Financial Plan

I have been on a 2 year odyssey to get my financial life in order. Mostly I've failed. I started by reading lots of books which generally said "do this" but never explained why. Over the next few weeks/months I'm going to try and summarize what I've learned.

Step 1 –

Buy "Get A Financial Life". There was nothing in the book I didn't know but reading it forced me to clean up a bunch of financial loose ends and gave me the websites/companies I needed to do the clean up relatively painlessly. The book has so far saved me several thousand dollars by making me do things like comparison shop for auto insurance and get a cash back credit card. Here are some of the choices I made as a result of the book:

Chapter 2 –

Microsoft Money is so much better than Quicken it's embarrassing. The only reason I use Quicken is that their web site connections are so incompetent that they are easily avoided. Money, on the other hand, slickly tries to force you to put your data up on the web. I suspect that Microsoft's dream is to get rid of Money as a product all together and just sell it as a web service. That isn't a dream I share so I stick with Quicken, flaws and all. Let us pray for GNU Cash.

Chapter 3 – Credit Cards –

I found the creditcardgoodies website which is intended to help people who pay their bills in full find the best card. Their discussion section had some good leads. It lead me to a picture on moneybb that really helps show just what the real cash rewards are for various cards. Based on what I've learned I have decided to get the following cards, each one is a cash back card that gives you a certain percentage of your spending back in the form of a cash "reward":

American Express Blue Cash –

  • Cashback – 1.5%/3% mixed rate, see the website for details.
  • Maximum Spending that Qualifies for Cashback – $50,000/year
  • How you get your money – Once a year a credit will be placed on your bill
  • Foreign Charges – 2% fee

[Note: If you have the old American Express Platinum Cash Rewards card make sure you keep it. While it only offers a 1.5% rate it has no maximum. So if you need to make some enormous purchase it may come in handy. You are allowed to move your credit limit between cards so if you need to buy something really big you can just move the majority of your limit over to the Cash Rewards card and when you are done move the limit back to the Blue Cash card.]

Principal Bank's Platinum VISA Cashback Card
[Updated – 10/18/2003 – Unfortunately Principal has sold out their card and changed their cash back structure to a much less favorable form. Finding a replacement card isn't a real high priority for me right now. If someone does the research and finds a better Visa/MasterCard cash back card with above 1% payback, no fees, low foreign charges, designed for people who pay their bills in full please mail me at yaron @ goland dot org and I will update the site.]

  • Cashback – 1.25%
  • Maximum Spending that Qualifies for Cashback – $48,000/year
  • How you get your money – When you earn $100 in reward (e.g. spend $8000) they will credit it to your account
  • Foreign Charges – 1% fee (I need to confirm this)

Chapter 8 – Insurance –

See my dedicated article on buying Auto and Renters Insurance.

Picking a Long Distance Carrier –

Consumer Reports (if you aren't a member, why not? If you want honest, independent research into consumer products then you need to pay for it so go get your membership) pointed me to Telebright. I also noticed that my local phone provider has 'all you can eat' long distance plans that are bundled in with their normal service. Between Telebright and my local phone company I found five plans that looked interesting. To figure out which was the cheapest I took my long distance bills for the last few months and my local phone bills for the last few months, created a spreadsheet and then plugged in the numbers for things like monthly fees, interstate calls, international calls, etc. Yes, it was a pain but the results should save me around $20 a month or $240/year. Not a bad return for about an hour's work.

Long distance rates only go down so you periodically have to check the latest rates. For example, a little over 6 months ago I thought I was a genius for finding a long distance provider that gave $0.045 a minute anywhere in the U.S. But the best rates now are around $0.03 a minute, 33% cheaper. I can't stress how important it is to use your real phone bills in picking a long distance provider (or a package deal). Because I work at home I'm on the phone an average of twelve hours a month. The actual number is probably twice that but a lot of my calls are to 800 based conference bridges so the total minutes don't show up on my bills. The best plan for me (which happened to include a minimum monthly fee) may not be the best plan for you.

Buy TaxACT

I now have the dubious distinction of having used all three main tax preparation software choices – TurboTax, TaxCut and TaxAct. I realize I could avoid having to buy any software at all by using one of the on-line services (TurboTax/TaxCut/TaxAct all support online versions) but I have too much familiarity with just how good (or bad) on-line security even at 'sensitive' institutions really is to ever trust posting a complete guide to my financial life to a website.Last year I used TurboTax and I thought it was pretty nifty. But I won't use it this year because of its new licensing terms which essentially say 'you pay per install.' Let's say you install TurboTax on your machine and you need to re-install your OS or even just install it on another machine that you would prefer to use. You will be forced to pay another $30-$40. It's awful and I won't pay.

BTW, for what it's worth, the reason Intuit did this is because they believe they are losing enormous amounts of money by people sharing TurboTax CDs. E.g. person A would buy the CD and then, when finished with their taxes, would lend it to their friends. By only allowing one install per purchase Intuit can force everyone to buy their own copy. It's like having a policy such that if you buy a book you have to nail it to your wall.So I then made the mistake of believing the reviews and decided to buy TaxCut. It's awful. The UI is a hacky mess. The q/a is useless. The instructions are opaque. It has bugs that cause all sorts of problems and it crashes. The whole user experience is really stressful which is the last thing you need when filling your taxes.I did successfully finish using TaxCut but I didn't trust it so I decided to pay $10 and buy the deluxe version of TaxAct. IT ROCKS! The UI is very simple and the instructions are clear and easy to understand. I managed to fly through my taxes and the result was within a few dollars of what TaxCut said I owed. TaxAct isn't perfect but when I ran into problems (I needed to enter two tax forms it didn't ask me about) it was trivial to fix (they have an incredibly simple listing of all possible tax forms you can receive, just select the forms you need).TaxAct doesn't import data from Quicken or Money but honestly – why would you want to? I used import with both TurboTax and TaxCut and it was a complete waste of time. The programs just dump the data in and don't really understand it well so you usually end up having to delete all of it anyway. It also doesn't have 'online' download of W2s. Since it takes about 2 minutes to enter a W2 I really don't care and besides not one of the five W2s that my wife and I had between us were from companies that supported the download function.If you want a quick, easy, simple tax program at a price you can't beat then go for TaxAct.

3 thoughts on “Financial Plan”

  1. I concur on Microsoft thinking of doing away with Money and making it a web service only, but many people don’t trust putting any data on the web – especially if it is linked with Passport.

    Microsoft recently announced the end of MSN Money Plus (see this link), so perhaps they have the message?


  2. I hope you’re right because my patience is running thin with my current money program, MoneyDance. The program has had a lot of promise for many years but I keep waiting for the promise to be fulfilled. Its reports in particular are just awful. On the other hand I’m on OS X so my choices are limited if I want something that runs locally.

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