Ask the grumpies: Alternatives to mint?

Linda asks:

I decided yesterday that I need to give up on Mint so I’m looking at replacements. I don’t really need a “budgeting” app. I use Mint mainly to track my spending, look at trends/patterns so I can make adjustments as needed to meet goals, and export reports for taxes. Doing some searches has led me to CountAbout as an option. It’s not free, and it seems that in order to get the automatic downloading of account data you have to pay $39.99 a year.

What do Grumpy Nation folks use? I’m open for suggestions.

The reason I’m giving up on Mint is that it simply will not connect to my mortgage or Ally Cashback credit card. I just get vague messages about security, although I can’t understand why there are problems since the security on these accounts don’t seem very different than others. I’ve tried their customer service chat more than once, and each time has ended with a “I’m sorry it’s not working” message. Ugh! These aren’t tiny financial institutions, and they are pulled up in the Add Account drop down, so some people must be able to get their accounts synced. I’m so tired of entering these transactions manually as “cash” transactions.

https://www.fivecentnickel.com/best-budgeting-tools/ people seem to like YNAB and Quicken, but that’s budgeting.  Leigh has programmed her own software.

#1 uses Mint, but not that carefully since it also usually doesn’t connect to one of her credit cards (despite working with her DH’s credit card from the same company) and doesn’t at all connect with her credit union.  We download all the tax stuff individually in February and just don’t pay that much attention otherwise.

#2 doesn’t use any program.

Grumpy Nation, surely you have better advice for Linda!  What software do you use to get your spending information all in one place, if any?

Ask the Grumpies: Outings for older kids

First Gen American asks:

Seems the last two go to weekend adventures have been dubbed as “for babies” by my tween. (They were a fall foliage historic train ride and corn maze/pumpkin fest in case you are wondering).

Wondering what new outings I can add that would hold the interest of the older one as I think we are outgrowing the zoo, museum phase of fun weekend activities.

#1 suggests: What do tweens like? Basically nothing! Also I have never outgrown the zoo and museum. [#2 notes, this is true– once when we met at a nearby city when #1 was at a conference, we went to the zoo]. Are there street fairs? I’d be happy to go to the library… Hiking? Fancy tea in the city? Music fest? Opera?

Make the tween suggest the things!

#2 suggests: What do tweens like? Protesting! Making a difference! Being active! Volunteering!

#1 says: That makes sense!  Volunteer at the cat shelter!

#2 notes: Miser-mom tends to have lots of good suggestions with her kids.

Ask the grumpies: How does not wanting to retire early affect your savings decisions?

Leigh asks:

How [does] having careers, not jobs and not wanting to retire early, while still having healthy retirement savings all ties in together. How does that affect how much you put into retirement accounts vs other accounts each year, etc.?

TBH it really doesn’t. But I do think it accounts for some of the calm we wouldn’t be feeling if we weren’t in good financial shape right now.

Back tracking a bit though…

As Leigh notes, we’re working because we want to, not necessarily because we have to.  We do like our high incomes, but a lot of why we work is because we’re trying to make the world a better place and in my case partly because of ambition.  We have no plans on retiring ever, though we may change our minds in the future.  Early retirement is definitely not in our plans.

Right now we’re maxing out all of our hassle-free retirement savings.  So I’m putting away my mandatory match, my 403(b), my 457, and DH’s 401(k) (now with Fidelity and a much better deal!  Asking for change works sometimes!).  We are on an “over-saving” track for retirement at this point given our lack of desire to retire early and my relative job security (though who knows what will happen in 30-50 years!).

The main reason we’re putting this much away is to take advantage of the tax advantage and to make it more likely that schools will give our kids financial aid.  We (as of this moment in our current situation) have plenty of money leftover to spend.  But there’s not much to buy around here and we don’t really have the time or energy to go looking for things to buy.  This is the first year that we’re starting to accumulate additional money after the targeted retirement/529/mortgage/sabbatical saving is done since before we bought a house.  If the US were stable, we’d be putting it in lump 10K sums into the stock market (with a 25K donor advised fund that we may still do), but instead we did one lump and now it’s accumulating in savings waiting to see what happens with DH’s job and the political climate.

(As we’ve expressed probably ad nauseum to our regular readers– we have more than enough to live on in our current low cost of living area, but not enough to safely buy a house in Paradise, even assuming we move to Paradise for a high paying job for DH.  But there’s always the chance we’ll want to move to Paradise with only one job and will be very happy that we “over-saved” even if we can’t afford to buy a house when we get there.)

I guess if we wanted to retire early we’d spend less.  I would probably have to actually sit down and figure out what numbers we could retire at assuming different draw down rates and stock market returns etc.  Depending on how early we wanted to retire, I’d have to figure out how to ladder accounts to draw down from (probably the easiest way is just to use the 457).  And I’d probably be freaking out about money more because it would matter for our “freedom” date.  But instead I’m expecting another 30-50 years of work so it’s easier to roll with uncertainty.  There aren’t money worries on top of everything else.

If we get more tax-advantaged space to save for retirement (because of changes to tax laws), I guess we’ll use it, but at some point we’d have to think hard about when to stop maxing it out.

So right now we’re just going with the max defaults because where else are we going to put the money?

Grumpy nation:  Do you have a career or a job?  Are you aiming for early retirement, not retiring at all, or something in between?  How does that decision impact your retirement savings decisions?

Ask the Grumpies: When to use a tax professional?

Linda asks:

I’m trying to decide if I should continue working with a tax professional for my 2016 filing year. I’ve been working with a tax pro for nearly 20 years now, but I feel like I do much of the grunt work of taxes by pulling all the data together and organizing it. If I just went one step further and filled out the forms, I could be done with the process and cut out the additional cost. If I’m guided by a good tax program, I shouldn’t miss any potential deductions or credits.

But I’m not sure if this is a good idea or a bad idea. So my questions to the grumpy nation are: What works for you: tax pro or personal preparation? Why do you choose to prepare your own taxes? Or, why do you choose to use a professional? If you prepare them yourself, do you use a tax program? Which one do you recommend?

#1’s family does not use a tax professional exactly for the reasons you say– pulling the data together and organizing it is the biggest time-sink and tax programs are pretty good these days.  We do make mistakes from time to time (previously mistakes have been on state taxes back when we lived in a state with complicated taxes), but we’re not sure that a tax professional would have been any better.

That said, #1 has a friend who has a much easier tax return but uses H&R block anyway because she wants their protection if a mistake is made or she’s audited.  For the risk averse, that makes sense.

#2 uses TurboTax

#1 used to use Turbo Tax but then there was that year where they messed up something that would have forced us to spend more money on a different package of their software for something small and stupid, so we switched to TaxAct.

Both our partners do the taxes instead of us.  Because doing taxes stresses #1 out and #2’s DH has weird stock whatevers that only he understands.

Ask the grumpies: Where should a teenager put extra money?

Miser mom asks:

One of my sons is going to come into a temporary cache of a lot of (for him) money: he’ll be getting something like $700-$800 each month for about a year. Where should he put this money?

He is 18 and lives at home — and will continue to be living at home, in high school, until he’s 20 (by which point, the money will have stopped coming in. We’d like him to set the money aside so that he can use it when he starts out on his own, by which we mean post-secondary education (most likely, a school of technology, where he’ll learn something like welding — not a 4-year college).

He has a savings account at our credit union, but that earns like zero-point-zero-zero-something interest, PLUS it’s accessible via his ATM card, which is a remote temptation for him. CDs? E-banking? Roth IRA?

I should mention that he has 529 plans and UGMA accounts that will *more* than pay for his education, so the money will eventually just be spending money. Or possibly the seeds of his retirement account.

Unfortunately, when you need money in the short term there aren’t a lot of good options.  So if the plan for this money is to put down a rental deposit for an apartment, then his best option is a CD or term share (the credit union version of a CD).  The rates on these won’t be great but it will lock up the money so it is difficult to get to until the date it is needed.  And generally the rates are a little bit better than most savings accounts.  You may want to shop around to see what’s out there.

He can only save for retirement in an IRA (Roth or otherwise) if he has earned income.  (Social Security and Disability do not count as earned income.)  Retirement is a great place for this money to go since jobs requiring physical labor often also require earlier retirement ages as they wear the body down, though who knows what life will be like in 30 or 40 years.  If he has earned income, whether to choose the short-term savings or the IRA (invested in a Vanguard Target Date fund or a low fee Total Stock Market Index) depends on whether or not you plan to help him with his housing when he starts post-secondary education because renting an apartment can require some combination of last month + deposit + realtor’s fee in addition to the first month’s rent, which can be pretty hefty for someone just starting out.

If you’re definitely planning on having him use it at age 20 even if it gets used for housing, then choose the CD/termshare option.  Short term savings needs to be in safe, non-risky savings vehicles.  You can take on more risk with long-term savings.

If he doesn’t currently have earned income and you do plan on helping him out with initial housing expenses, another possibility is to lock this money in a CD or savings account until he starts earning income of his own and then putting this money into a Roth IRA (again in a Vanguard Target Date Fund) while living off of his earnings.  His future self will really appreciate that he’s done so at age 62 or whenever in the future he is wondering if he can ease off of full-time work.

As always, we may be wrong, we’re not experts, consult with actual experts and/or do your own research before making any important monetary decisions.

What do you think, Grumpy Nation?

 

Ask the grumpies: How do you decide on donations?

Another activist economist asks:

What is your donation strategy right now? Are you giving to more places, or more to places you were already supporting? I was torn at the end of last year and just did the latter. Trying to decide what to do for 2017.

#2 says:  Both!

#1 also says both.  I think I must have the warm glow version of donating because I am totally just giving to places as they come on my radar.  I have no strategy at all for this stuff (my only planned giving is to my alma mater and DC1’s former private school).  Something horrible happens, I donate to the relevant agency or agencies, it makes me feel a little better.

I know that’s not optimal for the organizations in question (based on graduate public finance*), but it’s optimal for me!  Plus it’s a strategy shared by a ton of people since whenever I give, the news says that organization has just received record amounts.

Another activist economist replies:

If lots of donors share that behavior, it might become optimal for the organizations (getting small amounts from huge numbers of people)? Also, maybe your strategy (or non-strategy) means you donate more over the course of a year than you would if you explicitly made a budget for donating and only gave to a few places. Which is better for the places getting your money.

I have been holding back so far this year since I’m torn. For instance, a friend of mine started supporting this local organization that gives financial assistance to women who can’t afford abortions. But is it better to give to them or Planned Parenthood or split between the two? I’m leaning toward only PP.

I’ve given to both! Because I cried super hard when my sister told me that she was working with an organization in [City] that provides rides and housing for women seeking abortions and had someone staying in her spare bedroom for 3 days because the woman had taken an 8 hour bus in from [a neighboring state] to get an abortion. So I gave $100 to that organization to make the crying stop. Planned parenthood is where we regularly give whenever one of these things comes up in the news, plus it’s where many of our blog proceeds end up going.

While DH remains employed and with the mortgage gone and our retirement accounts maxed out and DC1 no longer in private school and no firm plans going forward for major expenditures, we can afford to just give money whenever so we don’t really need a strategy (still, this has always been how we’ve donated, it’s just that before it was much smaller amounts in grad school and I’d have to cut back on our grocery expenditures to make up the difference). We should be giving more, but I keep thinking, what if we have to move to Paradise permanently? We don’t have enough money in non-retirement non-529 accounts to buy a house in a decent school district, and renting would still be difficult on just DH’s salary. So mainly it’s the emotions that get me to part with my pocketbook even though we should be giving much more than we do.

Another activist economist replies:

I look forward to reading the responses [from the grumpy nation]!*** I should probably stop thinking about what would be optimal and just give when I feel like it. The reality is that my total giving across the year would likely be higher if I did that. But it is hard to turn off the little voice in my head that asks “if you give that $50 here are you taking it from somewhere else where it would have a bigger marginal impact?”

Yeah, I don’t listen to that little voice. It gets shouted down by the, “Look, do you want to stop crying right now or not?” voice, because I have very little impulse control. And since I don’t have a set budget constraint on charitable giving, there’s more likely to be crowding in** than crowding out of giving.

Plus it probably helps that I wasn’t all that convinced by grad PF’s discussion of optimal charitable giving given that most non-profit’s revealed preferences are to go all out and accept lots of little donations from people like me (and then sell my contact info to related organizations that could crowd out my donations to them…).

Agree about the crowding in (probably true for me too) – I don’t have a fixed budget either, exactly. (Though because I am a procrastinator, during normal times I tend to do all my donations at the end of the year, so then I am thinking about the total amount I want to give for that year.) But there’s a budget in the sense that I have an upper bound even if I don’t know exactly what it is. And that is what that little voice reminds me of. Hmmm….

*Graduate PF, if I’m remembering the lecture correctly, suggests that rational individuals interested in making an actual difference rather than just feeling warm and fuzzy should donate large sums to a small number of charities so other places don’t waste money trying to get more money out of you and you’ll have a bigger impact on that organization and more say in what is done with your money. I am obviously just motivated by warm fuzzies. Plus I’m not sold that that’s a bad thing, as you will see in our discussion.

**”Crowding in” in this context means that giving some money makes it more likely that you’re going to give more later.

*** emphasis added

Grumpy nation, do you have a donation strategy?  Do you have a set amount you give each year, or do you give on a case-by-case basis?  Have you had to make any sacrifices for giving?  What makes  you decide to give?  How do you pick who to give to and how much?

Ask the Grumpies: Do I need to see a financial planner about a 300K inheritance?

A asks:

Tl;dr: Would a windfall that doubled your (age appropriate but not amazing) savings overnight change your savings/investment strategy?

My dad died recently; my mom died a while ago. They were both relatively young and had saved extensively. The bulk of his assets, around 300k, are in various types of IRAs and we plan to roll them over as inherited IRAs and opt for option to take the required minimum distribution over my life expectancy, with the understanding that we can draw down more if we wish.  These assets are currently split nearly evenly between various stocks and bond funds. Additional property based assets also exist but the valuation is less clear – this will likely come to us as cash but at a much later date.

Having been saving appropriately ourselves for retirement, my spouse and I, at 40, have around $350k in various index funds through TIAA CREF and Vanguard – we have in the past several years fully funded our Roths, made our maximum contributions to our own IRAs, and done some “catch up” saving to offset the time my spouse spent in grad school/not working to his full potential.  We have planned/budgeted to continue to do so for the foreseeable future. We also had planned to pay off our house over the next 2-4 years in lieu of investing in bonds.  Our allocations are nearly all in small set of mid-large cap domestic and international index funds.

My question is, given this windfall, which nearly doubles our total savings, should we simply allocate the new funds into our existing allocation? Should we reconsider our savings rate into IRAs? Should we change our financial goals ~ 1) pay off house 2) save for retirement 3) save for other things (kids’ college/travel/etc).  We both like our careers but we also view savings as a means of having choices – to quit a job, to take a leave of absence, or to stay in a job we love that isn’t paying what it should.

We are getting some pressure (from family/from our tax attorney) to find a financial advisor and engage in more expensive actively managed investing.  We aren’t sure about this – should we engage someone for short term advice and pay for it? Should we keep doing what we are doing, which is reading up and figuring it out ourselves? Neither of us works in this area…

Thoughts and advice?

So sorry to hear about your loss.

This is a tough one.  If it were me, 300k isn’t so much that it seems like it needs special financial planning above and beyond what you are already doing.  On the other hand this whole inherited IRA thing could be tricky and have tax consequences that I don’t understand but you sound like you’ve looked into them.

When #2’s husband got a large lump sum from stock options he just added more to the investments he already had using the same strategy as before (also some of that went towards a wedding and moving expenses– they still can’t afford a house where they live).

If it were me I would do 1. Retirement 2. House 3. Other.  You also want as much of that as possible put into vehicles that you can hide from colleges (like retirement and your house) because 300k in cash means you pay 100% tuition etc. while 650k in retirement doesn’t, depending on your income.  So if making those moves is complicated or you don’t know how colleges are going to treat different assets, it might be worth it to talk to a professional.  But that seems more in the realm of your tax person than a financial planner.

Active investing is almost never a good thing and I can’t see 300k being so big that you need it.  It’s not like you’re trying to dodge an inheritance tax at age 40 with less than 700k plus a home.  It’s not a big enough portfolio to really benefit from munis.  So I’m not really sure what active management would add.

On the other hand, when my father dies, my mom already has a firm (apparently a branch of Charles Schwab does this) picked out to forensically untangle all of his investments.  Simplifying them in a way that doesn’t create massive taxes will be the next step.  That’s not active management but it will take a professional in the short term.

So I guess a fee only financial planner might be worth it if this is beyond your tax person’s abilities, but not one who is going to encourage active management.  Instead someone who will help your figure out how to get the right asset mix (which you probably already know), how to avoid excess taxes, and how to maximize financial aid.  So like one or two meetings rather than them taking over your portfolio.

Grumpy Nation, what would you do in A’s situation?