Probably a year or two ago I was working on the budget and came across Mint.com. Then I saw that they actually expect you to give them your log in information for all the financial institutions you do business with. Oh, hell no.

Looking at the reviews and the numbers of people who are ignorant enough to join the site it’s a colossal epic fail waiting to happen. I don’t even store my log in information for my banks and credit cards on my personal computer. Mint.com is a hackers dream come true. Getting access to their database would grant unlimited access to your finances and the finances of possibly millions of other people.

I’m not sure what kind of guarentees Mint.com is making to protect your money but I’m not willing to take the risk. That’s why my personal finance management site just makes you enter in various information manually. Account numbers and logins are not asked for or required for any of the site’s functionality. Sure it takes a little more effort but it minimizes the amount of information it needs. You don’t need to know that you spent $5 on a latte last month to do your budget properly.

In fact, any budget that expects you to go through the line items on your credit/debit card statements is wasting your time and your money.

It’s wasting your time because the money is already gone and it’s not coming back and it’s wasting your money because it’s giving you the impression that anything more than ZERO DOLLARS is a valid amount to budget for unnecessary crap.

If you want to get a grip on your finances you first need to stop pretending that you can budget for things you don’t need. “I budgeted $50 a month for coffee so it’s okay that I spend the money.” NO IT’S NOT.

Every penny that isn’t demanded by a bill that some company sent you is savings. You’re not making use of your budget to buy coffee. You’re spending your savings. You’re spending your savings on food and gas. The sooner you get that attitude about things the sooner you think harder about wasting food and wasting gas.

If you want to insist on budgeting for gas then this is the way to do it:

1) keep track of how many miles per gallon you’re actually getting
2) calculate the number of miles to and from work
3) multiply by 260 (5 * 52)
4) divide by the miles per gallon
5) multiply by the price of gas rounded up to the nearest dollar
6) divide by 12

That is the dollar amount of gas you’re allowed to budget for a month. Everything else is coming out of your savings. You can do without driving on the weekends but you have to get to work or you lose your job.

See the whole point that Mint.com misses by micromanaging your money is that it’s not telling you the minimum of what you should be spending. It’s telling you what you are spending. If I find I’m spending $200 a month on gas that doesn’t mean anything unless I know that it only costs $50 a month in gas to get to and from work every day. Now I know I’m somehow managing to waste $150 a month on gas.

And I don’t need to know where my money is going to know it’s being wasted. I know the minimum amount of money I have to spend every month to cover bills and pay for gas to get to work. Every day I simply say to myself “today I will not spend any money.” And I keep my money away from me during the day to make that happen.

Managing your budget is not a complicated process. And it’s certainly not a good idea to give out your account details to a web site no matter how secure they claim to be even if they promise to help you manage your money. It’s unnecessary and dangerous.

One of the harder things to do when getting your finances in order is overcoming cravings. Lots of people, if not everyone, has a list of items they would like to buy. Some of those items are day to day things like getting your favorite fast food for lunch or dinner.

To help cure your cravings for little day to day expenses you can make yourself “wallet broke.”

The first step to becoming “wallet broke” is making a budget that only includes the monthly bills you must pay. This includes the minimum payment on any credit cards you have. The total of these bills is the amount of money that will be taken out of your bank account whether the money is there or not. So there’s the motivation to not spend that chunk of money.

Now, you probably see that you have money left over. After all you didn’t include food, gas, entertainment, etc. But those expenses are made on the spot. They’re not scheduled and automatically withdrawn under threat of dings to your credit if the money isn’t there. So take the money out of your checking account. I like to leave at least something in my checking account. That extra money rolls into the next pay period and only after the next pay day do I re-evaluate the extra funds and what to do with them.

I like to keep cash on hand. However, it’s generally not a good idea to have wads of cash on hand so move most of the extra money to a savings account and just keep some of it as cash. The point of having cash on hand is that it deposits instantly and is accepted everywhere. It also can’t be spent if it’s not in your wallet.

And that is the key to being “wallet broke.” By reducing your bank account to have only the funds to cover the bills that must be paid it’s very easy to not bust out the bank card for day to day expenses. Because you know if you do you could miss a very important payment and suddenly be in a world of hurt. So even though you keep your bank card with you “just in case” it’s very easy to not give in to a craving for fast food or a shiney trinket. The bank card is just enough to fill up your car with gas one or two times.

The second part of being wallet broke is not carrying cash around. That’s right, you keep cash on hand but you don’t keep it in hand. If I know I need to fill up my car with gas that’s a legitimate reason to grab a $20 from my stash and that’s all that goes in my wallet. So when I’m out for the day I only have $20 and I have to put it towards gas or I won’t be getting to work.

You could convince yourself that you can just grab another $20 when you get home but while you’re out you have several hours to think that plan over and suddenly the craving for whatever it is you wanted is gone. You fill up your tank, you go home and the desire to put another $20 in your wallet is gone.

The whole point of being wallet broke is keeping that constant feeling that you “can’t afford it.” And eventually “can’t afford it” turns into “I don’t really want it anyway.” And maybe down the road your wants will go away completely. HA!

It’s not about getting rid of your wants. It’s about becoming conscious of money. You can have the things you want. You’re just learning to control your impulse spending so the things you want are the things you’ve really thought about. Not the things you made 2 second decisions on.

From day to day I want fast food. But I recognize that I’m wallet broke so I can’t afford it in the moment. The moment passes, I avoid wasting money. I also want a new server, a big screen tv and a sleep number bed. I’ve wanted those things for a long time, so for the next several months to a year I take the money I’m not spending on impulse buys and put it away and in not too much time I’ll have all those things without going into debt.

So to sum it up, being wallet broke means:

* carrying around a single bank card that only has enough extra money to cover one or two tanks of gas
* not carrying around cash except when you know exactly how much you need for a predetermined product (gas, food, trinket, etc)
* not having any credit cards in your wallet

Years ago I came up with the idea for “Bank of Ben” after sorting out a lot of financial issues but it never really went anywhere. Then in the last several months I started dealing directly with finances again and started looking at ways to simplify my financial life. And after developing a system using Excel that seemed to be doing rather well it was time to take it to the next step: put it on-line.

Bank of Ben is a financial tracking and planning web-site to help you manage your monthly bills and get out of debt quickly. All your information is entered by hand so you don’t have to enter in account access information for your real bank accounts. It also features a blog with financial tips to help you take control of your own finances.

Bank of Ben also takes over the role of “Stocks!?!” which is a stock portfolio tracking tool. You can now enter in your stock portfolio information at Bank of Ben and track performance. If you had an account with “Stocks!?!” it will work with Bank of Ben and all your information will be available. Both sites make use of the same information. “Stocks!?!” will be shut down soon.

With Bank of Ben you can

* Manage your monthly itemized budget
* Track your investments
* See how much your credit card debt is really going to cost you
* See how much your loans are really going to cost you
* See how you can pay off all your debts quickly and minimize interest fees

It’s very easy to say “I want to be debt free” and come up with a plan so that in some number of years you are debt free. But what you may not even consider is that focusing on being debt free may end up costing you money in the long run.

The above chart represent two scenarios. The blue line represents paying the minimum amount due on each debt and then putting the payment into some interest earning account until 30 years have gone by. So let’s say I owe $100 a month on a credit card and in 2 years it’s paid off. For the next 28 years I put $100 a month into an interest earning account.

The purple line represents the debt focused mindset. As debts are paid off the payment is applied to the next highest interest bearing account. Money isn’t put into an interest earning account until all the debt is gone.

The interesting thing is that until I start earning about 6% in an interest earning account, it’s best to just throw my money at debts. But, if I can get more than a 6% return somewhere else it’s better to just put the freed up money that was paying debts into the interest earning account.

At the end of 30 years with a 10% annual return on investment I’ll have $360,000 more than had I worried about paying off all my debts first. The sum of the remaining debt is far less than that so I end up ahead overall.

So sometimes it pays to not worry about debt.

There are two key steps to paying off your debts in a reasonable amount of time.

Step 1: Stop creating new debt
Step 2: When a debt is paid off apply the payment to another debt

That’s called “snowballing.” Imagine you have 5 credit cards and you’re paying $100 on each one every month. That’s $500 in total payments. Several months down the road one of the cards is paid off. You may be tempted to relish in the fact you’re only paying $400 a month now in credit cards but the smart thing to do is keep paying the full $500 on the credit cards until they’re all paid off. By the time you get to your last card you’ll be paying off $500 a month on it.

Snowballing of course assumes that your level of income won’t go down and that you can live comfortably at your current level of income.

Otherwise you’re going to have to take the money you were paying on the now paid off credit card and pay regular living expenses.

I did a little experiment and snowballed my credit cards, my mortgage and my student loans. By snowballing all the payments starting with the credit cards and ending with the house I would be debt free in 17 years. I’m in the process of creating the “Bank of Ben” which will be a personal finance site. One of the features that it will have is to be able to show you how to snowball to save the most amount of money and get out of debt the fastest. It’ll show you month by month how your payments are being applied.

You’ll also be able to track your credit card debts, student loan, home and vehical debts and put together a budget. The site won’t require your usernames or passwords to your various accounts. I’d rather do a little more manual work than risk having financial account information stolen.