New Year, New Ways To Expense

Now that you've straightened out the house and put away the dishes from those holiday parties, it's time to start thinking about straightening something else out -- your personal finances. In addition to January being the beginning of a new calendar year, for most of us, it is also the beginning of a new fiscal year.

Keeping good financial records makes sense from a number of perspectives.

First, it gives you a better sense of where you stand -- whether you need to cut back, try to increase your income, put more into savings or, if you're one of the lucky ones, spend extra cash on a vacation or maybe a new computer. It's also a bit of a necessity because the tax collector expects you to keep accurate records, especially if you write off any business or other tax-deductible expenses. And it's a good idea to have an understanding of your status with credit cards and other debt. Knowing how much interest you're paying is the first step toward getting it under control.

There are a number of ways to use your PC or Mac to help track your finances. One method is to simply create a spreadsheet in Excel, Lotus 1-2-3 or Microsoft Works that tracks your income and expenses. Without having to learn a lot of commands, these programs make it pretty easy to sort and summarize by category, which is pretty much all that most people need for personal tax record-keeping.

If you're looking for a more automated and sophisticated approach, consider getting a personal finance management program such as Quicken 2003 (Windows and Mac) or Microsoft Money (Windows). The programs have a lot of features in common, and I don't have a strong preference for either one, though I do think that Quicken is a bit easier to learn and navigate. Either program will let you track all of your income and expenses while keeping tabs on all your checking, credit card and investment accounts.

Although both programs are capable of printing checks, they both also allow you to do electronic bill paying so that you never have to bother writing a check, stuffing an envelope and affixing postage. One big advantage of this is that you can "pre-pay" your bills so that your mortgage, car payments and other regular bills are automatically paid when they become due with the money remaining in your account until the last possible moment.

Microsoft Money 2003 comes with a year's worth of free electronic bill paying (up to 15 payments a month and 50 cents for each additional payment). Quicken Bill Pay costs $9.95 a month for up to 20 payments, though you can get a one-month free trial.

The price of these software programs seems to vary depending on where and when you check. Both offer standard versions for about $30 and "Deluxe" editions for between $50 and $60, though you can often find them for less.
Many banks and credit card companies also offer bill payment services -- in some cases for free -- and many of these bank services interface directly with Quicken and Money. Before you sign up for Quicken or Microsoft's service, find out if your bank offers that service and if it works with Quicken or Money. American Express, for example, will let you download all of your bills to print out or load into Money or Quicken.

Quicken also has a service that allows companies to bill you electronically so that you view and pay your bills within Quicken or have Quicken pay them automatically. The problem is that it only works with those billers who have signed up. I used to use Quicken to pay my bills, but a couple of years ago I switched to Paytrust (www.paytrust.com), which not only pays your bills but receives bills from anyone -- even my son's trumpet teacher.

You simply give out the Paytrust address to your billers and, when Paytrust gets the bill, it's scanned and presented to you online via a Web interface. You can have the bill paid automatically, have Paytrust pay the minimum balance or view the bill and make your own payment decision. Either way, it all happens via the Web. At the end of the year, you can export all of your Paytrust records into a file that can be read by Quicken or Money or imported into TurboTax and other tax preparation programs.

Also, consider the electronic billing options now offered by SBC, several of the cellular services, utilities and other companies. Getting your bills electronically may make it easier for you not only to pay them but also to analyze how you are using the service. Check the Web sites of the companies you deal with to see what they offer.

In addition to these software programs and services, there are a number of Web sites that can help you manage your investments, analyze your loans and other expenses, including insurance. Naturally, these sites will also try to sell you products and services. Quicken.com has plenty of advice for organizing your tax records, managing your investment portfolio and saving for college tuition. Microsoft's MoneyCentral also offers a full range of services, including automatic tracking of all your online investment accounts.

Now, if only we could find a legal way to use our PCs to print money.

By Larry Magid