When I was in high school I took an accounting class. Wouldn't you know, I loved it! Numbers never lie. People use numbers to lie, but if you really look into the numbers, they themselves don't lie. Assets and Liabilities always add up. If they don't, there is a problem. It all made such obvious sense to me. Since then I've been a huge fan of finding ways to efficiently manage and track money. Sometimes I've been good at it: increasing our net worth by large multiples through frugal spending and aggressive savings. Other times we've had to make up for past mistakes: blowing thousands of dollars on classical music CD's through Columbia House right after college (although I still have a great music collection!)
As many of you know, we're striving for financial independence. We're on a path toward FIRE (Financial Independence and Retiring Early), and look forward to achieving it in 2017. In order to get there, we max out our 401K and IRA's (funding Roths and Traditional fully throughout the year, then recharacterizing the loser of the race before year's end with the expectation of converting the Traditional to Roth through the backdoor Roth post early retirement), and put enough money into Joshua's 529 so that he can go to a State School with a work study job for living expenses, and have no standing debt (although I love the idea of him going to college in Germany, where it's free, if he decides to go to college at all.)
We conduct an on-going review of our finances, watching money flow like water to and from all of our accounts, through Personal Capital. What I love about PC is that I can see everything in one place, it's free, and easy to connect all of my accounts. We used to use Quicken, but often had difficulty connecting new accounts, and occasionally they would disconnect for no reason. I still painstakingly use Quicken for doing our taxes, but PC has taken over for everyday accounting, and I may switch to using it for taxes next year. It's quick, easy, and I can log-in from anywhere, rather than being tied to my home computer for Quicken.
Over the past year we've taken another step toward financial independence by transferring both Jan and my Traditional IRA's, Roths, as well as our emergency fund and taxable investment accounts over to Betterment. The benefit here is the automatic reallocation and Tax Loss Harvesting that Betterment offers. The gains from these two elements, mixed with the fact that they use the Vanguard funds I know and love (because they are so inexpensive yet market beating), makes me love Betterment too. Now all of our investment, retirement, and savings accounts are in one place rather than spread across multiple companies only accessible at various websites. I no longer invest in individual stocks because I do not want to spend the time tracking and researching them anymore.
We made our finances COMFY by putting everything into one system, though maintaining our diversification. We are on track toward FIRE while at the same time freeing up time to do the things we love, like playing with Joshua, writing, heading to the beach, and eating. For those who know Personal Capital well, you may ask why we're not using their Financial Advising service instead of Betterment. Good question, as that would put everything in one easy to reach place, wouldn't it. We've chosen not to do that because we're already set for FIRE, and adding the expense of their advising fee for the ease of use just wasn't worth the cost. I did the accounting, and it just wouldn't add up.
I highly recommend Personal Capital (for tracking) and Betterment (for investing) to anyone who wants an easy, tax efficient, and cost positive approach to money management and investing. If you use the links provided we do get a benefit of longer service without any fees, although all of my fees for this year have already been off-set by Tax Loss Harvesting.
Check them out and let me know what you think!
How do you track your finances?
Are you on the financial path you want to take?
Do you use Personal Capital to track your spending? If not, may we recommend you do so. It's very handy, and Free! Not to mention, you'd be helping us out by singing on. Check it out!