Baseline family budget - recommend books/software

[AndyL]

Ok after multiple relationships where certain genders believed budget meant income = spending... Then way too many years of income <= expenses...

Now back to work - realizing I don't know what to do with this excess $ in my bank account... And I don't think I've done a proper budget in nearly a decade, so not sure where to start.

Anyone have some spreadsheets / software / book recommendations to get me on the right track? No I don't want to watch crappy tv series on it. Coles notes and stuff numbers in a spreadsheet is more my style.

And how to tackle old debts? Have some old almost past collections vintage debts (<10k - mostly 5-7yrs old) I'd like to start working on - but debating the save / pay off in one shot vs throwing them each a budgeted amount per month until clear... Is there a preferred way to handle those?

Thanks in advance!

[schurchill39]

Good on you for wanting to work on your finances! I'm sure lots of beyonders will have good input for you but I'd start with signing up to mint.ca. Its a great tool to track spending and put it into categories so you're not manually doing it.

[Mitsu3000gt]

I tried Mint in the past and while I think it's an excellent idea, it incorrectly categorized a large percentage of my purchases because the merchant name isn't always easy to decipher or directly related to what the purchase was. Might be good to get a baseline though, and it can link to all your accounts (bank, CC, etc.) as well as help you make a budget. As long as you don't mind manually re-categorizing a bunch of stuff it does the job and is free. YNAB is similar, may want to check that one out too (I have no personal experience with it though).

You can also make a budget very easily in Excel if you are so inclined. You can also google "excel budget template" and there are free ones to get a starting point at least.

For debt, first make sure it's in the lowest interest place possible. For example, if you have credit card debt (~20% interest) look into getting something like an unsecured line of credit (~5% interest) and use that to pay off your credit card debt, effectively transferring the debt to 5%.

My advice for when to pay off debts, in my opinion if it's getting to the point where it's going to cause you problems (i.e. collections), you want to clear those up ASAP. Beyond that, if you can reliably make a higher percentage profit than the debt interest in an investment, then I would put a smaller amount towards the debt every month rather than try getting rid of it all at once (with the balance going into said investment). If you cannot reliably make a higher percentage on an investment than the debt interest cost, then I would suggest paying off that debt ASAP. Some people also just like the idea of having no debt even if it's not technically optimal from an investment standpoint, and there's nothing wrong with that if that's what makes you comfortable.

Finally for investments, stay away from anything banks offer you for the most part unless you understand 100% what you're getting into. Many of their products are identical or near-identical to "third party" offerings, except with a management fee of ~2.0% rather than ~0.2%. For example, RBC will sell you the S&P500 with a 2% MER lol. For most people, I think ETFs are a great non-volatile safe place to start with very minimal effort. They are also good for "set and forget" type investors. I personally really like the ETF called "VGRO", and it's in Canadian dollars which is convenient. General rule of thumb for longer term investments is to put money in whenever you have it, rather than trying to outsmart the market or time it perfectly. Look into opening an account on a platform like Questrade - it's free, and trading North American ETFs is commission free through them (banks typically charge $10.00 per individual trade). I don't know your age, but generally speaking it's a good idea to slowly transfer investments into progressively lower risk/lower volatility options as you get closer and closer to retirement to minimize the chance of an unexpected event (like COVID) having too significant of an impact on your savings.

[ExtraSlow]

If you'd like to chat with someone about this. I don't mind looking through your info for a few minutes and offering my opinion face-to-face. I'm no professional, but I've done this for a couple people previously.

For debts, if there's one or two you can clear right away, do those, and that will reduce the complexity of your situation, and likely your stress level as well. Situations like this as are very stressful, and can be overwhelming. Reducing the complexity is a great first step.

[rx7boi]

It sounds like what you need is something like Dave Ramsey's debt snowball plan. It caters mostly to a US-based audience but the advice is applicable to the average person. You've got extra money right now and while I'm not one to diminish anyone's successes, it sounds like you have a long way to go from where you want to be. What I'm also reading is that you've got years of habits to break, things that won't be solved by a simple budget tool. If this is wrong, then you can disregard everything else I have to say.

Other than a mortgage, list your debts them from smallest to largest. Those small wins will give you motivation instead of consolidating a loan into a massive number and feeling like you're chipping away at it.

If some of them have gone to collections, see if they'll negotiate a settlement and get it in writing.

Pay for things in cash or debit, don't fuck around with credit cards.

Behavioural patterns are just as important as numbers. Other than keeping 5 walls around you, the lights on, and food on the table for the family, you get to decide how long you want to wallow in debt.

If you've got a partner who isn't on the same page for fiscal responsibility and affecting positive change in the finances, you've best sort those foundations out as well.

You don't need fancy tools or spreadsheets and shit. Sit down together and write out how much money you're bringing in each month, how much your necessities cost, and assign a category to every dollar. You tell your money what to do.

TLDR:
1) $1000 in emergency funds, you don't touch this unless you're super fucked.
2) Debt snowball your shit, negotiate settlements where possible. This is a major oversimplification that requires more discussion that I'm not qualified for.
3) Save 3-6 months of monthly expenses.
4) No debts other than a mortgage means you can finally start investing 15% of your income.

I know this isn't the answer you specifically asked for, but I've seen a ton of people who look for budgeting solutions but haven't made other considerations that seriously impede their ability to win with money.

[Twin_Cam_Turbo]

+1 for Dave Ramsey. He has a few weird rules but for the most part it’s good.

[killramos]

MMM is always a good solution

Most people take issue with CB

[tonytiger55]

Firstly congrats on settling to do this. I used to do this for clients all the time when I was in banking years ago. It was my bread and butter. I still did it in insurance too as I am such a jolly fellow. Im happy to meet for a cup of tea and raspberry doughnut if you need help.

Start with the basics. Pencil and paper. Don't do it in your head...just don't it never works. Or if you have Gmail or Hotmail they have free excel sheets you can just type in.
Hard to say without knowing your numbers. But I'l throw together how I cleaned up clients debit.

Part 1:
Stabilisation. You cant tackle investing or debit unless we stable the ship and know whats going on at the helm. Also we need to see if any storms are coming up or hidden financial monsters.



Start with your income. Then figure out what you need to exist every month. Not live.
So this would be things like mortgage/Rent. Cell phone, internet, water/electric etc These are things you will have to pay every month regardless. These numbers are generally the same.
Then the other type is maintenance. For example yearly oil changes, yearly car insurance, winter tire swap. How old is your vehicle, & any major maintenance in the next 2 years?

So when it comes to Car insurance or property tax. One does not need to stress too much about it as it has been calculated and the savings are there.
For example. My life insurance is due in September. My home and auto insurance is due in October. It's not too stressful as I have already calculated it and I have the savings to pay for it in full. So every month I put a little aside for next years payment. Give yourself a $5-7k buffer (this will change over time) and mini emergency fund say $5k.

Part 2:
Now the ship is stale, you know what storms are coming and you have a pan when to take down the sails when you hit rough water.
Now you can change your name to Blackbeard and start taking on shit.



Now that you know the real monthly numbers. This will help in how to answer your second question. How to pay off your debit in collections (big chunk or small payments..?).
There is short term debit, medium and long term debit. I dont know what your lfiestyle is in terms of mortgage or renting, car debit etc.

If you can pay off your debit in collections and it does not effect part 1. Then do that. If it affects your numbers and you don't have a small emergency fund. Go back to part 1 and stabilise. It generally takes six months to 1 year to stabilise (but you might be already there). Then you are set. Its important to do that first before setting sail otherwise if you hit rough seas, you will just be running back to port (ive seen this happen). i.e you dont want to be paying off your debit then realising you got a D service on your car next month and your car insurance is due etc. It will rock the ship.


But that is the basics.
Feel free to PM if you want me to go over your numbers.

Happy sailing..

[Buster]

No offense to anyone here, but Dave Ramsey sucks.

Maybe he might have some ideas on how to help you get in a mode to manage your spending.

But in terms of overall management and investing, he's just bad.

[ThePenIsMightier]

I think Gail VazOxlade does a great job of helping folks target spending into: servicing debt, savings, housing, food, entertainment, etc etc.
And not to panic if you're off in a couple categories, that just means you have other areas to shift spending in to or out of.

[rx7boi]

It's all about the audience, mate.

Dave's advice isn't particularly sophisticated but it works for people who are starting from scratch and learning how to manage their finances on a basic level.

[Buster]

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It's all about the audience, mate.

Dave's advice isn't particularly sophisticated but it works for people who are starting from scratch and learning how to manage their finances on a basic level.

it's his investment advice that sucks mostly. not sure about his personal expense managements stuff.

[Gainsbarre]

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it's his investment advice that sucks mostly. not sure about his personal expense managements stuff.

Ramsey's advice in that area sucks too. He is 100% against the use of any credit card by anybody "nOboDY hAs EveR beComE a MiLLioNaiRe wiTH PoinTs!!" and claims that using cash only "activates the pain sensors in your brain." I get 1.5% cashback from paying my ENMAX bill with my credit card and 1% CT Money back from paying property taxes with a credit card. Fixed expenses that must be incurred and cashback that I wouldn't be getting if I used cash. I don't spend more on my property taxes or utilities just because I pay these bills using a credit card. Dave Ramsey is also horribly preachy - he's essentially a sleazy televangelist masquerading as a personal finance "expert."

Gail Vaz-Oxlade (mentioned earlier) is a much better option, although the production values on some of her shows (the spinning dollar sign graphics ) are pretty amateurish. Her advice is pretty much spot-on for those who have issues managing debt and it's a Canadian show. Some personal finance books that I really like are "The Wealthy Barber Returns" by David Chilton and "Millionaire Teacher" by Andrew Hallam.

[killramos]

Is 1.5% reward supposed to be a flex?

[vengie]

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Ramsey's advice in that area sucks too. He is 100% against the use of any credit card by anybody "nOboDY hAs EveR beComE a MiLLioNaiRe wiTH PoinTs!!" and claims that using cash only "activates the pain sensors in your brain." I get 1.5% cashback from paying my ENMAX bill with my credit card and 1% CT Money back from paying property taxes with a credit card. Fixed expenses that must be incurred and cashback that I wouldn't be getting if I used cash. I don't spend more on my property taxes or utilities just because I pay these bills using a credit card. Dave Ramsey is also horribly preachy - he's essentially a sleazy televangelist masquerading as a personal finance "expert."

Gail Vaz-Oxlade (mentioned earlier) is a much better option, although the production values on some of her shows (the spinning dollar sign graphics ) are pretty amateurish. Her advice is pretty much spot-on for those who have issues managing debt and it's a Canadian show. Some personal finance books that I really like are "The Wealthy Barber Returns" by David Chilton and "Millionaire Teacher" by Andrew Hallam.

But he's right... No one becomes a millionaire off points, but a large percentage of people get into significant credit card trouble.
He's eliminating temptation by saying to avoid credit cards.

Big Dave Ramsey fan for debt elimination, follow him for that.

As for investing and growth either use Canadian Couch Potato for self directed, or speak with a legitimate financial advisor.

[ExtraSlow]

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As for investing and growth either use Canadian Couch Potato for self directed, or listen to Beyond.ca.

ftfy

[Gainsbarre]

I'm not a fan of the AA approach to credit cards. They absolutely can be used responsibly and I vehemently disagree with Ramsey's no-credit-cards-ever-even-if-you-pay-off-the-balance-in-full-every-month mentality. You'll spend more because you're using a credit card instead of cash? Rubbish when you can do price comparisons/the math when making purchases. Credit cards also have certain forms of insurance/fraud protection that you won't get with cash/debit. IMO Gail Vaz-Oxlade is way better in this area as she does coach those with debt problems to stop using credit cards and track their spending, but she isn't of the view that credit cards shouldn't be used ever by anybody. 1.5% cashback is what you can get on all items now with the Rogers WE Mastercard - I believe 1.5% is the highest current cashback rate on "all items" for a no-fee credit card.

[birdman86]

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I get 1.5% cashback from paying my ENMAX bill with my credit card

But you also incur a 1.75% fee to pay ENMAX via credit card...

Edit: hol' up I'm thinking Epcor. Does Enmax actually not charge a credit card fee? $8K/month during the summer to run pivots on the farm, that cash back would be nice.

[vengie]

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I'm not a fan of the AA approach to credit cards. They absolutely can be used responsibly and I vehemently disagree with Ramsey's no-credit-cards-ever-even-if-you-pay-off-the-balance-in-full-every-month mentality. You'll spend more because you're using a credit card instead of cash? Rubbish when you can do price comparisons/the math when making purchases. Credit cards also have certain forms of insurance/fraud protection that you won't get with cash/debit. IMO Gail Vaz-Oxlade is way better in this area as she does coach those with debt problems to stop using credit cards and track their spending, but she isn't of the view that credit cards shouldn't be used ever by anybody. 1.5% cashback is what you can get on all items now with the Rogers WE Mastercard - I believe 1.5% is the highest current cashback rate on "all items" for a no-fee credit card.

Giving a person with a clear spending problem a credit card is like giving crack to a crackhead and expecting them to stay sober.

You might be able to control your spending, most cannot.

https://www.cbc.ca/news/business/deb...scan-1.5837463

[Gainsbarre]

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But you also incur a 1.75% fee to pay ENMAX via credit card...

Edit: hol' up I'm thinking Epcor. Does Enmax actually not charge a credit card fee? $8K/month during the summer to run pivots on the farm, that cash back would be nice.

Yes, that started a few years ago. ATCO came onto the retail scene allowing credit card payments for no additional fee and ENMAX quickly followed suit.