Saturday, October 31, 2015

Understanding Finances: A Personal Account

In my personal experience, I have found that finances are complicated. I was 18 and it started out really easy, I was making just above minimum wage and I was paying rent to my mom. Then I started college, bought a car, needed car insurance, and kept making more and more money. I started wondering if I should get health insurance, which my employer did not provide. I bought a house, got yet more insurance, had friends whom I went out with, and of course, let us not forget the various consumer goods I bought, like my Xbox and TV. I spent 6 years in college, going part time because I was afraid of debt after amassing several thousand dollars in debt in the first year. I didn’t want to create more debt, so I choose safety over a speedy education. I also happen to be a self-learner, so I worked on learning software development and software testing over the years.

Then with the financial crisis I saw an opportunity. Like the Chinese curse, may you live in interesting times, I bought my house during the middle of the Great Recession of 2008. Towards the end of the Great Recession, I saw a nice house in a better location for me and I jumped at the chance. I decided that I could manage it if I rented out my other home, and I had always wanted to start my own business. This felt like a good place to start learning about running my own business. However, the only way I could do it was if I could get all the tax advantages from the rental. By this point I was struggling to keep track of what was going on. Adding a rental on top of it was making things too messy. I started with trying to create a simple rental management application. The more I worked on it, the more I saw I could generalize it to be about all my finances. And thus Money Pig was born.

Money Pig is not like some traditional financial software packages. It’s primary purpose is not just to try to enforce changes in your behavior by yelling at you when you’ve not saved enough but rather to allow you to gather insights about your finances. In looking to manage my money, I wanted something that would allow me to categorize my data and let me see trends. Then, as I was categorizing it, I realized how dull it was to do so by hand, so I built tools in to do it for me. Next up, I wanted to track what was a write off (from my rental or from donations), so I added that in too. I realized I wanted to see what the future would look like based upon my past year and I added another report. The next thing you know, this thing was making it really easy for me to tell how I was doing. I started telling my friends about it. They suggested features and I added a few. Then I stopped working on it. I changed jobs, life happened and I was only building it for myself.

I was talking with my boss one day, and he asked if I was doing anything cool with Money Pig. I told him no, I had not worked on it for some years. He then suggested, “If it’s that useful, why not sell it?” I started thinking about it. I had been slowly sharpening my business skills. I realized that other people might want other features, so I started adding some additional important features. I made Money Pig more secure. I made it support importing of CSVs support most formats, not just my banks. I made it easier to use. I started writing documentation. In effect, I made it what it is today. It no longer is just my Money Pig. It’s a tool for others to use.  It's our Money Pig.

So how do you understand your finances? While I can’t speak about specific cases, let me give some general guidance. You obviously want your income to go up, so keep your eye on that, particularly if you do not have steady income. If you have never done so, I suggest you hand-enter your entries in for a while. In doing so, you will gain insight into your finances. Just like in school, when you write things down, you recall them better. You can then start to see patterns and notice when something seems amiss. After that, importing financial data works just fine. You can then use the reports to notice things amiss rather than having to do everything by hand. When you do notice something odd, Money Pig allows you to write down notes about why some particular time was different than normal. You can also use a budget to keep track of your finances. These will help alert you to abnormalities in your finances. This will also help keep you from overspending or under saving.

I do want to pause here and make a few comments on my competitors. While I have found my methods work well for me, and I will continue to work to improve my software, I have no problem with you using my competitor’s software. I think it is better that you use what makes sense to you and make good choices than use a tool that does not make sense to you and make poor choices. Ultimately, I want you to succeed in your finances. Money Pig works for me, and in order to give you an opportunity to try it, I have a 30 day money back guarantee.

Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investing advice and/or professional financial advice. Always consult with a licensed financial professional.