Moneywell impressions, part 2 - square pegs and round holes

Continuing with my posts on Moneywell...

One of the complications I have with my envelope system is based on the fact that I get bi-weekly paychecks.  (There was an effort a few years ago to move to paychecks on the 1st and 15th of every month, but the union membership shot it down. It seems obvious to me that nobody in the union budgeted their money -- twice-monthly paychecks work sooooo much better).

This bi-weekly paycheck thing complicates my budgeting. Moneywell has a very nifty little spending plan setup to help automate the allocation of salary into buckets, but it doesn't work well for us bi-weekly check folks working in a monthly billing universe.  A small example will demonstrate this:

Let's say you've got a bill that runs $100/month.  Over a year, you're spending $1200.  Us bi-weekly payday folks get 26 paychecks a year.  In theory, I should be setting aside $1200/26 = $46.15 per paycheck to pay this bill. (That is, in fact, what Moneywell will say).

But here's where theory comes crashing into reality.  Let's say I get paid on January 6th and 20th, and the bill's due on January 27th. If I put away my $46.15 after Jan 6 and 20, I only have $92.30 set aside for my $100 bill -- I'm $7.70 short when the bill comes due.  Sure, it'll all work out eventually, but here in the short term I'm hosed.

Moneywell impressions, part 1 - buckets are not categories

As I mentioned a few weeks ago, I gave Moneywell a whirl.  Overall, I don't think Moneywell is going to work well for me, but your mileage may vary.

Moneywell supports the envelope theory of budget management. In Moneywell, every time you get some cash in, it turns into an inflow, which you can then allocate to different areas. Traditional envelope theory has you cashing your paycheck and getting paper envelopes; Moneywell uses the idea of buckets.

I guess my big problem with Moneywell's bucket implementation is the difference between buckets and categories.  Take, for example, my insurance bill. I've got life, auto, and home insurance with the same company.  The bill is monthly and fairly regular (maybe adjusting once every six months as a new auto premium is calculated), and there's just one bill that combines all three. From a bucket-budget planning standpoint, I just want to have one bucket -- "insurance" -- that money moves into and comes out from.

But, every once in a while, I want to be able to look back and get more granularity.  If I was shopping around for a different auto insurer, I might want to look back and see how much I had been spending on auto insurance. 

There's the rub with Moneywell -- if you want granularity, you need more buckets -- one per grain, so to speak.  But...the more buckets you've got, the more complicated every payday gets, and most of the time, you don't need that much detail.

New Year's Resolution

I'm making the leap.

I'm tired of Quicken.  I'm also tired of using Quicken plus two spreadsheets to keep track of money.  It's time to put my money where my mouth is and start using a different money management system.

I've spent a couple of hours messing around with MoneyWell.  Why MoneyWell?  Couple of reasons:

1. It does the envelope method.  (MoneyWell calls them buckets instead of envelopes)
   
2. It has a free trial, and the license costs $40 if I decide it's worth it (vs $60 for Quicken)
3. It looks like they've got nice support (including video tutorials)

Even with the video tutorials, MoneyWell has taken some work getting started.  I've got a savings account where I keep money I'm accumulating for future expenses (everything from the cell phone bill to property tax), and it took some figuring to get that all set up with the proper amounts in each bucket.  I'll post more thoughts as I go along.