Personal Finance 

Personal Finance Users Guide

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In my listing of goals for 2008, I wrote that I’d develop a Financial Users Manual based on an idea by Five Cent Nickel. Well, first things first, I’m renaming it to “Personal Finance Users Guide,” which I think is a more descriptive name for it. Here’s what I intend to put into it.

Chapter 1: Bank Accounts

Every bank in which we hold an account along with the login username, account number, and bank contact information. We won’t put the password in the document since most online places have a Forgot Password? feature we can leverage. There will also be a note as to the general purpose of the account so we can quickly remember why we have it in the first place. Notes could be something like “emergency funds savings” or “balance transfer arbitrage funds,” so nothing terribly fancy, just something that will refresh our brains. Also, if there are any atypical things, such as safe deposit boxes (we don’t have any but it’s worth noting that we don’t have any), it’s good to note those as well.

Chapter 2: Credit Cards

It’s crucial to have a good list of all of your credit cards, the last 4 digits (you won’t need more than that written down), card contact information, your online account access login username, and a little note about the general purpose of the card. If you’re adventurous, you could expand the information to include the benefits of the card (% cashback, etc.). This would also be an excellent time for you to do a credit card audit, closing or consolidating credit card accounts you no longer use (thought closing an account may affect your credit score). Having a list like this is valuable not only from a planning perspective but in the event you lose your card, you have a good list of what you had along with the card contact information so you can act quickly to report the cards as lost or stolen.

Chapter 3: Brokerage & Retirement Accounts

Again, every brokerage and retirement account along with the login username and account number. It’s important to get this on paper because it’s easy to forget these accounts because they’re very much on auto-pilot. For example, I have two Sharebuilder accounts when I took advantage of their free money promotional offers – I didn’t remember that until I was writing this article, so imagine how hard that would be in 40 years! Again, each one of these will have a note indicating the general purpose or origin.

Chapter 4: Insurances

The basics are homeowner’s, auto, medical, vision, and dental insurances. Beyond that you start talking the various flavors of life insurance, disability, etc. You’ll want to list all of them along with any general bits of information you might find useful in a crunch such as phone numbers, account/plan ID numbers, etc. The key here is to give a snapshot without having to do the work of digging it all up so putting that together is important. Also, if you do anything like a home inventory for your homeowners insurance (or have photos of your car, etc.), you’ll want to reference those documents and their location so you can locate them in a bind.

Chapter 5: Debts

Who we owe, roughly how much we owe, the monthly payments, the general duration of the loan, the contact information, the login username, and a general note as to the purpose of the loan. For us this will be pretty easy because we only have my student loans and the mortgage and both are fixed and easy to understand. By putting it down on paper, it also forces us to understand the importance of this debt and how it affects our overall financial picture. It also allows us to contact them easily and quickly should the need every arise. I think that if you start putting credit card debts and ones that vary in terms of monthly payments, duration, etc. it will start to get trickier but having general figures here to give you the overall picture is still valuable.

I have no idea how I completely forgot this huge category, much thanks to Fred at One Project Closer for reminding me (see! the power of blogging!).

Electronic Transfer Map

Now that we have all the accounts in one place, another crucial piece of the puzzle is knowing, at a glance, which accounts are connected to which accounts via electronic transfer. For example, my Emigrant Direct account is connected to my main local checking/savings account pair and my former employer’s credit union. My E*Trade account is only connected to my local checking/savings account pair. If I want to transfer funds from Emigrant to E*Trade, the only way I can do that now is by going through my local checking/savings account. Why not link everything together? Sometimes you simply haven’t gotten around to it and doing this sort of audit will inform you of that. Sometimes you don’t feel comfortable having everything link to everything, a little obfuscation never hurt anyone! Finally, sometimes accounts won’t let you link to other accounts without a voided check. In those cases, you have no choice but to go the roundabout route.

Next Best Alternatives

In the case of insurances, it’s always good to list not only the active #1 but the details of Alternative #1 or Alternative #2 if you have the information. For example, when I played around with finding out how my age affected my car insurance premiums, I had some good information about alternative insurances. All I would do is list Alternative #1 (and maybe even an Alternative #2) underneath my current active insurance along with the date of the quote. Perhaps in a year or two it’s worth revisiting, but at least I have good information on what was competitive the last time around.

Annual Reviews

A guide is only valuable if it’s current and so, at a minimum, annual reviews are a must. I think that I will update it as things change but annually the whole guide has to be looked at to ensure it’s current. This is also a great time to request a federally mandated free credit report and see if your guide matches up with the records the credit bureaus keep. If they don’t, you are now well enough informed to notify them of the corrections they need to make.

I’ll be doing this comprehensive user’s guide over the next few days (or weeks) and afterwards I will have a template I will share with you all and ask for your feedback.

Does anyone see a “section” that I should include but missed?

{ 8 comments, please add your thoughts now! }

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8 Responses to “Personal Finance Users Guide”

  1. ChristianPF says:

    This is a good idea… I do something similiar – I keep all of the pertinent information on my balance sheet, so I have all my necessary account numbers, logins, urls, phone #s, etc in one place….

  2. RacerX says:

    The one thing I would add is about working your carrer planning as well. It is were, most of us anyway, get our pay. Just a 1% per year extra would have a huge effect of your potential net worth.

  3. Fred says:

    The more recent versions of Quicken are beginning to integrate much of the data you mention here. That said, I think everything you mention is valuable to have organized and stored safely. I would add that you should collect the insurance policies, and your book, and store them together in a fire-proof safe. If you’re safe is hard to move and you’re careful about not leaving it unlocked, you could also store the password information there.

    Answering your question: I would definitely include a section in the book for debts (other than credit cards), to include things like mortages / car loans, etc.

    Related to insurances: a future post subject idea> I received a mailing today from MetLife that said, “if you’ve been with your car insurance company for more than 3 years, you’re probably paying too much.” I wondered about whether this was really true. Is there really a time-lapse point at which your car insurance company is taking advantage of you?

    One Project Closer

  4. Flexo says:

    This is a great idea. I should implement something similar. In the wrong hands, though, it can be a dangerous weapon, so I’ll have to take care.

  5. Ben says:

    How about something regarding taxes?

    -How much paid last year (state,federal)
    -How much is being withheld per paycheck/how much paid year to date
    -Any upcoming tax-worthy events (salary change, dependent change, unusual losses or gains)
    -Any tax moves to make for the year ahead

  6. Scott says:

    Forgot a big one- Legal. Wills, Powers of Attorney, Trusts, Land Trusts, Buy-sell Agrrements, LLC, Lease-buy backs, Limitied partnership agreements.

    And along with Legal is how each asset is titled: How is it held? Individual, Joint Tenets, tenents in common, Individual Transfer on Death, Joint with Right of surviorship, Joint Transfer on Death????

    And, Beneficiaries? they the same? different, need to be updated because Uncle Phil is in prision? Nanacy and Dave are divorced now? Sally had a new baby? Stella got married to a guy with three kids of his own.

    Finally, taxes: not just federal and state…the AMT going to whack you? Estate tax limits and how close are you(dont forget to include the life insurance, it goes to your benes income tax free, but is kept in your estate at your death.)

    Don’t forget expenses, like debts, it is helpful to see where your money went and then you can figure out if it needs to continue. $5.00 a day for Starbucks? $15 a month in foriegn atm fees. Adds up.

    Oh, and I like to keep track of income sources, both current and projected. Salary, pension, SS, disability payments, divorce decrees, injury settlements etc and how long will income stream last and how are they taxed.

    My folder/binder has 10 tabs. Not saying yours should, but for sure a legal section.

  7. Tony says:

    speaking of beneficiaries, don’t forget to make sure you have them listed for IRAs as the beneficiaries listed for these accounts supersede any you may list in a will for those assets. For example, now that you are married, if you don’t make your wife the IRA beneficiary, she won’t get a dime no matter what it says in your will.

  8. Paul Petillo says:

    I wrote a book in 2004 “Building Wealth in a Paycheck-to-Paycheck World” (McGraw-Hill) that has each of those chapters fully realized and quite a few you forgot. It takes you a comprehensive step-by-step journey through the world of personal finance.

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