Getting control of your personal finances in 4 easy steps

I wrote an email to a friend recently to help them get started in getting a handle on their personal finances and, since this is a topic I like to geek out on, I thought the info might be helpful as a post: 

1. Get a picture of your spending: 

Record every purchase for a month (or a week if that's too long, but the month will give you a better picture); this can be as simple as sitting down and listing all your monthly expenses (rent, utilities, memberships like Netflix, phone, cable, etc. car insurance, renters insurance, life and health insurance, debt service payments [like a car payment, student loans, etc], etc.), then carrying a notebook (or folded sheet of paper) with your wallet and just jotting down every time you use a card or cash; what I typically do is I pay for everything I can with a credit card, and keep all the receipts in my wallet, then about once a week I record all the receipts in an app called goodbudget.com (for cash purchases I record them in the app as they happen). It's really simple, but is set up more for once you have a budget set up, so initially you'd just be recording everything as an unassigned new expense.

A great tool for this if you take the time to set it up is Mint.com which you can connect to your credit cards and bank accounts so it will track all your spending for you (you'd have to record cash manually); that said, it takes some time to set up, so I wouldn't see it as a first step, more something to pursue if you find you like this process.

2. Look at the data: 

Add up everything you spent and compare it to your income. The difference is how much you have available to save. Think about the results: sometimes recording all our spending confirms we're where we think we're supposed to be; more often it surprises us with what we're actually spending. The simple process of recording is a hugely helpful tool for getting control because by becoming aware of where the money's going we get more control.

3. Determine a budget: 

Things like rent are fixed expenses but need to be accounted for in the budget; things like food you can decide how much you want to spend on it through choices like eating out vs. preparing at home (here's a great crash-course in starting to prepare food at home while spending at the same rate as the SNAP program).

I use a "simple digital envelope system" I've developed to deal with our finances: I use a spreadsheet to list out all the reoccurring monthly expenses, then I decide what I want to spend in each of four categories ("envelopes") on a weekly basis: "Fun" (eating out, going to movies, buying books or gadgets for pleasure), "Groceries" (just the food we eat that we prepare at home), "Misc." (toiletries, clothing, household goods, etc.), "transportation" (gas, train/bus rides, bicycle expenses, oil changes, auto repairs, etc.). You make these categories in the goodbudget app and then record each expense (or go through your receipts at the end of the week), in order to keep up with the weekly spending (since the monthly spending stays generally constant. (Things like utilities you can average your yearly costs to get a more accurate monthly picture than just what you spent last month given heating and cooling drive up these prices.)

I find the simplicity of this system works really well for me. I have friends who like a much more complex budget tracking system and if you want to get real specific about separating into multiple categories you can do that; it's more a matter of personality in my opinion. There's a great app called YNAB.com ("you need a budget") that is free for a trial period then you pay a small fee for it; I've heard good reviews, but I haven't tried it out because I already have a system that works for me. 

Here is a sample spreadsheet I used when I set up our budget years ago (with numbers randomized for privacy but somewhat representative) so you can see how you could format one: I put in my monthly income from various sources at the top, monthly expenses next, then weekly "budget envelopes" (called that because the old way of doing this was putting cash in physical envelopes at the beginning of the week), multiplied by 4.34 (how many weeks there are in the average month) to show me what my monthly expenses are.

4. Continuing ed: 

Start delving into free, online learning about personal finance. It's really a fun field, and it gives you a great sense of personal control, and even of personal wealth and ability. Mr. Money Mustache (Pete Adney) is a guy who writes about personal finance, being frugal, and lots of other life-hacks--he retired at 32 and has been living on the savings he built up working for 10 years after college for the last 12+ years. There's a whole genre of blogs and a growing group of people called the "FIRE" community ("financial independence/retire early") who are into this. Other good blogs or podcasts are choosefi.com, millennial-revolution.com, radicalpersonalfinance.com. I started with the first article at Mr. Money Mustache then read a few in sequence until I got distracted by other articles on random topics that seemed interesting to me.

A great tool for tracking your net worth (how much money and assets you have vs. how much debt you have) is Personal Capital (the link is my referral link). I'm not saying I recommend or don't recommend their financial advising services, I just find their personal asset tracking tools really useful: you link your bank, credit, mortgage, investment and retirement accounts and they will show you where everything stands. They have a great tool that will analyze your fee costs so you can see how much being invested in a particular retirement plan, etc. is costing you. They will start reaching out to set up a free advisory session--I never followed up on this and they eventually stopped reaching out...

Like I said above, I like to geek out about this stuff, so I'm happy to talk anytime if someone would like pointers setting anything up or talking through their situation!

Main Street, East Greenwich, RI

A description of Main Street, East Greenwich, RI, where my father grew up:

Old East Greenwich was about one square mile in size. The town’s borders ran from the water front of Greenwich Cove West to about Kenyon Avenue. It ran north to South starting at Division Street at the north to about First Avenue on the south. Most Of the homes and businesses were located on Main Street, King Street and Pierce Street. 

There were a little over 200 homes built in the 1700’s and 1800’s. About six homes were built in the 1600’s. Old Main Street has about 80 houses, businesses, churches and public buildings. Main Street is also known as the Post Road, Route a1.... Main Street was a dirt road. It was mud most of the time. In 1889 stone was taken from what is now Eldredge School field, crushed, and used to macadamize Main Street. It was the first paved road in the town. In 1900, a trolley ran to Providence and to Narragansett. The tracks were removed in 1928.... 

One of the charming things about early Main Street was that it was lined with beautiful Dutch Elm trees for the full one mile length of the street. In the mid 1930’s the trees were struck with the Dutch Elm Blight. The town tried to save the trees by spraying them. It helped for a short time. In 1938 the hurricane took a toll on the Elm trees. It was hard for a tree to hold up to 186 mile per hour wind. Those trees that survived were cut down when the Main Street was widened in 1940. Recently I asked a number of my classmates, all who are in their mid 80’s or late 80’s, what their most fond memory of East Greenwich is. They almost all said it was the Main Street with all the beautiful Elm trees. 

In the early years parking on Main Street was not a problem to do shopping or do business. Since most people lived not much more than a half mile from Main Street they walked. People walked to work in town and the children walked to school. Just about everything you would want or need could be found on Main Street: armory, post office, candy store, bike repair, barber shop, drug store, hotel, private homes, beauty parlor, grocery stores, hardware stores, liquor stores, clothing stores, shoe stores, shoe repair, banks, churches, restaurants, blacksmith, auto sale & repair, gas stations, bowling alley & pool hall, municipal buildings, fire station, funeral parlor and telephone exchange. Shopping was easy on Main Street.... 

Until 1940 when Main Street was widened there was a hitching post, horse water trough, the town pump and a fountain in front of the court house. The water fountain was moved to the Eldredge School when the Main Street was widened in 1940.  

Over the past 100 plus years there have been over a dozen major changes to Main Street. Not all of these changes have been in the best interest of the citizens. A number of homes and structures that I knew as a youth are gone on Main Street. 

The first home that I recall being razed was a very stately home on the corner of Main and Division Street. It was a very large three story home with three chimneys and a porch on the second level overlooking Maine Street. The home was built in 1749 and razed in 1930 to make way for the Post Office Building.  

Of all the buildings razed on Main Street the razing of the old Town Hall was a crime. The justification for its removal was that it was costing too much to retain.The building was built in Queen Anne style in 1885. It had a 70 foot bell tower with four clocks that chimed the hour 24 hours a day. The clock bell could be heard all over the old town. The clock bell weighed 12 hundred pounds. The building was razed in 1964 to make way for a parking lot.  

Next door to the Town Hall on the south side was the First Rhode Island Central Bank. It was built in 1759 and was razed in 1938 to make way for the construction of the F. W. Woolworth 5 & 10 Cent Store. 

Our Lady of Mercy Catholic Church which was built in 1867 was razed for a small shopping center in 1960; the parsonage and carriage house were also razed. 

A house on the corner of Maine and London Street, built as early as 1712, was razed in 1940 to make way for a gas station. 

At the start of World War Two, the USO Building was constructed on the corner of Greene and Main Street. It was used as a facility for service men. After the war, it was converted to a movie house. In 1995 it was razed to make way for the Centreville Bank Building.  

The Union Block was made up of nine two story wooden homes that were rented to the Union Mill and Drysalter workers. They were located on the corner of Greene and Maine Street. They were torn down in 1954 to make way for a new shopping center. 

A home built in the early 1712’s once stood on the corner of London and Main Street. It was razed in 1940 to make way for a gas station. 

In the 1900’s the following very old homes were razed in the name of progress: 

The Second Rhode Island Central Bank, built in 1840 once stood on the corner of Division and Main Street. It was razed in 1913 to make way for the building the Varnum Memorial Armory. The armory had two very large Rodman Cannons from the Civil War mounted on each side of the entrance. The cannons were donated to a World War Two scrap drive. 

The Cook-Lawton House once stood adjacent to the Methodist Church on Main Street. It was built in 1803. It was razed in 1924 and a one story brick bank building was built. 

The Joseph Greene House, known as “The Sterling Castle” built in 1776 was located on the corner of Pierce and Main Street. It was razed in 1956 and is now a parking lot.  

The Mowry-LeBaron House once stood on the corner of Church and Main Street. It was built around 1790. It was moved up the hill to make way for the building of the Masonic Lodge Building. It has since been razed for a parking lot. 

The Judge Loomis Home originally located on the corner of Melrose and Main Street was moved halfway up Melrose Street to make way for the building the Greenwich Theatre in 1925. The Loomis house was jacked up, put on rollers and pulled up the hill by a large team of horses. The Loomis House was built in the early 1800’s. 

The Brick House located on the corner of Long and Main Street was across the street from the fire station. It is one of the oldest buildings in East Greenwich. Built in 1767. It was the first brick home in town and was a Georgia-style brick building. When rumors started to circulate that the Fire District planned to purchase the Brick House and raze it for use as a parking lot for the fire station across the street, the founding members of the Preservation Society took action and in March 1968 bought the historic Brick House to save it from destruction. Preservation of the old Brick House was the Preservation Society's first project. Today the house is listed in The Register of Historic Places. 

The Jewel in the Crown of all structures on Main Street is The Kent County Courthouse. It was constructed in 1806. When word got out that there were plans to raze the building and replace it with a modern structure the citizens became alarmed and put a stop to the rebuilding plan. This is a good reason that we should support historic or preservation societies.  

In the last 100 years 14 or more very old homes have been razed, but we have gained SIX or more PARKING LOT. Time often takes away the ugly and beautiful.

-- Glen King

While there is change throughout, note that in the 1920s the trend is to move, not raze, buildings; note also that the trolley tracks were removed in 1928, as the auto industry bought up trolley companies and destroyed them to leave no competition for automobiles. Also note that the trend of converting historic places to parking lots accelerates in the post-World War Two years once the auto-dependent development model had time to design zoning, codes and tax-structures to support an economically unsustainable system.