A weakness in many budgets that allows money to be lost is the failure to track cash.  Adding the ability to track cash in Quicken (and other tools) is easy to setup and quite useful.

Why Should You Track Cash?

Cash purchases may be hiding an inefficiency in the way you spend your money.  Without visibility into where your cash is going, you might not realize the wasteful nature a particular spending habit.  Tracking all of your other spending down to the penny may be for naught if your cash slush fund is where the waste in your spending can be found.  I used to have a category in my budget for “Cash Withdrawals.” I used that category for withdrawals from the ATM.  In reality, the cash should have been allocated to the category it was used for.  My old system basically allowed my cash to be uncategorized spending.  I may have appeared to be following my budget for Dining Out, for example, but if I was using cash to pay for lunch, I might have actually been over budget.  To solve that problem,

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A fellow personal finance blogger, Mrs. Micah, has declared February to be Where’s My Money Going Month.  She’s challenging her readers to track their spending for 28 days and participate in the ongoing discussion on her blog.  I have a guest post on her blog, describing why tracking my money is more important than ever.

In addition to that contribution, I thought I’d share with you where my money went in 2008.  I track every dollar I spend and have found the practice to be quite enlightening.  Even though I don’t have as much fat to trim now that I’ve been doing it for a few years, it is still worthwhile.  Looking at my top expenses for the year is also very informative.

The chart below shows my 10 largest expenses for

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One of the most repeated pieces of financial advice I hear is that you should always have a savings goal in mind.  Setting a goal is supposed to focus your efforts and help to ensure success.  Since I’m saving a significant percentage of my income, I wondered why I am able to have success despite not having a savings goal.

My savings success comes from the fact that I have automated the process.  Before my paycheck arrives, sufficient funds are deducted to ensure that I’ll hit the maximum contribution limit to my 401(k).  Regularly scheduled transfers to a 529 college savings plan, taxable investment account, and high yield savings account are also in place.  The remaining money is sufficient not only to cover my expenses, which I keep to a minimum, but also to build up a little bit each month.  When I want to make a purchase, I simply take from this surplus.

Setting a savings goal is useful if you live beyond your means or spend most of what you earn.  In those cases, you need to do something to increase your savings and a goal may help.  But for those with more discipline who automate their savings, pay themselves first, and keep expenses low, the maximum possible savings occurs even without a specific goal in mind.

Paying $1.84 for gas today reminded me that I wanted to revisit my analysis of Chrysler’s Let’s Refuel America Program and MyGallons.com.

Back in May, I discussed why Chrysler’s program was such a bad deal.  As a reminder, the program allowed participants to lock in the ultra low price of $2.99 per gallon for three years.  The main reason it was a bad deal was that you had to forgo other dealer incentives to participate, meaning that you might have to give up guaranteed savings to get potential savings.   I wonder how people who participated in the program feel about it now?  Sure, gas may rise above $2.99 before their deal runs out, but I doubt they’re happy with their decision.

Those who wanted to prepay for gasoline for future use without having to buy an overpriced car may have opted to use MyGallons.com.  Those people are likely kicking themselves as well.  Anyone thinking about joining that site (which lets you prepay for Gas, with some restrictions) today, should ask themselves why

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I recently discussed how your savings rate can determine when you’ll be able to retire.  To go along with the table in that post, I developed the Saving Retirement Calculator below.  You can enter specifics for your situation to see when you might be able to retire.  Once you have an answer, you can copy the badge code and paste it into your webpage or blog to get a badge that looks like this:

Note that changing income will have no effect on the answer, unless you currently have a non-zero amount saved.  That is due to the fact that calculations are all made on a relative basis, i.e. if you are saving 10% (and thus living on 90%) 90% x 25 is the amount you’ll need to save, which does not need absolute current income to be  calculated.

Here’s the calculator:

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 The latest book review here at Richer by the Day is Passion Saving by Rob Bennett.

Note to Readers: I was given a complimentary copy of the book by the author, but believe that my review was not influenced by the fact in any way.

Passion Saving is billed as an alternative to the way many of us traditionally try to save, which author Rob Bennett refers to as the Sacrifice Saving method.  He contends that the spending urge is simply too great to overcome.  Rather than fight this urge, we are supposed to redirect it towards saving to achieve more desirable results.  The goal is to transform saving into as emotionally satisfying experience as spending.  Passion Saving is basically about motivation.  If you can’t get motivated to save following traditional methods, then following the Passion Saving method

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Following the House’s recent defeat of the bailout bill and heading into tonight’s US Senate vote, speculation has been building that FDIC insurance limits will be raised to $250,000 from $100,000.  While I’m strongly in favor of such a measure, and it will certainly improve consumer confidence in the banking system, I have to ask whether raising the limits should really change anything.

In my mind, banking customers fall into three basic categories: those with deposits significantly less than the current limits, those near (slightly above or below) the limits, and those significantly above the limits.  Lets look at how each of those will be affected by the raising of the limit.

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My wife and I recently cut back to having only one car instead of the two we have traditionally owned.  This isn’t the first time we’ve gotten by with just one car, but it is more difficult.  The last time we lived downtown in a small city and could easily walk to shopping, restaurants, and entertainment.  After we moved to the suburbs, we decided that a second car was necessary.

Our regression to one car had nothing to do with gas prices, cost of insurance, or anything like that.  We’re going to be moving again and took a recent opportunity to move the car ahead of time.  So now, until we move, we’re living far from everything with only one car. 

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We all have horror stories about how we were mistreated, overcharged, or otherwise screwed by a bank at some point in our lives. If we find this happening again and again, it’s quite possible that we’ve chosen the wrong bank. The choice of a bank is less about whether a bank is good or bad, but whether it is good or bad for you.

The bank that I use is notorious for infuriating some of its customers. There are websites out there whose sole purpose is to bash my bank and tell all the reasons why it’s so horrible. I laugh when I see people getting so worked up about this because I have never been charged the ridiculous fees described, received anything but the best customer service, and have had a simply wonderful banking experience. Clearly they are the wrong bank for some people, but the right bank for me. In fact, in addition to having a checking and savings account with them,

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I’ve already covered how Vonage can save you money, but now I’m saving even more by paying for my service once a year. By paying for 12 months upfront, I get an extra 20% off! That means I’m getting all the phone service I need for 12 bucks a month. How can you beat that?

Now that I’ve used Vonage for a few years, I know that I love their service (and low prices) and that the quality of the calls is as good as the phone or cable company. That’s why I had no problem signing up for an extended period.

You can save even more by referring friends and family to try Vonage. Each person you sign up will get 2 free months of service and you’ll get a credit as well. If you’d like to try Vonage, send me an email ( service at spindage dot com) with the subject “Vonage” and I’ll send you a referral link for two free months of service.