Getting Rich Slowly (The Non Conformist's Guide to Personal Finance)

Oh its not my idea.

Please read the whole article at http://www.getrichslowly.org/blog/2008/06/26/the-nonconformists’-guide-to-personal-finance/

And I am impressed by the article.

Oh just to revisit some of the principles mentioned there:

• Emergency saving funds (I usually have them, but seem to be doing bad on this count these days)
• paying off credit card balances every month ( I religiously follow this. Never paid a single penny extra to the credit card company)
• being aware of all your expenses (I try hard but am not good at it yet :( basically I try to keep everything in my memory and its not a good idea)
• using a cash method for discretionary spending (this is a good idea)
• long term index-fund investing (still to understand it)
• there is no such thing as a good debt (home loans, car loans, education loans, all are bad in the end, they constrain your freedom)
• a house is a liability not an asset (so true except for those who are in real estate business ;) )

Actually the article is about much more than just this. It discusses your larger view of life and how your management of your finances assist you towards achieving those.

Oh go ahead and read the whole article yourself. Its worth it.

http://www.getrichslowly.org/blog/2008/06/26/the-nonconformists’-guide-to-personal-finance/

Managing my personal finances

Prelude

One of the things that I have always kept putting of, is managing my finances personally.

In principle, I don't have to do much. Its more of a record-keeping work that I need to do on a regular basis.

But my problem is that I only want to do things which are a bit involved, are fun doing, involve some programming, and look like I would achieve something by doing those activities.

Keeping a mundane record of my credits and debits is not one of them.

But something forced me to actually sit back and do it finally.

Oh in short, lately my expenses have be on the higher side, and have led to a situation that I am running short of credit these days. By looking at the statements today, I found that there were some transactions which I couldn't recall at all.

It downed on me that if I don't my books straightened, I would really get into trouble some day.

The Search

Oh I like open source software very much and the moment I thought that I need to manage my personal finances, I went on to look for good open source solutions for them.

After some search, I ended up at http://en.wikipedia.org/wiki/List_of_accounting_software

I zeroed on the three for testing:

• GNU Cash http://www.gnucash.org/
• Grisbi http://www.grisbi.org/
• JGNash http://jgnash.sourceforge.net/wiki/index.php/Main_Page

Well my another problem is that I like open source software which runs well on Windows. (I fortunately/unforunately have a Windows laptop for everything I do).

GNU Cash is primarily from Linux/Unix background, so I skipped it.

I then tried Grisbi, and JGNash, one by one, but was pretty much dissatisfied with both of them :(

I figured out that :

• I don't know much about the terminology of personal accounting (things like separate accounts for bank, assets, liabilities, reconciling etc.) and would have to learn them before being able to effectively use these pieces of software
• They were not actually running well on my Windows (the UI was not native, and didn't feel like I was enjoying using them)

So I spent about 1 hour reading about these and trying them out.

Back to Good Old Spreadsheets

Oh I figured out that I couldn't spend so much time on this. So back to the good old spreadsheets.

Guess what! I don't like spreadsheets :) Reason is simple. I am a programmer, and like to write programs where I can see all the text of the program in front of me (C/C++/Python etc.) and I am a reasonably good programmer.

And in spreadsheets, the programs are supposedly to be fitted inside the cells (formulas etc.); and for myself, I haven't yet been able to reconcile myself with the idea of laying out programs like this.

So in front of spreadsheets, I feel like a dumb foolish guy, and I cannot make much use of these sophisticated applications (Excel/OpenOffice Calc) more than just putting up a dumb table of text and numbers.

The Mundane work

But then this personal finance work needed to be done. And I finally did it. And it turned out that the work was ultimately very useful :)

• I did a full review of my last 4-5 months of expenses and could identify the different sources of leakages
• I also was able to finally remember some of the transactions I had forgotten about
• Finally I had a table in which I had put remarks on some of the important transactions so that I could later remember what they were for.

The Happy Ending

Somehow I got the idea, that I should blog about this experience :) And if you have read so far, then thanx a lot, I hope it was not too bad a reading for you.