Up until now, my money management situation has been pretty complicated. It involved a bunch of online accounts, paper statements, excel spreadsheets, and even a “Finance Binder.”
Suffice to say, it took a lot of time and brainpower that I really didn’t have to spare.
But in 2015, I’m focusing on a couple of big things:
- Paying Off $30,000 in debt
- Focusing on the positive
And that is why I want to share my experience with Personal Capital with you today.
I actually started using Personal Capital nearly a year and a half ago, but I’m just now getting around the sharing it with you, because I wanted to focus on the positive part of paying off debt: watching my net worth rise. I was sick and tired of seeing negative numbers, of having to track my debt, savings and budgets in different places, and really just of wasting my time.
Why Personal Capital?
First of all, Personal Capital is completely free. After signing up and linking your accounts, Personal Capital’s little gremlin’s go to work and create you this super helpful dashboard showing your net worth over the last 30 days, your expenses and income – all in these pretty, easy to read graphs! Many people pay hundreds of dollars each month for information like this, but with Personal Capital it’s at your fingertips completely free!
Since this is my actual Personal Capital Dashboard, you can see that my net worth is sitting at $56,000 and has varied greatly within the last month. This is for a variety of reasons, which I won’t go into detail about here, but if you’re interested, you can find out exactly why in my Budget Updates.
During this month, I only made $5,408, but I spent $7,715, which is most cases would be a bad thing. However, because I’m trying to get out of debt, I’ve been saving to make big debt payments, and that means that this month was a really good month for paying off debt! Once we’re debt free, though, we will want to see spending at a much lower rate than income.
For days when I don’t have time to dig into my finances, this Dashboard saves me. It gives me a quick glance of my net worth and spending for the month, letting me know whether I need to rein in spending, or if we’ve had an awesome debt payoff month!
Net Worth Tracker
Personally, I love the net worth tracker because we have a ton of debt. I was previously tracking our debt in negative numbers, and while it was certainly nice to see our total debt creep towards zero, there is just something empowering about monitoring positive numbers.
Personal Capital’s net worth screen takes into account every single account that you have linked or manually entered. This includes checking, savings, investment accounts, car payments, mortgage, student loans, as well as manually entered assets like the value of your home.
Although some dips are normal, if you’re paying off debt or investing and saving correctly, then you should that the overall trend is upwards.
So, while I spent more than I earned is the month above, my net worth rose, because I paid off debt.
In Personal Capital, the budgeting portion is known as “Transactions” and can be accessed with one click from the Dashboard. Before I even look at my cash flow, I head over to Transactions to make sure that everything is categorized correctly. Most of the time, Personal Capital does an awesome job of automatically putting my expenses and income in the right category for expense tracking, but now and then I have to make a tweak.
Once I’ve glanced at Transactions, the next place to head is Cash Flow.
This portions gives a brief overview of my spending, as well as handy graph to tell me where my money is going at a glance. My top 3 expenses are ATM/Cash, which is what my debt payments are categorized as right now, Other Bills, and Checks. Taking a quick look at your cash flow is the best (and quickest!) way to see where your money is going.
Right off the bat, I notice that clothing isn’t even on the map, which is good! We haven’t bought clothing in several months, and we intend to keep it that way! I alos notice that our grocery spending is right where we want it to be (our budget is $400 for the month), and that the “General Merchandise” category is what we spent on lawnchairs, drinks and other things for our upcoming camping trip.
This also tells me that we’ve spent too much this month in Restaurants, so we’re cut off for this month, and we may have to have a $0 restaurant budget for next month too, but on the bright side, our gas spending is actually lower than it usually is, so that’s super cool!
One of the other cool trackers I would like to point out is the Income portion. As a freelancer who left her day job, tracking our income is super important because we need to budget based on what we’ve made. We do live on last month’s income, so to pay our bills in May, we’re actually using April’s income, and Personal Capital’s income trackers makes budgeting off our income a snap!
As you can see, in the last 6 months we’ve made $35,093, and in April we made about $5,400. So when we created our May budget, we based it off of $5,400 in income.
But besides basing our budget off of last month’s income, I really like to see how income stacks up against expenses, which is what the two lines above each month are comparing. Our expenses and income vary greatly, but each and every month we’ve trying our best to come up with new and inventive ways to save money. This tool let’s me know if we’re spending too much money.
Most people would agree that investing is boring. I actually like investing, but it can still be challenging, and sometimes not enjoyable at all! That is why I love looking at my portfolio this way:
As you can see, since we’re still paying off debt, we don’t have a whole lot of investments, but as our investments grow, I’m looking forward to this screen lighting up with our diverse portfolio!
Asset allocation is so important, which is the real reason I love this screen! All of your stock, bond, mutual fund, and other holdings are all condensed into one brightly lit summary for easy reference.
But if you want to dig deeper into one segment of your investments, a quick click will get you there.
As you can see, I hold the most value in Financial Services, Healthcare, and Technology.
Quite frankly, I tend to invest in index funds (after all, that’s what Warren Buffett uses) so I don’t pay a whole lot of attentiont to this tool, but it’s definitely fun to play around with.
Here is where we get down to the nitty-gritty of saving enough for the retirement. In a nutshell, Personal Capital makes it easy. Once you have a handle on where your assets lie currently, then Personal Capital will tell you exactly what you need to do to save enough for Retirement through their Investment Checkup.
You enter 3 minutes worth of information, and Personal Capital spits out this amazing Target Allocation
This handy diagram tells me exactly what my portfolio allocation need to be, according to the risk tolerance I’ve input, in order to reach my retirement goals. Of course, it’s still up to me to actually save the money, but with the Asset and Target Allocation tools, I have a blueprint for early (or regular)retirement!
If you remember one thing from this Personal Capital review, remember this:
Fees can eat hundreds of thousands of dollars off of your retirement savings.
Sure, 3% in fees may not seem like a lot on paper, but Personal Capital’s handy graphs and charts will tell you different.
Luckily, Personal Capital has a tool called Investment Checkup, which takes your specific saving and investing situation in account, tells you exactly what percentage you are paying in fees, as well as how much this can cost you over the course of 20 years. As you can see, I am paying 0.12% in fees each year, which is really very low.
If you want to specific breakdown of which funds are costing you the most money, Personal Capital lists them underneath the graph. The fees I’ll pay may not seem like much, at $62 over the course of 20 years, but remember, I only have about $1,000 invested. In order to retire, I’ll needed about $700,000, so if I do the math, that same fee percentage will cost me nearly $55,000 over the course of 20 years.
Why Not Mint?
I’ve used Mint for years, and I’m actually a really big fan of Mint Bills, because none of my banks offer free online bill pay. However, Personal Capital is like Mint.com for someone who want to have a complete handle on their finances. Personal Capital is 100% free and lays out not only your income and expenses, but your net worth, target investment allocation, fees and much, much more.
Personal Capital is similar to Mint, in that when I first signed up I had to link all of my accounts, manually add my home and car values, and let the system do it’s work analyzing all of my account. All in all it took about 20 minutes, which was time well spent.
I do still keep a small spreadsheet of our debt payoff progress strictly to show my husband because he gets overwhelmed by too much data (whereas I LOVE it) and we get really pumped to see our numbers keep falling and fill out our awesome Debt Payoff Thermometer.
Personal Capital provides all of my finances, all in one place.
And that’s why I recommend them. No more logging into 12 different checking, savings, and investment accounts. No more logging amounts on spreadsheets. And no more financial surprises.
Personal Capital puts every tool you need for budgeting, saving, and investing for retirement at your fingertips, completely free.
You can learn more about Personal Capital at their website.
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