and I also rely on advertisements to help earn income. The app is owned by Intuit so if you’ve used Quicken to prepare your taxes, then some of your Mint information can quickly transfer over when filing your taxes.

  
• You Need a Budget (YNAB) – The full service costs money but it offers a social experience to it too. You can go on their forums and talk to others, view their tutorials and lessons and get real advice from professionals. They’ve recently released a free “lite” version of their product and it’s still very powerful. Some of my friends love the feature that gives you tailored advice if it notices you’re living paycheck-to-paycheck. I’ve been helping people with their finances for over a decade now and a lot of people don’t like asking for financial help (especially men). A friend of mine loved getting good advice from the app while retaining his privacy.

  
• Personal Capital – A friend personally recommended I post about this one. This site is less about the budget and more about investing and managing your money. I’ve read a lot of good reviews from users and they are very happy with the reduced amount of advertisements compared to Mint.com. I’ve never personally used it before but I trust the recommendation.

These are very powerful tools that you can use. Working with a Certified Financial Planner can be very costly, so even paying $60 for YNAB will save you money over the long run. Check out each website and let me know which one you prefer or like to use.  What other sites do people use?

Budgeting Made Easy

For most people, being on a budget feels like being on a diet. The first thing people think of when they consider a budget is restrictions. Having a budget isn’t about restricting; it’s more about knowing where your money is going and knowing where your money goes is one of the most crucial steps to financial planning. I recommend doing the 30-day spending challenge I wrote about here: 30-day Challenge to track your expenses. Creating a simple budget is easy. Here’s how I recommend starting.

1.       Income. On the left side of your excel sheet or piece of paper, list how much you make in a month. Then on the right side, list your bills.

2.      Fixed bills. Start with listing your fixed bills. These are the bills that never change regardless of how you conduct your life and/or the minimum payments on installment loans. This typically includes rent/mortgage, insurance, car and student loan payments and sewer/trash bills. Generally speaking, you have no control over these bills.

3.      Variable bills. Next, list your variable bills. These are bills where if needed, you can reduce them if you need additional money. This typically includes gas, food, cable, phone, electricity, water, etc. When people come to see in dire financial need, it’s easy to reduce fast food consumption or simply downgrade current internet and cable service freeing up additional income to get out of their predicament. Use an average or use the last month’s bill to keep track of the amount.

4.      Take your income less your fixed and variable bills. Subtract your bills from your income and see how much “discretionary” funding you have available. The amount you have left will determine how you should proceed with your budget.

5.      Credit Card debt. Always list your credit card debt as a bill last. It is important to understand the negative impact of credit cards. Depending on your financial situation, you may only be able to pay the minimum payments from your available funding. If you have more money after you pay the minimum payments, then put more towards your credit card debt to help pay it off sooner.

6.      Savings. After paying your bills and credit card debt, the rest can be put to whatever savings strategy you are pursuing.

Creating a budget is that simple. It doesn’t require complex excel knowledge, a mathematics degree or expensive apps. If you get a promotion, you can quickly see the impact so you can increase your credit card payments or your savings. If you get into financial trouble, you can start reducing how much you pay towards your credit cards or you can put more money towards your variable bills. One quick tip: Don’t round your bills. People who round their bills, miss an opportunity to focus fire on financial objective. That being said, here’s a sample budget.

Income (Step 1)	Fixed Bills (Step 2)	Variable Bills (Step 3)	Income – Bills (Step 4)	Credit Cards (Step 5)	Savings (Step 6)
$5,000	-$1,500	-$500		-$200
	-$750	-$250		-$150
	-$250	-$200		-$75
$5,000	-$2,500	-$950	$1,550	-$425	$1,125

Military Retirement Plan

A majority of the people I've helped with their finances have been military members within 5 years, or even days, from retiring. They're concerned about only receiving 50% of their basic pay and not receiving BAH or BAS anymore. Anytime is a good time to start getting your finances settled but the earlier you start in your military career the better.


If done correctly, military members can retire from working at 40 years old. Imagine not having to work at the end of a 22-year career and only being 40 years old. When military members retire, after 20 years in the military, we get 50% of our basic pay (only basic pay) and an additional 2.5% each year after. If you start at the beginning of your career, you can have enough to make up the remaining portion of your basic pay when you retire.


For example, an E-8 at 22 years makes $5,115.30 a month (in 2014). The E-8 is entitled to 55% of his or her basic pay in retirement. 50% for twenty years and 2.5% for both years after. This would be $2,813 every month for the rest of his or her life, or $33, 756 annually and if you start saving now, you can earn enough income to get paid like you did when you were in active duty. You can potentially make enough to earn what you were getting in Housing Allowance (BAH) and Food (BAS).


To make up the remaining pay the E-8 would have to save up $552K and earn 5% when he or she retires. This may seem like a lot of money to save up, but by starting your Thrift Savings Plan (TSP) right away, investing in an Individual Retirement Account (IRA), buying real estate, living within your means and keeping debt to a minimum you can easily save this much money (or near it). $552K earning 5% a year would earn you $27,624 a year.


This discussion is theoretical because you can't withdrawal those savings from your TSP and IRAs until you are 59 1/2. But the point is, starting early and saving as much as you can will put you in a prime retirement position.

30 Sep End of the Fiscal Year is Coming

It's getting close to 30 Sep and, for us Department of Defense finance folks, that means it's time for the end of the Fiscal Year. For some people, conversations about the military budget may sound like a foreign language but regardless of your rank or position in the military, it's a language worth learning. Understanding the budget process can help you immensely in your career from the lowest ranking enlisted member to a 4-star general. Here are some common terms you may need.

• Fiscal Year - Our fiscal year goes from 1 Oct to 30 Sep. So FY14 started 1 Oct 13 and will end 30 Sep 14.
• Appropriations - These are the different types of funds we receive from Congress. Article 1 of the U.S. Constitution states, "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of Receipts and Expenditures of all public Money shall be published from time to time." This means we can only spend the money given to us by Congress; no more, no less. 
• "O and M" - Your Operations and Maintenance (O&M) appropriations are the types of funds that 90% of the military use in their day-to-day operations. There is also Procurement, Investment and R/D.
• Obligations - An obligation simply means we've spent the money given to us. You may also hear "commitment" which means we've committed to spending money but we haven't actually completed the transaction. By 30 Sep, the DoD must be 100% obligated which means in the month of September, a lot of End-of-Year spending happens. Some of this spending may get frivolous as each level or organization ensures it doesn't have to return the funds given to them. For tips on how to prevent this frivolous spending, check out my post earlier this year. End of Fiscal Year Discussion
• Bona Fide Need - This is a law that states we must have an immediate need for something when we purchase it. So you can't use FY14 funds to buy something you know you won't need until March FY15. The law allows us to purchase some items that have lead time so we have necessary supplies and equipment the first couple months of the new FY. 
• Form 9 - Certain requirements need to be purchased through your Contracting organization. In the Air Force, we call this a Form 9. I'm not sure what the other services call it but this is the Form your resource advisor will help you create to get the requirement you need. It can take a significant amount of lead time, so if you need something, get the leg work done sooner than later. 
• MIPR - This is an intra-agency form we use to send other agencies money to execute a requirement for us. If you have a requirement that will require a MIPR, then you'll have to get with your Resource Advisor to find out what information you'll need.
• "CRA" - Continuing Resolution Authority (CRA) is a temporary, yet restricted, authority to spend money until Congress passes the budget. Starting 1 Oct to the time the budget is passed, the DoD is under CRA which means you'll be restricted in how much you can spend and you're unable to start any new projects. Many units become risk averse and severely restrict spending during this time.
• Initial Distribution - Once the budget has been passed, each organization will eventually get its Initial Distribution, which just means it will get its budget for the whole year and normal spending can resume.

Hopefully, this helps you understand some of the conversations you'll hear this month. A lot of military members get bogged down with arguing and fighting how the system has been set up, but the successful ones learn the system. If there is a term you hear that you want explaining please leave a comment and I'll explain it.

End of the Fiscal Year Discussion

Have you ever wondered why at the end of the fiscal year (30 Sep) it seems like your organization purchases items they don’t need? Have you ever wondered why money isn’t available during the fiscal year for mission essential items but then there is plenty at the end of the fiscal year? These things happen because 1) the constitution sets limits on when funds (appropriations) are available and 2) the political environment and economic situation is so messed up causing delays in normal budget processes.  Regardless of your rank, you can play a pivotal role in stopping this.

Appropriations – Many people ask why funds are only available from 1 Oct – 30 Sep. The reason is because this is how the government was set up by the constitution. Funds are appropriated to the Department of Defense for specific reasons. The funds most of use day-to-day is called Operations and Maintenance funds and they are only good for one fiscal year. We must “zero out” all those funds during the fiscal year or else they won’t be available for use anymore (sort of, but for this conversation let’s just say the funds are unavailable). There are other types of funds that are good for 2, 3, 5, 10 years and some with no expirations.

But it is important to note that budgeting is not easier, or better, for those multi-year appropriations. In my personal opinion, we have more budgeting problems in the multi-year appropriations then our normal one-year funds. The one-year cycle gives current commanders the visibility and control to either make good use of the funds or abuse them on non-mission critical expenses.

Budget Cycle – For our normal Operations and Maintenance funds, the funds are good from 1 Oct – 30 Sep. In a normal political and fiscal environment, units would have their funds sometime in October. Commanders at all levels could execute the funding as appropriate. In April/May, Headquarters would perform Mid-Year reviews to ensure the units are spending correctly and see if there is any excess or additional funding needed for or from other units. By law, on 31 Jul, units at all levels must be 80% spent (or obligated). Sometime at the end of August, your local finance office will assume command of all funds not designated for a specific purpose to ensure your base/post/station can execute the funds by 30 Sep. And finally, by 30 Sep, all funds must be spent.

Unfortunately, due to the inadequacy of our political and fiscal situation, we start the fiscal year in a Continuing Resolution Authority (CRA). This means that units must stay at the previous year’s spending cap and can‘t spend money on new projects. After 15 years in the military, I’ve concluded that each New Year ALWAYS has new surprises, but they have to be deferred until the CRA is over, sometimes causing more expensive future problems. Lately, Commanders haven’t received their budget until Mar-May. This only gives Commanders less than 6 months to execute their missions appropriately before the local finance office assumes control over the funds. During CRA and the short time Commanders have funds available, this may be the reason why you don’t have funds when you needed them. It could be simply they don’t have the funds available at that specific time. If this happens to you in your unit, then you need to get with your Resource Advisor/Resource Management team and make sure you have a solid spend plan to forecast your requirements and to ensure cash availability.

Unfunded Requirements Listing - Sometime halfway through the fiscal year, units will generate an Unfunded Requirements Listing to track all the requirements of the unit. At the end of the fiscal year, units may get additional funding to buy down items on the list. A good commander will put most of the money for mission requirements but it is important to spend a portion on Quality of Life initiatives. Commanders at each level will prioritize which requirements are the most important. This is where the problem usually comes from. Some commanders will prioritize non-essential requirements OVER essential requirements. There could many reasons but most aren’t as malicious as the stories seem. Commanders often have better visibility on issues and the direct impacts to the Wing. So it may seem like the wrong choice in your circle of influence, but the Commander may have a better sight picture. Unfortunately though, and despite plenty of opposition, I’ve seen Commanders spend a lot of money on items not essential and, while they may be permissible, waste money that could have been spent on much needed items.

What can you do to stop the wasting of money? Regardless of your rank, you have a part in the process. If you are junior in rank, then you can make sure your bosses are keenly aware of the requirements you need.  You can maintain a “wish list” of the items you need to complete your mission. Do all the leg work to be prepared to purchase the item, so you only need funding to execute. Sometimes the first prepared is the first to receive money. If your rank allows you to be in the prioritization discussion, and then make sure you voice your concerns about what truly is mission essential. Some Commanders make decisions based on the “squeaky wheel” or the” most recent requirement” and they need your insight to what is actually mission critical and what isn’t. If you are a decision maker, then listen to your subordinates on what is truly mission critical or not. If you are a commander, remember that the “Gucci” days of infinite funding are gone and large expenses may be taking away from the core mission.

Personal Story: I remember being in communications- electronics maintenance and needing some parts, $30K total) that couldn’t be purchased under normal supply conditions. We were told we couldn’t buy them because there wasn’t any money. But at the end of the fiscal year, the unit Commander purchased several $20K glass display cases to hold squadron memorabilia. Two things could have happened there: 1) My message of mission critical parts never got to the commander in the appropriate forum or 2) The commander chose the glass display cases versus mission-critical parts. Either way, from my point of view, in my circle of influence on the mission, it seemed like money wasted.

Have you experienced any good or bad funding decisions?  Leave a comment and let me know.